Internet of Things

Internet of Things: DBSV issued a regional report on the “Internet of things” (IoT), guiding that IoT will revolutionise business like how the internet did in the 1990s.

IoT is expected to lead the innovation for the creation of smart, connected products, which will enable vendors to track their products and maintain relationships with their clients even after the completion of a sale. This will enable companies to launch newer services to target users and generate recurring revenue streams.

The house expects Singapore and South Korea to be amongst the leading cities to adopt IoT in Asia, with Singapore expected to leverage on its Smart Nation program to tackle challenges faced in the healthcare, transport and utilities segment. China similarly has plans to build 202 smart cities, as the country becomes more urbanised.

Some Asian enterprises meanwhile have been found to be ahead of its US peers in adopting IoT, with companies like Samsung and LG targeting for 90% of their products to be IoT ready by 2017.

Going forward, the broker is guiding for IoT services to make up for over 80% of revenue in the IoT value chain, with businesses expected to allocate more capital towards building up IoT services infrastructure.

Potential industries that will benefit from this trend could include the Telco sector, as most IoT data is expected to take place over Bluetooth or Wi-Fi. Other opportunities will include the ability to provide industry specific and security solutions and cloud infrastructure.

Key companies with exposure to the IoT theme are: ST Engineering (Buy: TP $3.60), Keppel DC REIT (Buy: TP $1.14), 800 Super (N/R), Vicom (N/R), Waison (Buy: TP HK$12.50), Kingdee (Buy: TP HK$3.80) and ZTE (Buy: TP HK$24.00).