Anirban, I haven’t had time to write it all up, but here’s what I got from that earlier post (somewhat rewritten). And then I added three links at the bottom.
Avigilon AVO.TO or AIOCF
This is a somewhat overlooked Canadian company which has been the #1 growth company in Canada the past 2 years: Avigilon, ticker symbol AVO on the Toronto Exchange, and AIOCF in the US.
Avigilon has rapidly growing sales (102% CAGR, and a current $220 million Canadian run-rate), steadily expanding profit margins (unusual for a growing company, especially in the tech sector), competes in a highly fractured international market (where no participant had more than a 5.9% market share, and the top 15 had only a 43.5% share).
Avigilon provides the only end-to-end solution for buyers of High Definition digital surveillance cameras, storage solutions, network switches, video analysis/alerts, and access control. This gives them a strong competitive advantage relative to the alternatives. It is a “Moat in the making” and should also qualify it for “Rule-Breaker” status given the unifying, one-stop-shopping nature of its value proposition in the marketplace, and its steady displacement of outmoded analog competition.
Furthermore, and most importantly regarding future growth opportunities, the worldwide market for such systems (both digital and analog, not including installation costs), was $12.6 billion in 2012 and IHS forecasts it will grow to $23.2 billion in 2017, with the High Definition digital component making up the lions-share of the growth (24% CAGR), whereas demand for outmoded analog systems will remain basically flat. It would be reasonable to expect that in the coming decade or two almost the entire analog market sector will be eliminated in favor of digital, IP-enabled, systems.
The company went public in late 2011 and has done several re-financings and is thus very well capitalized for its current and future expansion plans, even after paying all-cash for several recent modestly-priced bolt-on acquisitions (RedCloud Security, VideoIQ).
Its CEO, Mr. Alexander Fernandes, has over 20 years of experience in the technology sector, and in fact founded QImaging and then sold it to Roper Industries in 2002. As such, Avigilon gains immeasurably from his prior experience running a large technology company that engaged in a somewhat similar product set as Avigilon.
Their current production facility in British Columbia is highly automated and cost-competitive against Asian or other geographic regions, enables the protection of Avigilon’s intellectual property, and is large enough to handle annual sales of $500 million by Q4 2016 (without any further Capex) which is roughly double the current production run-rate of $220 million. Future production facilities will be set up in various regions around the world, with the Richmond facility acting as the Master template.
The company engages 2000+, and growing, system integrator resellers worldwide to handle the sales process, with Avigilon staff assisting as required to explain the compelling value proposition to end users. To date the company has installed its systems in 24,000 customer sites in 113 countries around the world.
For additional information, there is May 2014 investor presentation that can be downloaded here:
And the Q1 2014 Report that can be downloaded here:
Check pages 5-6, 7, 11, and 13-16 in particular for the following key info:
Quarterly results going back to 2012 (note that every Q1 there is a seasonal minor drop in sales due to a strong prior Q4, which is explained on page 6)
Analysis of the steadily declining cost of sales percentage
Steadily improving profit margin percentage
Outlook regarding the global surveillance market, followed by an explanation of Avigilon’s Growth Strategy
Note that the stock dropped quite precipitously recently, which provides an excellent buying opportunity for value-oriented investors, as its forward P/E has compressed quite dramatically down to about 25 (based on a price of $18.67 Canadian and annualized earnings of 76 cents Can.
The drop was caused partly by the general sell-off in the tech sector over the past few months, followed by the CFO leaving his post due to “a personal health issue” a day before the Q1 results were released on May 7 (a reason which is believable, given that he was working in such a fast-paced company, but it caused major consternation in the market because investors feared there was more to the story than just that). The interim CFO, Mr. Wan Jung, previously held that role at Avigilon before retiring, and thus can easily step back in until the search for a replacement is completed.
Here’s a link to the 1st Quarter report, which is much more extensive and complete than a quarterly report in the US
and here’s the link to their investor relations site
here’s the link to the Yahoo finance site which will give you access to articles written about them, etc.