HK/China small/mid-caps specialist

Pep So, CFA, CPA

Equity Bottom-Up

Plover Bay Technologies / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/24191" target="_blank" data-smartkarma-citation="entities:24191">Plover Bay Technologies Ltd (1523 HK)</a> (“PB”) is a leading worldwide SD-WAN router vendor. Leveraging on its strong R&amp;D capabilities and solid track record in its niche markets, PB is experiencing robust growth. Despite its short listing history and coverage insufficiency, PB is an undiscovered small cap that has multiple merits that are not commonly known by investors:</p><ul><li>Outstanding products: In addition to its wide range of SD-WAN router products, PB’s proprietary software products are well-received by customers and are chosen by world-class customers across different sectors.</li><li>Niche markets: PB has a niche market where competition is less keen. Its products are best suited for enterprises with mobile or remote working environment. At present, its four core segments are public safety, transportation, maritime and unmanned systems.</li><li>Extensive distribution network: PB has no sales team and relies primarily on third party distributors. As such, its brand recognition and user reviews are the main driver of its future demand. Thanks to the robust demand worldwide, the company has more than 400 distributors in about 70 countries, mainly located in North America, EMEA and Asia regions.</li><li>Strong profitability and earnings outlook: Leveraging on its asset light and sales team-less business model, PB has strong margins and return profile. Looking forward, the company is likely to double its net profit in two years by 2018.</li></ul><p>PB is still in its early growth stage and it is likely to achieve sustainable growth in multiple years. On top of visible organic growth ahead, the company could well be a takeover candidate in this booming industry. Overall, PB offers tremendous upside as a small cap opportunity!</p><p><strong>Company details (as at June 14, 2017):</strong></p><table class="table table-striped"><tbody><tr><td>Ticker</td><td>1523 HK</td></tr><tr><td>Name</td><td>Plover Bay Technologies</td></tr><tr><td>Listing date</td><td>July 13, 2016</td></tr><tr><td>Share price (last close)</td><td>HKD0.89</td></tr><tr><td>Market cap</td><td>HKD890 mn</td></tr><tr><td>Enterprise value</td><td>HKD742 mn</td></tr><tr><td>Shares outstanding</td><td>1,000 mn</td></tr><tr><td>Free float</td><td>25.0%</td></tr><tr><td>Avg daily value traded (3M)</td><td>HKD4.6 mn</td></tr><tr><td>52 week range</td><td>HKD0.38-1.02</td></tr><tr><td>P/E (T12)</td><td>17.6x</td></tr><tr><td>P/B</td><td>4.7x</td></tr><tr><td>P/S (T12)</td><td>4.0x</td></tr><tr><td>Dividend yield (T12)</td><td>4.1%</td></tr></tbody></table>

Plover Bay Technologies Ltd (1523 HK) (“PB”) is a leading worldwide SD-WAN router vendor. Leveraging on its strong R&amp;D capabilities and solid track record in its niche markets, PB is experiencing robust growth. Despite its short listing history and coverage insufficiency, PB is an undiscovered small cap that has multiple merits that are not commonly known by investors:Outstanding products: In addition to its wide range of SD-WAN router products, PB’s proprietary software products are well-received by customers and are chosen by world-class customers across different sectors.Niche markets: PB has a niche market where competition is less keen. Its products are best suited for enterprises with mobile or remote working environment. At present, its four core segments are public safety, transportation, maritime and unmanned systems.Extensive distribution network: PB has no sales team and relies primarily on third party distributors. As such, its brand recognition and user reviews are the main driver of its future demand. Thanks to the robust demand worldwide, the company has more than 400 distributors in about 70 countries, mainly located in North America, EMEA and Asia regions.Strong profitability and earnings outlook: Leveraging on its asset light and sales team-less business model, PB has strong margins and return profile. Looking forward, the company is likely to double its net profit in two years by 2018.PB is still in its early growth stage and it is likely to achieve sustainable growth in multiple years. On top of visible organic growth ahead, the company could well be a takeover candidate in this booming industry. Overall, PB offers tremendous upside as a small cap opportunity!Company details (as at June 14, 2017):Ticker1523 HKNamePlover Bay TechnologiesListing dateJuly 13, 2016Share price (last close)HKD0.89Market capHKD890 mnEnterprise valueHKD742 mnShares outstanding1,000 mnFree float25.0%Avg daily value traded (3M)HKD4.6 mn52 week rangeHKD0.38-1.02P/E (T12)17.6xP/B4.7xP/S (T12)4.0xDividend yield (T12)4.1%

Plover Bay Technologies: Small Gem in the Booming SD-WAN Industry that Offers Tremendous Upside!

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Plover Bay is the holding company of Peplink. Our vision is to make connectivity reliable through our ecosystem of enterprise LTE/5G routers and software services. Everyday, thousands of enterprises in retail, industrial, public safety, healthcare and government organizations use Peplink technologies in workplaces, factories, outdoor deployments, vehicles, ships, drones, and IoT systems to ensure their network connections are fast and reliable.

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Plover Bay Technologies (1523 HK)

Plover Bay Technologies: Small Gem in the Booming SD-WAN Industry that Offers Tremendous Upside!

Plover Bay Technologies Ltd (1523 HK) (“PB”) is a leading worldwide SD-WAN router vendor. Leveraging on its strong R&D capabilities and solid...

Pep So, CFA, CPA

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