Want exposure to 5g? Consider this Hong Kong small cap
For quite some time, 5G has been one of the hottest themes for global investors. The technology promises connection speeds up to 10 times faster than 4G, along with a huge reduction in latency (time it takes for communication or signals between machines across a network).
Artificial intelligence, autonomous driving and automated industrial-scale factories are some of the key areas 5G is tipped to accelerate.
But as Don Rosenberg, an executive at semiconductor giant Qualcomm, told the World Economic Forum last year, “5G will connect everyone and everything”
“3G put the mobile Internet in your hand and 4G gave us mobile broadband – redefining how we interact with our world – 5G will connect everything and everyone. The technologies within 5G were and continue to be designed to vastly expand network capacity so cars, utility grids, appliances, medical devices, industrial machinery, homes, cities, farms and more can all be connected.
“And 5G will reduce delays and improve reliability, thereby enabling mission-critical tasks such as remote surgery, self-driving cars and enhanced public safety, to make possible secure connections so lightning-fast that an entire movie can be downloaded in seconds.“
– Don Rosenberg, Executive Vice-President, General Counsel and Corporate Secretary, Qualcomm
Plover Bay Technologies (HK: 1523)
Global large cap telecommunications and tech giants, as well as thematic ETFs can provide investors with exposure to 5G. But there are smaller companies making big leaps in 5G development too.
Plover Bay Technologies is one of them – a small cap tech company listed on the Stock Exchange of Hong Kong.
Its stock price has risen almost 250% in the past 12 months.
Plover Bay Technologies develops both wired and wireless SD-WAN hardware and software which is being improved by 5G connections.
As apposed to a standard wide area network (WAN) which are based on traditional fixed internet routers and not designed for cloud computing, a software defined wide area network (SD-WAN) uses centralized control and intelligently directs traffic across a network, above its physical infrastructure.
It’s network technology designed for cloud computing
Jerram Lindsay, an analyst at Autralia-based asset manager, Spheria Asset Management, estimates Plover Bay Technologies has around a 16% share of the global SD-WAN market.
“Plover Bay technologies predicted the shift to wireless well ahead of the competition and has secured its spot as one of the dominant players in the wireless space,” he told Asia Markets.
Spheria Asset Management owns Plover Bay Technologies in the portfolio of its top-performing Spheria Global Microcap Fund which has returned +46.6% in the past year.
Mr Lindsay sees a big opportunity for growth in the company’s patented SpeedFusion technology which can combine networks (fixed lines, wireless 4G, wireless 5G) from various service providers to form fast and highly reliable network connections for businesses from any location.
The technology is highlighted in the feature video at the top of this article.
“Plover Bay generates up-front revenue from the sale of SD-WAN routers, as well as recurring revenue from software and services. It recently rolled out a subscription model, providing routers, data connectivity, support services, and access to its cloud management platform, in exchange for a monthly fee based on data consumption,” said Mr Lindsay.
“This provides an attractive proposition to smaller businesses that want to avoid the upfront costs of setting up a wireless SD-WAN network, while creating another recurring revenue stream for the business. It currently derives 76% of its revenue from wireless, which has grown at a compound annual growth rate of 25% over the past 5 years.
“Plover Bay is highly cash generative, has a net cash balance sheet… And it’s currently under the radar of most investors, only covered by a single local broker.”
Plover Bay Technologies recently posted a profit of US$9,292,000, for the six months ending 30 June 2021. It was an 81.5% increase on the same period in 2020.