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Tech stock of the week ( Week of August 30, 2010 )
| Junior Tech Stock Highlight: Cantronic Systems Inc (TSX VENTURE:CTS) |
| Company Name: |
Cantronic Systems Inc |
| HQ Location: |
Coquitlam, British Columbia, Canada |
| Company Website: |
www.cantronics.com |
| Shares Outstanding |
84.56 Million |
| Stock Price (Sept 01, 2010) |
$ 0.25 |
| Market Cap |
$21.14 Million |
| 52 Week Range |
$0.18 - $0.48 |
| Average Daily Volume |
21,000 |
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Tech stock of the week is a very popular segment on smallcappower.com to find interesting junior tech stocks. Small cap tech stocks and penny tech stocks quite often offer very compelling growth and are well suited for small cap investment. Tech is good space to find hot Small cap stocks and penny stock picks and this segment provides more information on such companies.
Share Highlight / 1-Year Stock Chart
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Business Overview
Cantronic Systems Inc. manufactures, distributes, and provides training and services in the fields of
infrared vision and video security surveillance technologies, specializing in passive and active infrared
cameras, infrared illuminators, low light infrared sensitive CCD cameras and long-range night vision
surveillance systems for demanding homeland security and surveillance application.
Cantronic, through its US subsidiary QWIP Technologies, Inc. ("QWIPTECH"), holds a worldwide,
exclusive license from the California Institute of Technology ("Caltech") to produce and sell infrared
detectors and sensors based on Caltech's Quantum Well Infrared Photodetector technology.
Cantronic, through its China subsidiaries Cantronic Security Systems (China) Co. Ltd., Beijing Advanced
Videoinfo Technology Co. Ltd. ("AVINFO") and Shenzhen Huanghe Digital Technology Co. Ltd. ("Yellow
River"), provides digital networked video surveillance solutions to government and corporate customers in
China. + More info
What is interesting?
- Company is emerging as a player in the infrared imaging and video surveillance systems. In both the high end night vision and low end day vision surveillance systems.
- Primary application in home land security, corporate surveillance, telecom, defence etc.
- In an ever more security conscious society, surveillance is more and more widespread.
- The technology came out of NASA & Caltech (California Institute for Technology) for defence and homeland security. The company has 17 patents in the infrared detector chips.
- Strong management team.
- A rare small cap with strong footprint in China one of the fastest growing economies in the world (and now the 2nd largest economy overtaking Japan).
- Global video surveillance camera market of over US$9 billion (as per the company).
- The company is shifting focus on fast growing Internet Protocol based surveillance market.
- Management has a significant stake in company (36% stake for management and board).
- 8-10% annual growth rate in North American and European markets.
- 38% growth rate in IP cameras – the technology of choice and current focus for Cantronics.
- Cantronic’s current market share is < 0.1%, suggesting lot of room for growth.
- The Chinese market is projected by company released estimates to grow at 40% rate. The company has a strong operating and marketing presence in China.
- Blue chip customer base including US Department of Defence, US Homeland Security, Canadian Department of National Defence, UK Department of Defence, US Navy etc.
- In private sector all the major defence contractors are customers including Northrop Grumman, Siemens, Lockheed Martin, Johnson Controls etc.
- Company is making strategic acquisitions in Chinese market to give it system integration capability, moving up from being just a product supplier to higher margin services.
- China has implemented some local laws for security and surveillance, including requirement for surveillance systems in entertainment venues. All this is resulting in fast growth in Chinese market, as government mandates makes this a forced buying decision.
- Company is also working with major Chinese Telecom players.
- Company’s revenue jumped from $3.7 million in fiscal year ending Jan 31 2009 to $ 15.7 million in fiscal year ending Jan 31, 2010.
- Although company is making net loss, the loss situation significantly improved in the year ending Jan 31 2010.
- Good Cash position with $3.3 million in cash as of Jan 31, 2010-09-01.
- The company has some short term debt in balance sheet.
Risks
While the company is growing fast, it is still making losses. Expansion in markets like China comes with risks, given the uncertain regulatory and business environment. Intellectual Property protection is also limited in Chinese market. Has some short term debt in balance sheet.
Cantronic Systems Inc News
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