Vectron Systems AG

Vectron Systems AG
Investment thesis
Vectron Systems AG, headquarted in Muenster, is a leading provider of
intelligent POS systems for the networking of branch shops. The company
specializes in the dual platform strategy which allows Vectron to deliver software
and hardware from one single source. Along with intelligent POS Systems in
various sizes and product categories, the company´s product range comprises
communication software as well as large variety of peripherals such as printers,
scales and vending machines etc. With an installation basis of more than 100,000
POS systems all over the world, Vectron belongs to the "Top 10" of the European
manufacturers and is market leader in the German catering trade and bakery
industry. Overall, Vectron is technology leader and brings almost two decades of
experience to the development of intelligent POS systems.
Business model - In our opinion Vectron has meanwhile established an
attractive business model which is superior in many respects as it enables to
remain highly innovative while keeping at the same time manufacturing and
distribution expenses on a favourable level.
The focal point in Vectron´s business model is its dual platform strategy which
allows the company to pursue a cross-industry and a cross-system strategy instead
of focusing on one industrial segment. Moreover, Vectron´s manufacturing process
is based on a “built-to-order” approach which provides the company with the
flexibility to react faster on technological shifts by keeping at the same time
financial resources tied in inventories at a favourable level. Besides, the company
commercialises its products by means of an indirect distribution channel which has
the advantage of providing a broad customer access by keeping at the same time
the costs per customer contact on a relatively low level.
Market positioning – We expect Vectron to benefit from the ongoing squeezeout
of the small regional operators in its underlying market.
The market for POS systems is characterized by a high level of fragmentation and
market saturation in developed countries. Apart from few international players, the
underlying market is mainly dominated by a large number of small regional
providers. However, since demand has become more sophisticated many of the
small operators meanwhile face the problem to deliver technologically appropriate
products to address the increasing demand. In absence of major players in its main
customer segment of small-and medium sized enterprises (SMEs), Vectron as a
premium manufacturer with sound financial background is in a favourable position
to benefit from the consolidation of its underlying market.
Strategy – Given the market saturation and fragmentation in its underlying
market, we consider Vectron´s multi-pronged strategy as promising.
Vectron embarked on a multi-pronged strategy to expand and diversify its customer
base and product portfolio, fully capture international business opportunities and
accelerate long-term growth. Vectron intends to tap with its product portfolio new
niche segments and price categories which have been neglected by the company
in the past. New innovations as well as technologically improved versions of its
existing products will attract not only new customers, but also create sufficient
incentives for existing customer to replace their “old” systems. The company has
already added mobile and hybrid devices to its products and intends to renew its
entire portfolio of stationary POS systems. Along with higher revenues in its
existing markets, the company expects a significant revenue contribution from its
international business activities. Vectron pursues a pan-European expansion
strategy and aims to become a leading European market player in the mid-term.
www.cbseydlerresearch.ag
A leading provider of
intelligent POS
systems
Attractive business
model
Vectron is in a favourable
position to benefit
from the squeeze-out
of small players
Promising strategy
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