Thread by @gabcasla

My thoughts about Pax Global after talking with the company and other experts in the field.
You should be aware of the fact that the FBI and the DHS have registered only a warehouse from Pax in Florida so far. They looked for evidence about malicious software on Pax terminals

The authorities have not formally charged them, they were looking for evidences and it is super important to know that Pax (including the US region) is doing business as usual today. The US segment is working to deliver and maintain terminals as usual!

I'd be very surprised if Pax had done something illegal. The company doesn't have any relation with Chinese gov and the chinese business had been suffering for a long time. Pax was growing very fast in all geographies except in China and the clients were amazed with Pax product

I have a good relationship with the management and can't imagine any wrongdoing. It makes nonsense since they were slowly but constantly opening themselves to the market and raising strongly the dividend. Management have not even exercise their stock options yet (strike HK$3.5)

Experts confirmed that the regulation and security standards would make it impossible to have a security break in Europe, but couldn't say the same about the US. I don't think the terminal has been hacked, but I'm no so confident in PAXSTORE as it is newer and weaker than POS

It is surprising that Pax was growing so fast beating the market out because they have a superior offering than peers and oddly enough, they only have cyber issues in the US (being a Chinese company). That's really weird!

Pax confirms they have never had any technical issue happening with their terminals in the US/EU before and they are currently investigating it. For me is relevant they are doing business as usual today and the FBI have only broken into one warehouse for half a day

The stock has been halted as the HK regulator is stricter than others. I expect Pax issuing a press release giving more details in the coming days and if the regulator considers it enough, it will trade again. I've asked for buybacks as soon as they can to show confidence!

The weight was 4.2% in Sigma, so the impact is modest, limited to less than 2%.We haven't sold and will stay tuned, but both the fact that Pax US is only 10% of the total business and that I expect they'll own almost HK$ 4Bn by the end of the year in net cash, gives us confidence

I don't want you to think I'm downplaying the significance of the event. Even if Pax is innocent, their reputation has been severely damaged in the US, so it might take time for the stock to trade again above HK$10