Anxin-China Senior Vice President Mr. Gordon Li told investors that the firm's Intelligent Safety Systems (ISS) -- software, hardware and equipment sold to enterprises or governments for the purposes of ensuring industrial or public safety -- offer very promising prospects going forward. Photos: Aries Consulting

ANXIN-CHINA HOLDINGS Ltd (HK: 1149) is moving into ISS (Intelligent Safety System) technologies which help keep industrial venues safe and business secrets secure.

But it’s no secret that Hong Kong-listed Anxin-China has been expanding rapidly of late, and a company official told investors.

Anxin-China designs and manufactures system hardware and application software for installation of intelligent surveillance disaster (ISD) alert and rescue coordination systems in the PRC.

Mainland China has struggled with safety issues at is thousands of mines scattered across the country, and Anxin-China determined to make changes on this front.

Good Fences Make Good Neighbors: So do cameras. Anxin-China is betting on higher security requirements from China's growing urban population to boost sales.  Photo: Andrew Vanburen

Anxin-China started its growth spurt with its coal-mine ISD systems, but it quickly sensed that multi-industry ISD applications have an even brighter future.

That is very good news for Anxin-China as all these other industries' product needs translate into millions and billions of surveillance points.

For the uninitiated, here is a briefer on the differences between ISD and ISS technology.

ISD is a dedicated communication platform that collects, processes, transmits, analyses and finally displays sensor data in a government monitoring center. In the past, data acquired by sensors are never shared between one factory and the government, causing some issues between the government and factories. Now with the help of ISD systems, the government can directly monitor the status of a factory on a REAL-TIME basis, greatly reducing the possibility of production hazards.

ISS refers to smart hardware/software used in the safety business. For now Anxin-China has been focusing on the development of smart video surveillance systems, based on core algorithms Anxin acquired from Israel. In current stages, Anxin is determined to turn traditional PASSIVE cameras into cutting edge ACTIVE cameras that can effectively collecting useful information.

"Aside from coal-mine industry safety and security products, the PRC also wants to make sure that all other industries are also reasonably free from hazards during their workaday production processes. Despite the central government already having expressed a desire to establish province/city level ISD systems by 2015, the current penetration rate for such products is still less than 1%, and we still don’t see any real competitors while expanding our territory.

“Based on this, we believe the multi-Industry ISD business could still maintain a high speed of growth over the next few years,” Anxin-China Senior Vice President Mr. Gordon Li told investors at the Aries Consulting-sponsored “Braving the Waves: China Investment Strategies 2013” conference last week.

anxin_prodsKeeping an eye on things: Some of Anxin-China's monitoring products.     Photos: CompanyISD systems use a variety of networking technologies, according to on-the-ground regional conditions across China, to allow local government authorities the ability to safeguard workers in the mining industry via early-warning systems and site surveillance.

And with the cutting-edge ISD technologies, Anxin-China was in the catbird seat in terms of providing not only early warning and rescue solutions software and hardware to the nation’s miners, but also was increasingly committed to providing state of the art business and commercial security products to grow along with the country’s astounding economic expansion.

Intelligent Safety Systems (ISS) refers to software, hardware and equipment, e.g. surveillance cameras, CCTVs and sensors, sold to enterprises or governments for the purposes of ensuring industrial or public safety.

“For now, we focus on designing and manufacturing of camera and CCTV systems with state-of-the-art video analysis capabilities.

“Our advanced technology transforms traditional surveillance cameras from PASSIVE information collecting tools into ACTIVE information gathering and filtering tools.”

Anxin-China Senior VP Mr. Gordon Li said ISS is something shareholders can look to with confidence.
Photo Aries Consulting

“Our advanced technology enables a video surveillance system to record only useful information, thus avoiding massive quantity of meaningless footage.

“We expect ISS will become another significant growth driver in due course.”

The Hong Kong-listed firm’s recent financial performance was beginning to show uplift from the group’s business expansion into new areas like ISS.

For the six months to June 2012, Group operating revenue rose 45.4% to 406 million hkd while net profit was 32.2% higher at 298 million.

Gross profit surged 45.7% to363 million hkd with margins up 0.2 percentage point to 89.5%.

One of the main reasons for the strong interim performance was the addition of a new monitoring center with 5,432 surveillance points.

As of end-June 2012, the Group operated 31 monitoring centers -- up from 30 at end-2011 – and 18,434 surveillance points(end-2011: 13,002).

“We are the first and largest comprehensive ISD systems solutions and services provider in the country with our ISD systems based on China’s unique national conditions.

“Anxin-China is currently the sole ISD systems provider able to offer effective services to relevant government departments, and this provides Anxin-China with a very competitive industry position and sets a high standard in terms of barriers to entry,” Mr. Li added.

He said that not only was the market itself demanding more safety and security equipment as software as mines and other industries paid closer attention to both the well-being of their workers and the integrity of commercial and trade secrets.

But the state leadership itself was pushing sales across the sector via legislation and stimulus measures.

“As part of China’s 12th Five-year Plan, the Central Government has renewed its determination to upgrade safety conditions within the nation’s coal mines.

“Over the next 10-15 years, the leadership in Beijing plans to install one million ISD surveillance points in a whole variety of potentially hazardous mine venues,” he said.

Mr. Li added that stipulations within the 12th Five-year Plan mandate that local authorities spend at least 5% of their budgets on upgrading technological systems that would enhance worker safety, and this presents tremendous growth opportunities for ISD system sales.

"We are one of the first movers and currently the undisputed leader in the ISD industry. And as ISD systems involve national security, we believe the possibility of a foreign competitor entering the marketplace is very remote."


Anxin-China shares are currently trading near 52-week highs

Unique to China, ISD systems involve the setting up of a dedicated communications platform using leading edge Internet-of-things technologies, through which all the safety parameters obtained via on-site electronic sensors located at surveillance points (e.g.: gas content in a coal mine, oil pressure in an oil depot, etc) are transmitted to the Local Government Monitoring Centre via the Internet.

The Local Government Monitoring Centre monitors such information and data on a real-time basis and should any parameter exceed the pre-set safety limit, the system automatically sends out warning signals to different interested parties, including the relevant government departments.

Anxin recently 1.90 hkd

“Not only does the system help local governments in supervising enterprises to take precautionary measures to avoid industrial disasters, but it also assists different government parties in devising the optimal rescue co-ordination and contingency measures after the occurrence of an accident in order to minimize casualties, including alerting the local police/fire departments, paramedics or hospitals,” Mr. Li said.

And Anxin-China recently took on a new partnership which has the potential to open a lot more doors to government contracts.

“Last year Israeli private equity firm Infinity entered into a strategic partnership with Anxin whereby Infinity will, leveraging upon its reputation and local connections, endorse and market Anxin’s ISD products to various local governments in China,” Mr. Li added.

Infinity has strong connections with many provincial governments in China and is jointly running more than 10 yuan-denominated private equity funds with various local governments in China.

Mr. Li also said that environmental protection systems and public safety monitoring apparatus also offer very promising growth opportunities for Anxin-China.

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