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May 30, 2017

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Citigroup upbeat on local point-of-sale suppliers

TAIPEI -- U.S. bank Citigroup Inc. has issued a "buy" rating for two Taiwanese manufacturers of point-of-sale (POS) systems in anticipation of rising demand for upgrades in retail information management systems.

Citigroup set its price targets for Flytech Technology Co. at NT$161 (US$5.36) and for Posiflex Technology Inc. at NT$242, forecasting that the two companies could see a 12-15 percent growth in operating income in the coming years driven by transformations in POS systems, a type of software and hardware network that records sales as they occur and facilitate tracking of figures and inventory levels.

Timothy Chen, a Citigroup analyst in Taipei, said that new POS systems will increasingly allow retailers to deepen customer engagement, personalize marketing and promotion, and better manage inventory and data.

"Growing mobility and connectivity in POS, changing payment options, and a push to enhance customer experiences via data analysis are drivers of the transformation," Chen said in a June 3 research note.

"The new POS is also a must-have IT spend for major retail chain stores. The integration of new functionality into traditional POS creates opportunities for software developers and hardware manufacturers," he said.

Chen said worldwide POS hardware sales have been growing by 8 percent on average since 2011, compared with only 2-3 percent in 2009 and 2010. He forecast that the figures may continue to grow in "high single-digits" over the next few years.

According to Citigroup's data, Flytech is the world's third-largest POS hardware maker with a 13 percent global market share. Posiflex has a 5 percent global market share and boasts major customers like Starbucks and McDonald's in India and Outback Steakhouse in the U.S.

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