NetPosa's Terrible Situation Worsens

By: Charles Rollet, Published on May 19, 2020

NetPosa is fighting for its existence as the situation worsens for what was once the PRC's largest VMS provider. The firm is being investigated by Chinese securities regulators, has suffered another 90% sales drop, and has seen its embattled and debt-ridden founder resign from the board of directors.

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Last year, NetPosa was already under crisis for its many financial and legal issues. In this note, we examine the latest developments for this troubled firm, including:

  • NetPosa Background: Already Under Crisis
  • 2019 And Q1 2020 Report Dismal
  • Lower Government Spending, Strong Competition
  • Police Provider Subsidiaries Hit Hard
  • CSRC Investigation Of Liu Guang, NetPosa Announced
  • Investigation Impact Examined
  • Stock Price Mystery
  • Bad Look For Sichuan SASAC
  • NetPosa Response to Crisis

******* ******* ***** ******

** "****** ** *******" (******* ****), **** reported ***** *** ******* was ******** ******* ****** bills **** *** ****** local ********** *******, **** NetPosa's ***** ******** ********** standing ****** **** *** annual ******* ** $**** in ****, ***** *** made ** *****'* ******* VMS ******** ** *** time.

*******'**** *** ***** *** also ***** ** **** been ******** ****** ** debt ** *** *******'* name, ********* ** ******** from ********* *** *** shares ******* ******, * problem**** ********** ***** *** Sichuan ********** ********** *** bought * *********** ***** in *** ****.

* ***** *****, **** reported ***** **********'* ** **** ********* **** **** **%*** **** ** ********* ***** *** ********** *** **** *******.

2019 *** ** **** ****** ******

** ******* ******* ******** its**** ****** ******,******* * ****** ********* situation. *** **** *** ***** of **** $*** **** year, **** **% **** the **** ******, *** ended ** ****** $**** (figures ***** *** ** Chinese ****):

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* ***** ******* ** the ****** ***** *** to ** ******* ***: of *** $*** ******* in ****** ***** ******* had ** *** *** of **** **** **** than *** *********, $*** million **** **********'*** *****'*.*., ************* *** **** counted ** ********.

***** ****, ****** ******** further. *******'* ***** **** 92% ** **** $*.** and *** **** ****** a **** ** $**.**. Its ********* ****** ***** decreased **** ******** (*%) to $*** *******.

***********: ***** ********** ********, New ***********

******* **** ***** **** figures **** ******** ** "major ******* ** *** security ********," ******* ********* local ********** ********* ******* projects ** ** ******* or **** *******, ** a******** ** ************:

*** ******** ****** ** 2019 ** *** ** good ** ******** [...] S******* ******** *** ********: security ******** ** ******** regions *** ******* ** bidding ** **************, *** the **** ** ********** payments *** ****** **** significantly. ******* ******* ** required, *** *** ******* period ** **** ** long ** *-* ***** [...] *** ** *** decrease ** ********** ****** of ***** ***********, **** planned ******** ******** **** been ********* ** **** terminated, *** *** **** of ******* *** ********* projects ** ****** **** expected.

** ** **** **** PRC ********** ******** ** video ************ *** ****** in ****** *****. *** example, ********* ****************** **** ************* **** *** "************ demand **** *** ****** [government] ******** ******** *** fewer *** ********" ***** Hikvision's ********** ***** **** just*% ** $*.* *******. However, *****'* ** ******** of * ***********, **%+ style **** *********** ** NetPosa.

******** ** ********** ***** were *** *** **** factor ******* ******: ** also ******* ** *** losses ***** *********** **** ******* (China's ******), ******, *** "AI ********" **** ****** and *********:

*** ******** ***** ** technology ** *** ******* to ***** ** *** security ********. ***** ******* giants **** ** ******* and ******, **** ** unicorns, *** ******** *** focusing ** *** ******** industry, ***** *** *********** competition

Police ******** ************ *** ****

******* **** **** **** environment *** *** ************ especially ****,***********************,**** *** ****** ***** surveillance ******** *********.

*********, * ******** ********, went **** ****** ****** $10 ******* ** ******* in **** ** ****** $50 ******* ** ****** in ****. ***********, ***** focuses ** ***** ******* analysis, **** $*.* ******* in ******* ** **** but **** $**.* ******* in ****:

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*** ********* *** ***** like *****, *********, *******, Huawei, ******, *** ********* is *** **** ****** relations **** *** ******/**********, but **** ***** ******* sector *****, ********* ******* lacks.

**** ************* *********, ***** Resigns

** ***** **, ******* disclosed **** *** ******* Liu ***** *** *** company ****** **** ***** investigated ** ******** ********** ********** ********* (CSRC):

**. *** *****, *** company's ****** *********** *********** and ******* ********, ******** the "***** ********** ********** Commission ********** ******" (******* Investigation ****** **. *******), due ** *** ******* ’s ******* *********** ********** violation ** **** *** regulations [...] *** ******* and **. *** ***** will ******** ********* **** the **** ** *** China ********** ********** ********** and ********* *** ******** comply **** ********** ************ to ******* *********** ********** obligations.

*** **** *****, *** Guang******** **** *******'* ***** of *********. ******** ***** *** no ***********, *** ***** reported **** *** ******* to *** *************'* ************.

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CSRC ** *******; ***** ** ******* ** ************ *****

*** ****, ** *********, did *** ******** ******* what ** *** ************* Guang *** ******* ****. However, *** *********** *** the ******** ************ ***** Liu ***** ******** **** year.

