PAX Global Announces 2014 Interim Results
Revenue Rises 59% to HK$1,005.7 million
Net Profit up 118% at HK$198.2 million
Speedy overseas growth & significant rise in gross margin
(Hong Kong, PRC and Singapore, 4 August 2014) PAX Global Technology Limited (“PAX” or the “Company,” together with its subsidiaries collectively known as the “Group” , HKSE stock code: 00327.HK), one of the world’s leading Electronic Funds Transfer Point-of-Sale Terminal (“E-payment Terminal”) Solutions Providers, is pleased to announce its half year results for the six months ended 30 June 2014 (the “Period”).
In the first half of 2014, revenue of the Group rose 59% to HK$1,005.7 million, and net profit surged 118% to HK$198.2 million with basic earnings per share at 18.7 HK cents (1H2013: 8.7 HK cents). Revenue from the People’s Republic of China (the “PRC”) excluding Hong Kong, Macau and Taiwan (“China Market”) increased 29% year-on-year or by HK$123.5 million to HK$552.9 million. Revenue from overseas markets surged by HK$251.1 million to HK$452.8 million, representing a gain of 124%. Gross profit margin for the six months ended 30 June 2014 was 37.8%, a rise of 2.3 percentage points compared to 35.5% for the six months ended 30 June 2013. This was mainly due to an increase of weighted contribution from overseas sales and successful cost reduction. The significant rise in sales to overseas markets was mainly attributable to big breakthroughs in the Middle East and Brazilian markets as well as established sizable and effective sales channels in other overseas markets. In addition, PAX Computer Technology (Shenzhen) Co. Ltd. (“PAX Computer”), a wholly-owned subsidiary of PAX, was recognized as a Key Software Enterprise by the National Development and Reform Commission (NDRC) and received approval from relevant tax authorities to enjoy 10% corporate income tax for financial years of 2013 and 2014.
During the Period, the sale of E-payment Terminal generated the majority of the Group’s revenue. Total sales revenue of E-payment Terminals rose 63% to HK$941.5 million. The Period sales volume of E-payment Terminal exceeded 1 million units. According to the Nilson Report published in June 2014, PAX is the third largest E-payment Terminal supplier in the world, having moved up one position, with a market share of 9.21%, up from 6.25% for the previous year. In 2013, PAX Global’s terminal shipments exceeded two million, surging by 64% compared to 2012, which is the highest growth rate among the top five suppliers in the world, showing the sustained and steady growth of PAX.
Overseas market revenue of the Group was HK$452.8 million in the first half of 2014, representing an increase of 124% as compared to HK$201.7 million in the first half of 2013. All overseas business units recorded notable growth especially in Europe, the Middle East and Africa (“EMEA”) and Latin America and the Commonwealth of Independent States (“LACIS”) business units. North Africa, the Middle East and South America become new focal points for business growth of PAX in the near future. Overseas market revenue comprised 45% of total revenue compared with 32% in the first half of 2013. PAX has developed its “GLOBAL PRESENCE” strategy that covers all of the world’s major markets, with over 80 overseas distributors and partners worldwide. In the first half of 2014, PAX achieved significant breakthroughs in Brazil and the Middle East with encouraging results. After 13 years of continuous experience in penetrating into overseas market, PAX has accumulated rich and valuable overseas sales experience and has established sizable and effective sales channels. We have established business units and international sales teams for EMEA, LACIS, Asia Pacific (“APAC”) and United States and Canada (“USCA”) geographic region. PAX is one of the few PRC E-payment Terminal solutions providers holding payment card industry (“PCI”), EMV Level 1 and Level 2 certifications. In addition, PAX obtained TQM, PayPass and payWave card certifications. These qualifications will enable PAX to capture huge overseas market opportunities.
During the Period, China Market revenue of the Group increased 29% to HK$552.9 million (1H2013: HK$429.4 million). China Market revenue contributed 55% to total revenue (1H2013: 68%). The growth was mainly attributable to third party payment service providers (“Operators”) and vertical application sectors, which benefits from the increasing popularity of bank card and prepaid card payment options in China. As at 15 July 2014, the People’s Bank of China issued payment licences to more than 260 Operators, among which over 50 have acquiring licences. Those licensed Operators have begun installing E-payment Terminals at merchant venues. PAX anticipates that the Operators will strengthen the expansion for rolling out their E-payment Terminal networks over the next three years. In addition, the People’s Bank of China and China UnionPay are currently pushing for rapid development of near field communications (“NFC”) E-payment Terminal networks which fuels demand for related products. PAX’s mainstream products are compatible with NFC. As a market leader in the PRC, the Group will continue to benefit from the rapid growth of its home base market.
Looking forward, PAX continues to develop innovative products to meet customer requirements and demand while capturing opportunities in new markets. PAX constantly enhances its research and development capabilities, expands and optimizes its sales and after-sales service networks and enlarges the scope of business and its market share in major international markets. PAX seeks potential mergers and acquisitions or partnership opportunities that can enhance its technological know-how and/or market share. By leveraging on our strong position in E-payment Terminal solutions market in the PRC and consolidated international market experience, we believe that we will be able to capture the rapid development of China and emerging markets as well as other important international markets.
Mr. Jack LU, Chief Executive Officer of PAX Global Technology Ltd, said: “As the world’s second largest economy, the PRC has experienced rapid economic growth in recent years. Supported by national policies and benefiting from the popularity of credit card payments, we believe demand for E-payment Terminals in the PRC, especially in the second and third tier cities and rural areas, will remain strong. For overseas markets, we believe that they will maintain rapid growth for the foreseeable future so the Group will further penetrate emerging markets and important mature overseas markets. In the future, PAX will continue to focus on consolidating and enhancing its strong position in the PRC, expanding overseas market penetration, actively look for mergers and acquisitions opportunities along the payment chain and remain on the right track to be one of the leading global E-payment Terminal solutions providers.”