HONG KONG -- Shares of Chinese payment terminal maker PAX Global Technology are set to resume trading on Monday after crashing last week amid media reports of a law enforcement task force raid on its warehouse and office in Jacksonville, Florida.
The stock dived 43.3% in the opening 86 minutes of trading last Wednesday before going into suspension as the Shenzhen-based company prepared to update shareholders about the raid the previous day by officers from the U.S. Federal Bureau of Investigation, Customs and Border Protection and other agencies.
PAX on Friday evening requested the resumption of trading, saying that normal operations had resumed after officers seized "certain items" and interviewed employees of its U.S. subsidiary. It said it was "not aware of any charge having been filed against the group" and that it had not been told the purpose of the enforcement action.
"Based on the facts and circumstances currently known, the company does not envisage any material financial impact on the group," it said, though it acknowledged that British payment processing company Worldpay and FIS, its Jacksonville-based parent company, had halted deployment of PAX terminals in both the U.S. and U.K. in early October.
PAX, which produces the small devices used in stores for credit and debit card purchases, said the two companies accounted for only 0.3%, or 14 million Hong Kong dollars ($1.8 million) of its revenue last year.
PAX indicated that the two companies had raised questions about what they saw as unusual data transmissions from its terminals. They also queried some of the destinations where the data went.
PAX, though, said that it had provided explanations and had "properly addressed the enquiries" from FIS and Worldpay, insisting its terminals connect only with identified servers.
"As far as the board is aware based on due enquiries, as at the date of this announcement, there has neither been any reported cyberattack incidents nor cyberattack complaints, including any breach of security protocols, against PAX products and services anywhere in the world," it said in response to a report by U.S. cybersecurity news site KrebsOnSecurity alleging that the company is under investigation due to signs its terminals were used in cyberattacks.
The company said its terminals are complaint with industry standards and all relevant laws and regulations and that the security of its devices is subject to third-party testing.
It is not clear whether investors will be satisfied with PAX's response.
Douglas Kim, a former technology analyst with BNP Paribas who publishes on the SmartKarma platform, said he believes PAX's legal troubles are likely just beginning, though he noted the U.S. is a relatively small market for the company.
"It is highly unlikely that this issue will get all cleared by the end of this year," he said in a research note on Oct. 28. "While this legal fight gets prolonged, this will likely result in many existing customers around the world stop using the company's point-of-sale terminals and new potential customers using other suppliers."
However, Gabriel Castro, a fund manager with Spain's Singular Asset Management, tweeted on Saturday his belief the company was handling the crisis well.
"I've checked with other source (not management) and at least from now, the business has not been impacted, confirming management statement," wrote Castro, who had said last week that PAX had a 4.2% weighting in his fund and that he had not sold shares during the plunge.
PAX was the top payment terminal seller globally last year, according to a report published on Oct. 20 by Counterpoint Research, with 11% of the world market.
"PAX, with its robust supply chain, manufacturing facilities and R&D capabilities, will remain in a leading position in the global POS (point-of-sale) market, driven by a strong presence across China and Latin America," Counterpoint said. It identified PAX's closest rival as fellow Shenzhen producer New POS Technology.