Coquitlam-headquartered Cantronic Systems Inc. (TSX-V:CTS) more than quadrupled its annual revenue due to organic growth and revenue from its acquisitions in China.
The developer of infrared imaging and night vision closed-circuit TV cameras reported revenue of $15.7 million for the year ending January 31, 2010, up from $3.7 million in the same period a year ago.
James Zahn, Cantronic’s president and CEO said in an interview that about 57% of the company’s revenue growth last year came from its acquisition of Shenzhen Huanghe Digital Technology Co. Ltd. last June and AVINFO in March 2009. Revenue from its North American operations also doubled last year due to organic growth.
While the company will continue developing the North American market, Zahn said the company continues to focus on the Chinese market. He said the video surveillance market in China is growing 40% to 50% a year compared to 8% to 10% growth in North America.
This month, it plans to close its acquisition of Actiontop Electronics, which designs and manufacturers high-speed video surveillance products in Shenzhen, China, including a variety of dome-cameras.
It also plans to get into the systems installation business in China, where the company will install the entire surveillance system rather than just sell the various components to contractors. “Acting as a contractor, the competition is less,” Zahn said. “We have already gotten the key license from the central government and have succeeded in completing some projects.”
The challenge in China, however, is being able to keep up with demand. Zahn noted he has already turned down large contracts because the working capital requirements are more than the company is currently able to handle. That may ease by November, when the company’s wholly-owned subsidiary in China will be better able to access financing from China’s state-owned banks.
“Typically in China, banks will only start lending you money if you have two years of operating history. Our subsidiary was incorporated in November 2008, so we should be able to start doing financing after November 2010.
“It will certainly be important for us to fund our growth.”