Infinova's Huge $1.2 Billion IPO Examined

Author: John Honovich, Published on Jan 06, 2011

Relatively unknown surveillance manufacturer Infinova announced an IPO valuing the company at $1.2 Billion USD and raising $300 Million USD. This is a huge event. Inside this note, we provide feedback from an interview with Infinova and our commentary on the implications for China and the overall market.

To put this IPO in perspective, Infinova's public financial valuation is now about the same, or slightly more, than Axis Communications (see Axis's stock summary), a company that generates about 6 times as much revenue. Also, see Infinova's stock summary.

Let's start with some basics financial information about Infinova:

  • In 2009, the company generated about $57 Million revenue
  • Over the last 3 years, annual growth rate has been in the range of 12% to 18%
  • 2010 growth rate looks to be in the same range (review the Financial Prospectus in Chinese)
  • For surveillance manufacturer standards, Infinova is a moderately sized company, bigger than most earlier stage IP companies but smaller than, for example, Dedicated Micros, IndigoVision, March Networks, Mobotix, etc.)
  • Growth rate is in-between analog incumbents (0-10%) and new IP entrants (25%+)
  • Funding was raised in the Shenzhen China stock market

Now let's examine the company's positioning (which is different than many Asian companies):

  • Infinova focuses on relatively complex, larger scale projects (such as fiber optics and switching products). They are not a 'budget' nor 'SMB' supplier.
  • Infinova primarily sells under their own brand. Infinova's says they have a very small OEM business and that they prefer branded sales. They say they are not looking to grow their OEM business.
  • Infinova does not and has no plans to be an integrator / general contractor in China (unlike Hikvision and CSST which have large operations in this area). Their slogan/moto is actually 'The Integrator's Manufacturer'.
  • Infinova is heavily focused on International expansion and presence (e.g., the corporate headquarters are in the US)
  • The $300 Million raised is being retained by Infinova and will be used to grow the company. Infinova is looking to accelerate sales growth through a combination of channel growth, product development and acquisition.

This is a lot of money, a big opportunity for Infinova and an interesting sign for the market. We see 2 main areas for consideration:

Warchest of $300 Million 

Infinova now has a massive $300 Million 'warchest'. This is an enormous amount of cash for the surveillance industry. For sake of comparison, 'big' late stage VC investments in surveillance are about $15 to $25 Million (e.g., 3VR, Pivot3). With $300 Million, Infinova could pay cash for any number of US independent surveillance companies (note: I am not claiming they will, it's just financially feasible).

Infinova now has a major tactical advantage against almost all of their competitors. It will be very interesting to see what they do with the money.

Chinese Stock Market Valuations

A key element in the fund raising and a dynamic that goes beyond Infinova are the valuations of IPOs in the Chinese Stock Market. For Western standards, a 20x Price to Revenue ratio is astronomical (that's Facebook level). However, both Infinova and Hikvision have both IPOed in the last 12 months at these levels (e.g., Hikvision's valuation is 7x Axis's at roughly the same revenues as Axis).

We cannot rationally justify such a variance in valuation (the implicit CAGR needed to justify this on a DCF has to be over 40%). It seem, to us, to be unsustainable and a bubble in the making. However, even if the valuations are not theoretically 'correct', if the valuation levels hold for a number of years, the impact could still be significant.

  • Will we see more Chinese companies take advantage of this extremely favorable IPO market?
  • Will this provide them a significant advantage in competing and expanding with global surveillance players?

This may develop into one of the most interesting trends in the surveillance market.

[Update 2012: Infinova's stock price has dropped more than 75% since IPOing - not surprising.]

Comments : PRO Members only. Login. or Join.

