Within days its price reached an all time high of $9.5 per share raising its value to $357 million, which for a $57 million revenue company (2009) with annual growth running around 20 percent over the last two years is a very high valuation. However its valuation is approximately $243 million.
In January 2010, HikVision, a company having annual sales in 2009 of $300 million and solely serving the Chinese market listed on the same exchange and raised $500 million making an exit sales ratio of valuation 1.66 and an EBITDA ratio of 4.4 which is far from being highly rated. So it would appear that within a year the Chinese security market has moved up a gear or two and this will inspire western companies to take a serious look at floating on the China Stock Exchange. Not surprisingly China based, China Security Systems Technology (CSST) listed on the NYSE but based in China is unhappy with its current valuation and is looking to go private.
The most interesting deal this month was Tyco's purchase of Signature Security Group for $171 million. Tyco intends to combine Signature Security's Australian and New Zealand operations with its ADT Security business under the ADT name. Signature Security is a provider of electronic security services in Australia and New Zealand, providing security installation and monitoring services. This deal looks a strategic fit with ADT business, providing increased scale and attractive operating synergies.
Alliances in the first quarter numbered 24 compared with 23 in the same quarter of last year, so this is at least one area that is still very buoyant.
So how is the financial performance of security players standing up? The fourth quarter financial announcements made recently show for the most part revenues and profitability well up on the same quarter of 2010 and the full year outperforming 2009. With almost all anticipating improved trading conditions in 2011 it looks as though revenues and profitability will improve on 2010.
The star performers in 2010 include Axis Communications, Mobotix, Basler, China Security & Surveillance, Authentec and Bio-Key, despite the fact that their fourth quarter was well down on 2009. These companies are very specialist and perform in the high growth areas of the business and are strong in geographic markets that performed well in 2010.
Tyco, Honeywell and Siemens all increased both profitability and growth and are bullish about 2011. Cooper and Ingersoll Rand similarly increased their growth and profitability, whist Bosch returned to profitability on increased sales.
With trading conditions looking buoyant and the drivers that accelerated consolidation and investment in 2010 still well in place we believe that the slowdown of acquisitions and funding in the first quarter of 2011 does not indicate in anyway a change of course but is just a short-term deviation. This industry will not buck the trend much longer for global merger and acquisition activity is well up on the same quarter of last year. Listings activity has been the highest on record so far this year, with firms raising a total of $24 billion from IPOs. Interestingly Asia, which dominated equity capital markets in 2010, continued to lead the field, with China accounting for 41 percent of issuance.
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