** ************, ***** *** '*******' his ******* ****** *** cash. ** *******'* ***** price ********, ** ****** cash ** ***** *** pledges. ** *** **** cash, ** ******** ******** loans ** *******'* **** without ****** ***** *************. Guang **** ******** **** in **** ****** ** pay **** *******'* ******** accounts ********** *******.

** * ****** ** these *****, ***** *** sued ** *** **** creditors, *** *** ****** 20% ***** ** ******* was ******. ** *** time, ***** ***** ******* a ******** $*** *******, of ***** **** $** million *** **** **** so ***. **** ***** not **** ** ****** from ******* ** ******* where **** ****** ****** as ** *****.

Investigation ****** ********

* **** ************* ** not *********** *****. *********'* CEO *** ********** ** *** **** year,*** ***** *** **** * warning ********* ******* ****.

*******, ******* ** ** far ***** ********* ***** than *********, *** *** potential ***** *** *** investigation (**** ****** *** unauthorized *****) ** **** serious **** *** ********* (undisclosed ***** *****).

Bad **** *** ******* *****

*** **** ******** **** drew ******** **** *******'* SASAC (*** ********** ************ overseeing *****-***** *********) *** buying * *********** ***** of ******* **** ****. PRC ********* ***** **** commented ** ****,**** ******"****'* ***** **** ******* SASAC?" *** ****** ** "stepped ** * ****".

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******, ******* ***** ****** a *********** **% ***** in ******* ** *** 2019 ** *** ***** of $*.** *** *****, while ******* ********* ****** at ******** **** **** 40 *****, * -**% return.

** *** ****, ******* SASAC's ******** *** **** as * ******** ********** trying ** ******* * homegrown **** ******** **** had ****** ** ***** times *** ********** * bullish **** *** *******.

******* ***** *************

*******'* ***** ***** *** market ************** ** ********, to *** *** *****. Despite *** ******* ********, NetPosa ********* *** * market ************** ** ******$*** ******* (*** *.** billion *** *********** *****):

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**** ** ******** *** a ******* **** ********* 2019 ******** ** **** $51 *******, *** ***** its **** ***** ******. Netposa ** ******* ** nearly *** *******, ***** is **** ********** **** companies ********** ******* **%, instead ** *******'* ****** 90% *******.

*** ******* ********* **** outlet************** ***** *******'* *********** and **** ********** **** investors, ** "*** ** delisted" **** *** ******** Stock ********. *******, ** far, ***** ** ** sign ** **** *********.

******* ******** ** ******

******* **** ** ** responding ** *** **** cash **** ******* **** various *****:

  • ******* ** ***** **** $43 ******* *** *** sale ** *** ********* subsidiary ***** *********** ***** ************ ****** **** ****** early ** ******* *** rights ** *** **** on *** **** ******. So ***, **** **** has *** ********* ***.
  • ********* ********* *% ***** ** owns ** * ***** hedge ****,*** *****,** ********** ** ***** to ****** * $** million ****.

***** **** ** ****, but **'* *** ***** to ** *** **** can **** ** *** the *******'* *********** ********, chiefly * **** ** paying *********.

******* ** ********

******* *** *** ******* to ****'* ******** ******** for *******.

******* ****

***** *******'* ********* ******** are ***** **** *** own ********* *******, ** are *** ***** ***** how *******'* ******** ******* the ******* ***** ************ market. *******, **** ***** video ************ ********* *** challenged ** ******* ******* including **** ******** *** impact ** *********** (****** Netposa ******** ******* ******* that).

**** **** ** ********** to ***** ** ******* Netposa ** **** ** an ******* ** * sign ** *********** ******* for *** **** ****-****** 2010s ***** ***** ************ market.

Comments (6)

*******, **** *********!

*** ***** * **** fascinating ** *** ***** price. ** **** **** noticed **** *** ********** for ***** ***** ************ companies **** *** ****** than ***-***** ********* **** similar ******* *** *******. A *** ***** ***, a ********** **** ***** be **** ***** *** projected ******, *.*. *** valuation *** **** '****' but ******, *.*., *** company ********* ******* ** 30% ******** *** * years, **** *******'* ******* will ******* *********. ***** this **** *** **** true *** **** ***** it ****.

***, **** * ******* like *******, **'* **** to ******* ******** ***** to **** *********. ****** on *** ************, * company **** *** $** million ** *******, ******** 80%, ***** ****** $*** million ***** ** ****** worth ******** - ** would ** **** ** justify ****** $** ******* for **** * *******, compared ** *******'* ****** market *** ** ~$*** million.

** ** ***** ********* just **** ************ **** valuations ************ **?

*** **** ***** ***** stake ** ***********? ****'* got ** ** ** least ***** $*****... ***

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******: ***** ********** *** **** announced **************** ******* *** ***** rights ******.

*********** **** $** **** Netposa... **'* ************ **** can ***** **** **** money **** ****** ********* with ** ********* ** concerns ** *** *** shenanigans **** ******* ** include ****** *********. **** CEO ** ****!!!

******: *** ******** ***** Exchange*** ****** * "****** condemnation"** ******* *** *** massive ****** ***** *** non-disclosures, *******:

*** ***** ********** ****** to ******* *** ****** procedures *** *********** ********** obligations ** * ****** manner [...] ***** ****** were *** ********* ** a ****** ******.

**** ****** ******* ** legal ******, ** ********* as **** ** * warning ** *********. ******* is ***** ***** ************ by *** ****, ***** does **** *** *********** capacity.

************* *****,* **** *********** ********** with *** ***** ********,******** ****** *** **** ********** gives ******* ** ************** penalty, ********* **** ****** NetPosa's ****** ****** * certain ****** ** **** may ** ******** ** compensation.

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