Related Reports

Hikvision Wins Chinese Government Forced Facial Recognition Project Across 967 Mosques on Jul 16, 2018
Hikvision has won a Chinese government tender which requires that facial recognition cameras be set up at the entrance of every single mosque...
US Tariffs Hit China Video Surveillance on Jul 13, 2018
Chinese video surveillance products avoided tariffs for the first two rounds. Now, in the third round, many video surveillance products will be...
Hikvision Fights Ban - Claims 'Red Scare', Hires 14 Term Ex-Congressman on Jul 11, 2018
Hikvision is fighting back against the House Bill Ban of their products. Hikvision has hired one of the biggest lobbying firms, led by a 14 term...
Arlo IPO Filing Reveals Key Financial and Competitive Details on Jul 09, 2018
Arlo is going to IPO at a projected valuation greater than Axis. Now, Arlo has released their 175-page Form S1 Registration Statement for its...
2018 Mid-Year Surveillance Industry Guide on Jun 28, 2018
2018 has been an explosive year for the video surveillance industry, with the industry becoming a global political issue, with the expansion of...
China Public Video Surveillance Guide: From Skynet to Sharp Eyes on Jun 14, 2018
China is expanding its video surveillance network to achieve “100%” nationwide coverage by 2020, including facial recognition capabilities and a...
Debating Relevance of China Hacking US Navy Plans on Jun 11, 2018
"Chinese government hackers have compromised the computers of a Navy contractor, stealing massive amounts of highly sensitive data related to...
Remove Dahua and Hikvision Gov Installs Required By US House Bill Ban on Jun 06, 2018
The final released US House Bill HR 5515 verifies that it not only prohibits the purchasing of Dahua and Hikvision products, it requires removing...
Hikvision Chairman Affirms China Communist Party Leadership, Celebrates Marx's Birthday on Jun 06, 2018
At a recent event commemorating Karl Marx’s 200th birthday, Hikvision Chairman Chen Zongnian stressed the importance of strictly adhering to the...
Dahua Products Are Not GDPR Compliant, No Products Can Be on May 29, 2018
Dahua products are neither GDPR-compliant nor certified, contrary to their marketing. The reason is that no products can be, as the EU does not...

Most Recent Industry Reports

Security Sales Course Summer 2018 on Jul 13, 2018
Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security Sales Course Summer 2018 This...
US Tariffs Hit China Video Surveillance on Jul 13, 2018
Chinese video surveillance products avoided tariffs for the first two rounds. Now, in the third round, many video surveillance products will be...
Last Chance - July 2018 IP Networking Course on Jul 12, 2018
Registration ends today, Thursday. Register now. This is the only networking course designed specifically for video surveillance...
4 Most Difficult Camera Installs (Statistics) on Jul 12, 2018
Heavy housings, cumbersome brackets, heavy ladders required, and tricky field of view requirements will cause difficulties no matter the camera...
Axis Perimeter Defender Video Analytics Tested on Jul 12, 2018
Axis 'high security' video analytics offering is Perimeter Defender, OEMed / developed with Digital Barriers. But how good is Perimeter Defender?...
Hikvision Fights Ban - Claims 'Red Scare', Hires 14 Term Ex-Congressman on Jul 11, 2018
Hikvision is fighting back against the House Bill Ban of their products. Hikvision has hired one of the biggest lobbying firms, led by a 14 term...
Arecont Acquisition By Costar on Jul 11, 2018
Arecont Vision acquisition by Costar Technologies has been approved by the court, concluding the bankruptcy process triggered by Arecont's...
Amazon Ring Partners With Rapid Response For $10 Monitoring on Jul 10, 2018
Amazon's Ring alarm system is using Rapid Response for monitoring, IPVM has confirmed in our testing. Amazon is arguably the most feared new...
SIA Lobbyists Working On House Bill Ban of Dahua and Hikvision on Jul 10, 2018
While SIA is most known for ISC West, SIA maintains the industry's most significant lobbying organization to influence US government action. Last...
Eastern and SavvyTech Merge, Form ENS, Targets ADI on Jul 09, 2018
ADI, ENS is coming for you. Or, at least, they hope. Two US distributors, NY based EasternCCTV and California based SavvyTech have merged, to...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact