I bought some GNG recently at 18p (price now up to 26p) given:

- excellent trading update giving a current year P/E of 8 or 9 on likely 3p-3.5p EPS
- 2.6p historic EPS to 31/3/06 and a historic P/E of 10
- contract wins announced post-IPO in June 2006
- 1.9m of net assets, with 820k of cash, against a 6.8m m/cap
- results to be announced 28th November following the trading update

Here's the trading update:
http://www.investegate.co.uk/Article.aspx?id=20061031080000P4198

I gather GNG's CEO and CHairman (both superb English speakers) will be over here next week to tour the City, give press interviews etc.

GNG intended to raise $7m at IPO, but raised only 500k due to terrible matket conditions at the time in June. Despite this they've now announced that they're almost going to meet the broker's estimates as calculated on raising the full $7m.

GNG should now be on course to make around 3p-3.5p EPS this year to March'07. This leaves them on a current year P/E of only around 8 or 9.

Heres their IPO RNS from 23rd June 2006 (the Board of Directors is extremely impressive):

http://www.investegate.co.uk/Article.aspx?id=20060623081500PF52B

This is what GNG do:
GEONG has established itself as one of the market leaders in the Peoples Republic of China in providing content management solution software products and related services for large enterprises. GEONG's flagship product range, the GEONG PortalAge series, is used by the top 5 Chinese banks and 12 out of the top 20 securities firms in China. It is an enterprise server software product which combines a number of optional business solution components and customisation modules that can be used to provide individual solutions for a range of industries including those that require real-time or time critical applications such as internet banking.

Note the wording a range of industries.

In slightly more detail, GNG has a 6.8m m/cap, with 26.12m shares in issue.

GNG made $1.28m post-tax profit for the year to 31/3/06. At $1.87 that's 685k, or 2.6p EPS, for a historic P/E of just 10.

The brokers forecast on IPO was for $1.89m post-tax profit this year to 31/3/07, or around 3.7p EPS, for a P/E of just 7.

And per the pro forma in the prospectus GNG had at 30/4/06 1.9m of net assets, including 820k of cash, against the current 6.8m m/cap. Thus the continuing business making a $1.28m historic profit after tax is valued at just 4.9m.

The prospectus noted that GNG are trading in line, and there's been some excellent announcements post-IPO at the end of June to indicate that things are continuing to go well:

July : a $350k contract win with Huawei-3Com, who employ more than 4,500 people worldwide:
http://www.investegate.co.uk/Article.aspx?id=20060724074128PFD9C

October : a $500k contract win with Air China:
http://www.investegate.co.uk/Article.aspx?id=20061018071237PC25A

In the same RNS, GNG stated that their solutions "are already being used by Shanghai Airlines and China Travel International and will allow us to gain a larger share in this fast growing sector."

October : core supplier status from IBM:
http://www.investegate.co.uk/Article.aspx?id=20061018071206PB237

November : new contract win with China's Bank of Communication (one of China's "Big Four" banks):
http://www.investegate.co.uk/Article.aspx?id=20061121070205P7788

The reason for the post-IPO fall is some of the pre-IPO $300,000 loan note holders from late 2005 turning their converted stock for a quick profit, and a complete lack of PR. GNG also raised less than they hoped for on IPO because they floated just after the FTSE had dropped calamitously from 6,100 in May to 5,600 - this of course also contributed to the artificial fall in the share price post-IPO.

Note also from the prospectus that 80.16% of the shareholders, including the directors, are locked in for from 6 months to a year, so there are only 5.2m shares in free float, or around 1m worth.

On a 6.8m m/cap, a company making 1m post-tax profit could have rather a long way to go imo. DYOR etc.

Corporate website : http://www.geong.com/Site/Home/EN

I checked this out yesterday and bought in as well.
Saw it as a constant gainer on ADVN.
No big major shareholders. Yet
Hemscott shows less than 5.2million shares unless my maths are wrong.

You add it up

Major ShareholdersShares in issue:26.1m1p Ords Name Amount % Holding
Pershing Keen Noms Ltd 18.01%
Weldong Wang 14.22%
Henry Hak-Yan Tse 13.61%
Jee Wah Miu 8.02%
Keen Eak Teo 6.40%
Bo Yuan 6.32%
ZhengHong Yang 6.32%
Hichens Harrison & Co PLC 3.83%
MinRen Guan 3.26%
Sai Chuen Au 3.20%
Keen Whye Lee 3.20%

Hi Rivaldo - thought I would join you here and add a few of my thoughts as regards GNG:

Seeing as the Company expects figures for the full year to 31 March 2007 to be
only marginally below current market expectations (my guess somewhere in the region of 3.5p EPS), then for next year they should easily make 4.5p EPS at least, which would place the share price at 45p on a PE of 10 (not forgetting of course that the stock-market is always forward looking).

Results shortly, which should help highlight and confirm what we are expecting. Confirmation is essential here seeing as these will be their first results since listing.

Looking very good here, and happy to be a holder.

Nice end of day close, with now the oppertunity to buy in at the placing price of 30p.

Hi affc21. Couldn't agree more. The broker forecast for next year is actually for 5.9p EPS, so at 29p the forward P/E is just 4.9.

Having raised less than they wanted at IPO due to the terrible spring markets GNG might not be able to achieve the full development and marketing of SmartBox as planned - but even so your 4.5p EPS shouldn't be unreasonable.

I'm looking forward to next Tuesday's results - the trading statement gives every reason for optimism.

Thanks Rivaldo. I added after your posting

Thanks for the info on this company. I am now in even though it took 15 minutes for my stockbroker to work my trade. Must be that this is an illiquid stock which bodes well if the results are good.

Kind regards
Raymond

Morning all!

Rivaldo, I have jumped in on this just now, persuaded to take a small speculative position by the apparently very good prospects. Many thanks for the tip.

BTW, nobody has yet posted today's news of yet another contract win:

Geong International Limited - New Contract Wins
24 November 2006

GEONG INTERNATIONAL LIMITED
NEW CONTRACT WINS

GEONG International Limited ('GEONG' or 'the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that
its wholly owned subsidiary, GEONG Business Networks Limited, has signed two
agreements with IBM Global Business Service ('IBM GBS') to provide its
PortalAge based solutions to Motorola China Electronics Ltd ('Motorola'). The
amount of the contracts total approximately US$153,000.

GEONG will assist IBM GBS to enhance and develop Motorola's Channel Management
platform in China.

Motorola was recently ranked number 6 in China's Top 500 Manufacturers List
published by the National Bureau of Statistics of China and was the only
foreign company that made its way into the top 10.

Wang Weidong, Chief Executive of GEONG, commented: 'We are delighted to be
working with Motorola China. Their addition to the list of blue chip clients we
work with is yet another positive step for GEONG.'

-ends-


Good luck to all.

Hi Rivaldo - my 4.5p EPS at least for next year is as stated - at least (ultra conservative), just stating that even if they were to earn only 4.5p P/S for next year they are still cheap. But personally I am expecting more.


And more news this morning (AFX version):

Geong unit Geong Business signs 2 contracts worth 153,000 usd with IBM in China
LONDON (AFX) - Software solutions provider Geong International Ltd said its
unit Geong Business Networks Ltd has signed two contracts worth 153,000 usd with
IBM Global Business Service (IBM GBS) to provide its PortalAge based solutions
to Motorola China Electronics Ltd.
The company said it will assist IBM GBS to enhance and develop Motorola's
channel management platform in China.

newsdesk@afxnews.com


And the blue chip client list gets even larger, this is very good news.

Morning all - a bit of a mark-down by the MM's this morning, by the looks of things. They must be trying to shake out some stock before the results. that's the only interpretation I can give to a 15% drop in the SP on turnover of a very piffling 72k shares.

Roll on a continuation of the upwards trend on results day tomorrow!

Hi Soul,

I welcomed your comments. I wondered what might be going on. Fingers crossed for tomorrow results. Only just bought on Friday on anticipation of a contiuing sp moving north.

Mr T, thanks for your feedback. I hope I'm right; it's just my best guess, but I can't think of any other reason for such a drop given the apparent level of anticipation about the forthcoming results, and the volume traded certainly doesn't warrant the value destruction involved. This kind of thing happens with very illiquid stocks - SOLA's SP has also been all over the place recently as the MM's try to stimulate some movement.

Best of luck, etc.

Just topped up - drop seems overdone on the selling.

AFFC, I'd join you if I had any liquid - may still give it some thought.

soul traders - GNG was probably due a small pullback in share price, considering the rise in the share price of late. But even so today's pullback seemed a bit harsh, so took advantage of it.

Agreed - with the SP doubling in less than month, you could expect some kind of profit-taking. However, the timing and nature seemed all wrong - anyone who bought on the basis of the figures quoted in this thread is certainly not going to be selling now unless very overweight in the stock.

Agreed. I am not selling.

SP recovering some of the morning's losses:

GNG Bid: 28p Offer: 30p Change: -3

Well done, AFFC, looks as if you topped up at a good time.

What S.P. did you get in at Soul? wondering how potentially high these could go, are the results out yet?

I got in at about 32.25p on Friday, so you could beat that if you bought today.

Results due out tomorrow. How high they could go is anyone's guess, but see the earlier posts on this thread for some predictions.

Looks good to me, but could be risky, and of course PDYOR.

Well the shares are back to 26p which is where I came in.
Contract wins and DELOITTE'S FASTEST 50CHINA awards and they still drop, despite a cheerful set of results.
This another case of China's Griffin Mining which I sat on at 28p for 18 months until
production really took off.

Morning all,

Can't pretend I'm not a little disappointed by today's drop, but the small-cap market has been having a torrid time - almost all of my stocks are down, so GNG could only have escaped if it had turned in some really stellar results.

I'm inclined to gree with you, Peter, but I think we can also take a certain amount of comfort from the statement that GNG's revenues are heavily weighted towards the second half. Certainly they are continuning to win contracts for PortalAge and SmartBox, which only really got going in the last half of the interim financial period, also ought to start making its presence felt in the top line in due course.

Could be a bargain buy for those who like a bit of risk. I'm holding and watching.

All IMO, fingers crossed etc.

Hi SOUL

I totally agree with you Soul. Almost all of my stocks look sick today.
I am in for the long term but somewhat disappointed based on the results and short term potential having bought in at 31; only slightly less than you.

Morning, Mr. Turbot.

I am wondering what the effect of a weakening US dollar might be. May not be too bad as GNG's core market is actually China and should therefore see more revenue dollars per renminbi, but the reporting in USD and conversion to Sterling for the earnings figures could be another thing.

so current S.P. could be a bit of a bargain for 1st time purchase?

"looks forward to the future with cautious optimism"
couldn't they have skipped on the "Cautious"?

Morning folks, disappointed in the share price reaction to the results this morning, but can see 3 reasons for the fall in the share price,
1: Traders taking profits.
2: Down day on the markets, Chinese stocks in particular have taken a hit.
3: At first glance EPS of 1c (US) looks disappointing, so a few investors may have took fright and sold, without realising that earnings are heavily weighted to the second half of the financial year and in fact they have started this period strongly (as they have themselves stated this morning, under Trading Outlook within the results).


In fact EPS would have been higher if it was not for the one of costs of the AIM admission etc.

Plus with the contract wins (RNS's) that have been released to-date, will help boost the second half earnings.

Then of course not forgetting the Trading Update:
"the Company expects figures for the full year to 31 March 2007 to be
only marginally below current market expectations, which were based upon a much
higher level of funding being achieved in June".
(since pre IPO expectations were for 3.7p EPS for the full year, so in my view somewhere around 3.5p EPS may be achievable for the full year).

Market cap this morning is only 7.1 @ 27p mid price, even with all those blue chip clients on their books.


So all in all, I can see more value in GNG, and intend holding for the long-term.

Dead right - good point about the profit-taking - those who have almost doubled their money will doubtless be plesed to take out some profits.

Adjusted operating profit is actually up, to $382k from $294k, if you strip out AIM admission costs and amortisation of intangibles. And that's before you account for the additional SmartBox marketing costs this H1.

But just the same performance in this year's H2 as last year, with no growth at all, would give 2.7p EPS before even stripping out AIM costs etc...

Interesting to note GNG have 2m of net assets, almost all tangible, per the Balance Sheet. Excellent asset backing for a 7.5m m/cap company.

How many 7m m/cap companies can say this about their customer list?

"During the period GEONG won a number of significant contracts with Air China,
Huawei-3COM, Motorola China, Bank of Communications, Shanghai General Motors,
Shanghai Telecom and DELL"

And GNG are diversifying - they "are now working with customers in the
transportation, power and automotive industries."

We've also now found out for the first time that GNG are selling overseas:

"We also, in September, introduced an English version of Smart BOX(TM) which has sold in beta form in Canada and Hong Kong."

And how many companies are on this low a m/cap with this much potential - and likely to make at least $1.3m PAT for the current year which ends in four months? Not many.

I am signing off on this as I have bought and will keep with other Chinese stocks.
Long term gainers is what I want.
Thanks Rivaldo for your input which reinforced my decision to keep.

Hi Peter11, let's hope we're right on this one. I see you like FDP too!

I posted on another board that I managed to wangle a meeting with GNG yesterday. Here is what happened.

Remember, this is all IMHO, DYOR etc, and the notes are all my impressions/memories only - do NOT take as gospel. I may have to edit on re-reading it!

Firstly and most importantly, the coffee and biccies were of an excellent standard -plentiful choccie biccies in particular. Sadly no hobnobs.

Henry Tse (Chairman) and WD Wang (CEO) were present (plus the PR team). They're doing the rounds in the UK this week meeting and greeting - mostly the press, but also fund managers apparently. Keep your eye on the IC, Shares, GCI etc.

As you'll know from their ages Henry is the "old hand" and WD the young gun. Henry in particular is totally impressive - a superb English speaker with a great manner and a good sense of humour. Obviously someone who's been in the business for many years (mainly at super-senior level at IBM) and plainly knows his stuff, his industry and the Chinese territory. WD is more "stereotypically" Chinese, occasionally difficult to understand before your ear gets tuned in, but still came across well.

Now the formal stuff.

PROFITABILITY
The broker note forecast $1.9m operating profit this year to March 07 based on the full (unachieved) fundraising at IPO. The trading statement gave the impression that the operating profit for the full year wouldnt be far away from forecast. This was re-confirmed by the Directors.

I will aim low at $1.5m-$1.6m operating profit and be happy with anything around or above that....though of course on a 7.6m m/cap that isnt bad at all :o))

I enquired about recurring income. Around 30% of H1 income is recurring (maintenance etc). And around 70% of income is from existing customers. Its important to understand this, as in China many clients simply renew/roll over their contracts from year to year (see Bank of Communications section below). So in reality around 70% of revenues are recurring - its just that there isnt a contract going forward a number of years. This is where the reality of GNGs clients being captive is so important (also see below) - as long as GNG continue to do a good job.

SEASONALITY
The seasonal split for PortalAge remains at around 38%/62%. I didnt really establish why, but it appears that the Chinese clientele mostly sign up to PortalAge in H1 and implement it in H2. Of course, what this means is that from GNGs point of view there is relative certainty looking forward about the level of H2 revenues. Which is what makes trading statements such as the recent RNS possible. Which is also nice from a shareholder's point of view.

SmartBox is unaffected by seasonality. Mr Tse noted that it would be SmartBox that would transform the company, as an off-the-shelf package which could quickly be distributed, marketed and implemented.

Admin. & distribution costs are not seasonal. Thus one can extrapolate quite nicely the possible operating profit for the year

FUNDING/WORKING CAPITAL
I asked about financing of future growth/expansion, especially given the slow payment culture in China. I was told that at some future point and at the right price GNG would look for funds, but there was no immediate need for a fundraising.

As to the $4m of trade debtors, I was told that GNG intended to factor these with the banks. This is a very good idea, with the commission a small price to pay.

SmartBox sales are expected to ramp up quickly in H2, and this will benefit cash flow, not just for H2 but in smoothing out the H1/H2 discrepancy for PortalAge.

GNG noted they had no bad debts despite the high level of debtors. This was because of the blue chip nature of their clients, e.g ICBC, Air China, Huawei-3COM, Motorola China, Bank of Communications, Shanghai General Motors, Shanghai Telecom, DELL etc.

GENERAL
The CFO left soon after IPO, having only just joined pre-IPO. It seems that she lived on the other side of Beijing, which was 2 hours away, and the commuting was too much. Several candidates have been seen and a replacement will be appointed in due course.

The prospectus noted trademark applications for PortalAge and SmartBox were still pending. Apparently PortalAge has now been received, but SmartBox is still pending as in China this process takes 2 years!

The AGM will probably be some time after the prelims as usual.

The average contract size was $80k-$100k in 2005/6. In H1 this was $120k.

In March 2006, GNG employed 244 people - they now employ 280.

Re. Bank of Communication RNS recently (as an example), theres a $150k ongoing maintenance contract to Dec 06. I asked why this ended in December - the reason is because the contract will then be renewed for another year, and so on.

Henry Tse: his service agreement says 15 hours per week, which I was a little concerned about. Im not worried any more. He comes to the UK (from memory) once a quarter to talk to advisers, contacts etc, he is seen as a father figure by many of the young ex-IBM and other staff at GNG, and he seems to me to have a real and personal (and financial!) involvement.

Revenue recognition policy appears conservative, i.e revenue is recognised upon implementation and not signing of the contract.

News flow is healthy and my impression was that this will continue to be the case - after all, on this m/cap and level of sales, if you're dealing with such a blue chip customer profile most sales are going to be of a reasonable size and often potentially RNS'able (certainly of PortalAge anyway).

PORTALAGE
I wondered how GNG exerted such power for a tiny and relatively new company in selling to the top 5 Chinese banks, insurance companies etc. The reason is partly because of GNGs products and service, but also because the Chairman, CEO and others are all ex-IBM, HP etc who were carrying out projects for these blue chips when working for IBM, HP etc. So when setting up GNG they already had the reputation and the contacts - they merely needed the products.

GNG have not had to discount their prices to get initial sales at reference sites, although their prices are cheaper than those of multinational competitors.

Once PortalAge is installed, it is unlikely to be replaced by a different package as it would mean that the whole infrastructure of the clients reporting system would have to be overhauled. I was told that GNG had not lost a single customer yet

Licences are granted for periods of anything from 2 to 5 years, depending on the client, though more are for 2 years.

There was a $1m sale in 2004/05. I asked whether this was likely to be repeated. This was for a Corporate Licence for the Bank of Communication and was simply due to the way they wanted to structure it - it might or might not happen again.

Apparently there is already an English language version of PortalAge, which has been sold to Cummings (?) and Northern Telecom. This sounds intriguing to me, but GNG didnt want to stress this - they were happy to concentrate on prospects for PortalAge within China.

SMARTBOX
Of the $3.15m H1 sales, only $40k were SmartBox sales. As previously stated, this is expected to ramp up quickly, especially following the marketing seminars in the late summer.

Geong have already sold SmartBox in Canada and Hong Kong. This was through personal contacts of the Board - there are similar hopes for contacts in Singapore, and of course this is nice and cheap and doesnt require marketing costs, but means GNG have reference points for other prospective clients.

The increased marketing costs for SmartBox in H1 were around $130k. These will continue in H2.

And that's it.

Thanks a lot. Very through.
I started investing in Hitech way before the bubble in 2000.
My secret ambition was to own software shares for companies
which just brought in money (recurring income etc) once they were established.
No overheads, transport, raw materials etc.
Just elec bill and update the computer.
I expected them to go up by 20% but of
course everything went bananas, which I couldn't understand.
I had NTX before it was NTX at 50p and it went to 27. Now it's 25p
Gresham Computing is another classic case. And Sage.
But the principle is still there.
Chinese stocks shows growth but no ruinous bubbles and while
we are fortunate that they launch on AIM, will they pay a dividend?
(Hence my interest in a stock like FDP)
Are Chinese workers and owners going to pay UK shareholders.
Griffin Mining was a steady gainer which I got out of at 90p in May and is a share buyback
Whereas Asian Citrus is paying a dividend. How long before they sell oranges to the USA?
So GNG is on the right path which I noticed and bought before your posting.
Otherwise as an ex Canary Wharf worker (hack), one of the first to be
transferred there years ago, when it was derelict with one tower, I am into Sonbgbird SBDB heavily. But their views on dividends are on another planet see http://www.investegate.co.uk/Article.aspx?id=200610301614312377L
Hope you are well.

Good post, Riv, thanks.

Hi Soul-looked into this one and like what I see. Maybe patience needed but I bought a few today! thanks for the info.

My pleasure - hope it does well for all of us!

Looked at the website and noticed interims are out on Dec 30th--if they are good interest should rise.

Are you sure, MP? - the interims were released on 28th Nov.

sorry so I see..! Their website says 30th Dec so figures must have come out early check out the financial calendar in investor relations. Hope this does well as I sold some sola to buy here and look at them this morning!!!

Bought 37k @ 30p this morning but no trades showing as yet.zib

Making quite decent progress this morning: GNG Bid: 30p Offer: 31p Change: 1.5

I paid 32.15 for mine, so is good to see SP regaining some ground after the brief sell-off.

Getting better by the minute. Zib, your purchase clearly gave the market the kick it needed :o)

According to FT.com, somebody just paid 34p for a buy, which equals the high set at the end of Nov.

Wow: GNG Bid: 33p Offer: 35p Change: 5

What's going on out there?

EDIT: seems there are a few investors (speculators) over the road who are all piling in.

It's up 5p to 33p bid which is a jump of Renesola percentage proportions.

I've got a feeling we are into a good one here! hold on tight for a rewarding 2007 when the momentum gets going.

If the co manages a FY profit like that of last year, then it's on a PE of about 15 at the moment.

Experiencing a bit of a reversal at present. Anyone heard anything?

GNG Bid: 23p Offer: 25p Change: -2.5

I'm still in and looking to add when funds permit-I think this one is below the radar at the moment.

Why has this drop 10% today???

Hlyeo98, it's dropped because a few small sellers have no patience and there's been no recent "wow" "incredible" news flow to keep those impatient PI's happy! And because this is a relatively illiquid small cap stock where the MMs lower (and raise) the price disproportionately based on small volumes.

In October GNG said profits would be "only marginally below current market expectations, which were based upon a much higher level of funding being achieved in June." That must mean at least $1.5 million PBT for the year about to end on a 6.3m m.cap. The trading statement also suggests good PBT growth for the current year; up from $1.3m last year and $0.86m the year before, with $2.92m forecast for next year. How much would you pay for a growing company with those sort of profits?

At double the current 24p share price the m/cap would be 12.6m. A 48p share price on a likely 3p or more adjusted EPS for the year about to finish and 5.7p EPS forecast to 31/3/08 is hardly demanding - especially given that much of the current 6.3m m/cap is represented by cash and 1.8m of net tangible assets.

If you gave GNG a P/E of only 12 for next year's forecasts (which may be reduced slightly in the next broker note because less was raised at IPO than originally planned) the share price would be 68p, almost triple the current price. Even discounting by 50% the share price should be at 34p!

Only 2 months till the year end now - not long to build a decent position. The trading statement quoted above is all a patient investor should need to know to decide his position here imo.

Morning all. Good news: two RNS out today.

First RNS:

Geong International Limited - Re Contract
Embargoed: 07.00am, 29 January 2007

GEONG INTERNATIONAL LIMITED

NEW CONTRACT WINS

GEONG International Limited ('GEONG' or `the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that it
has signed a US$190,000 contract to provide its PortalAge software to FAW
Volkswagen (`FAW-VW') .

Under the terms of the contract GEONG's PortalAge software will be used to
streamline FAW-VW's content management systems by establishing a 'Collaborative
Platform' enabling information and data to be stored, managed and shared across
the organisation.

GEONG also announces that it has signed an extension to its maintenance
agreement with Shanghai General Motors (`SGM'). The agreement is expected to be
worth up to US$280,000 and runs until the end of November 2007.

The Company will provide SGM with product support and application maintenance
services for 'DMS II' (Dealer Management System Phase II); an ECM framework
designed and installed by GEONG in 2005.

Commenting on the two contracts, Wang Weidong, Chief Executive Officer of GEONG
, said: 'The automotive industry in China is experiencing very rapid growth and
is a sector where we have a strong presence. PortalAge is being used by the
regions top two automotive companies by sales, and is an area which should
prove lucrative going forward.'

-ends-

Second RNS:

Geong International Limited - Re Contract
Embargoed: 07.00am, 29 January 2007

GEONG INTERNATIONAL LIMITED

NEW CONTRACT WIN

GEONG International Limited ('GEONG' or `the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that it
has signed a one year service agreement with China Construction Bank (`CCB')
which the Directors estimate has the potential to be worth up to US$500,000.

Under the terms of the agreement, which commenced last month, GEONG will
provide its PortalAge products and services in all future Java platform
projects and help CCB improve its IT systems, especially in Portal, Enterprise
Information Portal and Customer services.

ECM software is an internet based suite of products that enables companies to
capture, manage, store, preserve and deliver content, documents and data across
thousands of users, processes and locations. GEONG will provide CCB with its
existing PortalAge solution for large enterprises.

Commenting on the agreement Wang Weidong, Chief Executive Officer of GEONG,
said: 'We are delighted to extend our successful relationship with CCB. GEONG
has proved itself capable of delivering first class ECM solutions and the
highest level of service to a number of Fortune 500 organisations.'

He added: 'Our PortalAge software is used by the top 5 Chinese banks and this
agreement reinforces our market leading position in the PRC's financial
services sector as well as providing stable and visible revenue streams for the
Company.'

-ends-

Good to have some more good newsflow on this after a bit of a quiet spell.

I'm not as up on the numbers as Rivaldo (thanks Riv for the breakdowns above!), but have a feeling that with current mkt cap only around 8 million, and only 26 million shares in issue, this could be cheap.

Current SP: GNG Bid: 28p Offer: 31p Change: 5.5

yes-nice to see some movement up in this one.

IMHO the potential for GNG is huge.

At 29p it's likely to be on a single-figure P/E for the year about to end in March '07, and is on a historic P/E for 2005/6 of only 11.2. On that basis alone GNG could be 50% higher.

Then factor in the 5.7p EPS forecast for the year about to start - even if you downgrade that to say 4.5p EPS we should be looking at a 50p minimum share price.

Then add in the revenue possibilities from the Chinese auto, insurance, airline, banking sectors etc etc.

Then add in the possibilities if SmartBox starts to sell across China, the Far East and Canada....

At a stroke today GNG have won $970k of business - that's almost 20% of last year's ENTIRE turnover.

And they've entered a new booming area in the Chinese auto sector, as well as reiterating their usage by the top 5 Chinese banks...

This is a 7m m/cap business which is cheap on fundamentals and has a solid Balance Sheet with net cash, yet has blue sky prospects across China and the Far East with the most amazing client list you could imagine for such a micro-cap.

Rivaldo, you should defnitely work in sales, if you don't already :o)

Glad I didn't sell last week when I was tempted to.

GNG having another good day :- GNG Bid: 30p Offer: 31p Change: 2.5 162k traded

Making more progress today too: GNG Bid: 30p Offer: 33p Change: 1

I like this one -not yet on the radar but will eventually really take off IMO. Added a few today plus a few new ones I've put on drivers tips. CCH and VIY are doing well are you in those Soul?

Hi MP, I am not in either of those as yet, although I thought VIY looked interesting.

I am not particularly liquid at the mo, but might have a go at a Chinese petrochemical co called Haike which is due to float shortly.

I was very overweight in sola-so I sold a small amount to fund my new picks-VDS looks promising too.

Well, here we are, winning contracts again (and if winning contracts flicks your switch, check out my CBOX thread :o)


Geong International Limited - New Contract Wins
Immediate Release 6 February 2007

GEONG INTERNATIONAL LIMITED

NEW CONTRACT WINS

GEONG International Limited ('GEONG' or 'the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that it
has signed a US$150,000 contract to provide its PortalAge software to Haitong
Securities ('HTS'), the number one securities firm in the PRC.

GEONG also announces that it has signed two contracts with China Asset
Management Company ('ChinaAMC') one of the biggest mutual fund companies in
China. The contracts are together worth US$110,000.

GEONG's PortalAge WCM (Web Content Management) V5 software will be used by both
HTS and ChinaAMC to improve their e-trading systems. Geong's PortalAge has
significant competitive advantages over alternative software products and is
used by the top five banks in China.

Commenting on the two contracts, Wang Weidong, Chief Executive Officer of GEONG
, said: 'We are delighted to have won further contracts in this key sector for
our products. Financial services is a booming industry in the PRC and is an
area where we have a strong presence and expect significant growth going
forward.'

FWIW turnover in the first half of the current financial year (i.e. to end Sept 2006) was US$3.15 mil. I'm not quite sure how current revenues and the recently announced contracts are being spread, but it sounds encouraging.

The wins I have totted up since the end of the first half add up to almost $US3 mil. Again, I don't know how useful a guide this is, but it looks good.

EDIT The revenue stream is "heavily weighted to the second half of the year" and so the remaining 7 weeks could also bring more good news.

and up some more: GNG Bid: 33p Offer: 35p Change: 3.25 1.3 million traded today.

And even better progress today: GNG Bid: 38.5p Offer: 41p Change: 5.75

The SP has set a new all-time high of 40p. 350k traded so far.

Kicking myself that I sold 20k of these before the rise-I thought I had time to buy elsewhere and come back later! still hold 13000 so must be happy with that for now-JTCod on the other side bought 300000 shares yesterday triggering the rise and it looks as though his admirers are following him in. Very promising investment this one. lots of new contracts.

Thanks for that update, MP. haven't had time to take a look at the other side recently (am in the throes of leaving the country, so am a bit busy, to say the least), but it's interesting that JT is backing this so strongly. I'm definitely chuffed with the fact that GN keeps winning new orders.

Another nice climb to start the week: GNG Bid: 39p Offer: 42p Change: 3.75

202k traded

Not a bad start to this week either soul traders! Now 43p mid. Not many of us here yet, so nice and quiet too - wait till the wider market catches on.

FYI I've had it confirmed by Henry Tse that I'm right about why GNG were able to issue a trading statement for the year so early. The major revenue contribution this year is still PortalAge related projects, for which there are signed contracts and a sales pipeline, and these have enabled GNG to look ahead as announced in October.

It's now up to others to finally pick up on the hidden message here.

I'm particularly interested to find out if the trading statement from October may have been superceded, with all the additional PortalAge contract wins since then and SmartBox seemingly doing really well - if so forecasts may have to be lifted. We shall see.

Good stuff, Riv.

I have to say that this one seems to be full of nice surprises. 44p to buy is a new all-time high as well.

GNG Bid: 42p Offer: 44p Change: 5

IMO the markets are only just waking up to this one---the future chinese microsoft is what I'm hearing!! Good trading statements so the next results should send it sharply up -fingers crossed.

I certainly have no complaints! Except perhaps that maybe I should have bought a few more shares already! Will have to give that some thought . . .

Still movin' on up. Only 3,000 shares seem to have been traded, but hey, if today's rise sticks, that'll be five days of rising SP on the trot.

GNG Bid: 44p Offer: 47p Change: 1

47p is yet another new high, too.

Moneyplus, that's a great line - "the future Chinese Microsoft"! Where did you hear that - down the Dog and Duck?! Or are you really hearing good things, and if so where?

......or did you hear it from a Seymour Pierce analyst?! Good news tonight - Seymour Pierce have started coverage of GNG with an "outperform" rating (and that must be at this morning's 44.5p price) - in traditional brokerspeak that means that when GNG come out with their 31/3 results they can say "I told you so" and upgrade to Buy...


http://www.newratings.com/analyst_news/article_1480819.html

"Geong International initiated with "outperform"

Thursday, February 22, 2007 8:51:50 AM ET
Seymour Pierce

LONDON, February 22 (newratings.com) - Analyst Amit Thakkar of Seymour Pierce initiates coverage of Geong International Ltd (ticker: G2Z) with an "outperform" rating.

In a research note published this morning, the analyst mentions that the Enterprise Content Management (ECM) market in China, to which the company caters, is expected to grow at a CAGR of at least 50% going forward. Geong International has a client base of 50 large enterprises, to which it provides PortalAge and SmartBOX products, the analyst says. The company is expected to achieve 25% annual earnings growth over the next couple of years, Seymour Pierce adds."

Blooming marvellous: GNG Bid: 50p Offer: 53p Change: 5.5

GNG is deemed favourably to be the 'Microsoft' of China. Thanks for the above update, rivaldo.

Yep - thanks Riv! Yours truly is now up a very healthy 50%.

Great start! thank you seymour p.

Ta everyone. Some analysis of the new note if I may...

GNG made 2.6p EPS last year. Seymour Pierce say 25% annual earnings growth over the next two years. So for the year about to finish on 31/3 I assume they go for 3.25p EPS.

For what will soon be the current year we can assume 4.1p EPS, and forward from that say 5.1p EPS.

I'd expect a new broker to be cautious with their initial estimates to leave plenty of room for upgrades. But even on those estimates, at 48.5p GNG are on a forward P/E of just 9.5.

And that's without taking the near 2m of tangible assets into account on the 12.7m m/cap. And the PEG at 0.47 is demonstration enough of the value here.

GNG could be at 80p pretty quickly given that that would still be a forward P/E of only 15.7. With room for upgrades if Seymour Pierce's 31/3/07 forecasts are beaten.

Time to top up further, Rivaldo?

Of course

Certainly very impressive after doing some research on Geong...STRONG BUY at 50p.

22/2/2007 - Seymour Pierce upgrades its annual earnings growth.
6/2/2007 - Signed two contracts with China Asset Management Company ("ChinaAMC") one of the biggest mutual fund companies in China.
6/2/2007 Contract win - Haitong Securities ("HTS"), the number one securities firm in the PRC.
29/1/2007 Contract win - China Construction Bank (CCB).
29/1/2007 Contract win - FAW Volkswagen.
29/1/2007 Signed an extension to its maintenance agreement with Shanghai General Motors (SGM).
28/11/2006 - Geong named in Deloitte Technology Fast 50 China.
24/11/2006 - Signed 2 agreements IBM Global Business Service to provide its PortalAge based solutions to Motorola China Electronics.
21/11/2006 - Signed an agreement with China's Bank of Communication ("BCOMM").
18/10/2006 - Signed an agreement with IBM Global Business Service ("IBM GBS") to provide its PortalAge based solutions to Air China ("Air China").

23/6/2006 - Admitted to AIM at 30p per share. Its flagship product
GEONG PortalAge is used by the top-five Chinese banks and 12 of the top-20 securities firms in China.
31/3/2006 - Sales in the year ended 31 March 2006 were $5.48m and the operating profit was $1.36m.

up again this afternoon-hope it holds to the close then onwards and up for next week. We should get a lot more broker comment as investor interest rises.

Up a little more: GNG Bid: 52p Offer: 54p Change: 1

Lots of buys...GNG is a good BUY

Very strategic move for GNG...you can tell GNG has a very impressive management...BUY!


Embargoed: 07.00am, 27 February 2007

AGREEMENT SIGNED TO PROMOTE `SmartBox'

GEONG International Limited ("GEONG" or "the Company"), the AIM listed, Beijing
based, provider of content management software and solutions, announces that it
has signed an alliance agreement with the Shanghai Enterprise Information
Promotion Centre for SME's ("Shanghai EIPC") to promote SmartBox to Shanghai
based businesses.

Shanghai EIPC is a joint venture between the Shanghai government and a number
of leading Shanghai Universities. Its aim is to improve the way SME's manage
their information systems. According to the Shanghai government, in 2005 there
were 337,353 SME businesses in the region. Shanghai EIPC and GEONG intend to
target these companies by holding joint seminars to demonstrate the benefits of
SmartBox. Following the demonstrations, the SME's will be entitled to a 30 day
free trial as well as a promotional price on the software.

Wang Weidong, Chief Executive of GEONG, commented: " Signing up Shanghai EIPC
as a strategic partner will further drive sales of SmartBox and give us
valuable access to a huge number of potential customers through a reputable
channel and an institution which is known throughout China."

"Our experience and knowledge of Enterprise Content Management, through work we
have done with major organisations, has allowed us to develop a quality product
that will add significant value to smaller businesses. The management are
confident that this agreement will bring significant value to GEONG in the
medium term," he added.

looks very good on the charts Company is buying lots of contracts only thing big drop in the sp down to 55p from 62p......still up 2p...... 98 were you see this at

Don't know where I see this at, but it's up again very smartly this morning:

GNG Bid: 65p Offer: 68p Change: 10 approx 145,000 traded

This has all but doubled in ten days; I'm on almost double money too :o)

50K bought at 67p earlier on is the reason - that was 3p ahead of the 64p offer price at the time! Made people sit up and take notice...

ST: This is my experience also and I'm doing likewise with SFT. I'ts just too good to be true and am wondering if there's a catch. I wonder for instance if the Chinese have the same committment to their shareholders as we do in the West?
sd.

Squidd, GNG's SP seems to be well supported by profitability and newsflow, so am not too worried. However, I am not about to pour huge amounts of money into China at the moment. Will cool my heels having just cleared out all my SOLA nd when I have completed my move back to the UK (Saturday) I will start looking at some UK companies. Some of Goldfinger's recommendations look quite interesting.

Am having a vauge idea about speculating on gold, too, since it's enjoying a good run. Cynic seems to be the man to talk to for that.

GNG finished off the day's highs, but with 650k shares traded, was above average active.

GNG Bid: 59p Offer: 62p Change: 4

ST: I have every confidence in the fundamentals and management at GNG but I feel uneasy about their communist masters. If GNG were to become a great success, they might be regarded as a strategic asset for nationalisation or else loaded with windfall taxes, and there are plenty of precedents around, particularly for foreign assets. It's an argument for sellling half at some stage and enjoying a free ride. Meanwhile I think you were right to sell SOLA, if for no other reason, it's harder to gear up production of wafers than say software at GNG.
I too, am attracted by GF's tips and am kicking myself for being deterred by the big spread on VML a couple of months ago.
My only gold is AVM - take a look.
sd.

ok then guys .... as requested please find the chart below ...... undoubtedly fantastic impetus and even a further rise today ...... surely this is defying all logic and gravity and rsi is well overbought ...... one thing is for sure, if sp starts to fall you are likely to have great trouble off-loading ....... as a parallel, you might want to look at SOLA's performance of late ...... i am already an orphan, so this one def not for me!

Exactly cynic, I considered GNG and have declined for those very reasons. Also, the current PER on current forecasts is now a little high.

cynic. Not a poster here. Can you please explain to a "novice" why the shares would be difficult to offload if the price started to fall?

because i think you will find the market is very small and MMs will either widen the spread or effectively refuse to take the shares except at a silly price ...... the price you "see" is really only an indicator not a "promise" to buy/sell at that level

Thanks for that cynic. I have learnt something. GNG are going well...beyond my wildest dreams. Best of luck to all holders.

a word to the wise ...... please please please set stop losses and/or take at least partial profit ...... no share in this world keeps going up (or down) in a straight line ..... present markets will be violently volatile at best and pundit consensus, who of course are often if not usually wrong, reckon south will be the prevailing direction.

Cynic (re your post #97), the attraction of this one is in the fundamentals. Profitable and winning business hand over fist; not surprising it's doing so well, although I admit that the China factor is stopping me from increasing my holding right now.

Cynic, you really can't compare GNG with SOLA. SOLA has risen from 140p to 600p recently. GNG is nowhere near that in percentage gain.

and so it should soul* ....... 98 - my comment is still valid; i highlighted SOLA merely as a comparative as to what happens when a rocket turns into a stick ....... meanwhile I try resolutely to sit on my hands

SOLA has not turned into a stick...just a bit of profit-taking. It will move up again.

but not today i think

SOLA is not doing too badly considering it made its AIM debut at 79p and reach 630p recently and it is 490p now.

was not the point i was making .... but give up

Cant beleive I didnt get in about 2 months ago when they were 32 p and i was so close to buying!

You will say this again in 2 months time, GD.

Thanks hlyeo, I was following this thread and bought in at 62p and now I am in profit. I believe this will go further in nature of its business. I think more contracts on the way.

You are most welcome, justyi.

HI 98 where you see this at the end of this week i like to put you on the spot so i can hear wt cynic as to say.............lol

no you wouldn't! ... lol

hi cynic how you doing........wt you think the week brings

opening with gloom and doom and threats of the end of the world! ...... Expect (hope!) Dow will stage some sort of recovery, perhaps even later today as that index hits a support (11950 from memory, but will check) ...... the sustainability of any recovery is however very questionable

considering the bloodbath all around, a very solid performance indeed here .... down just a nominal 1p

Investors know GNG has a strong management and still cheap comparing to other similar companies and has huge upside in the long term.

today, the one has nothing to do with the other! ..... real baby and bathwater day!!

A 225,000 buy just came up in GNG

Spoke too soon...-4p at the moment from -1 earlier.

Down 6.5p to the minute now.

Grrrr!

why r u surprised?

Oh never mind...it's only money, cynic...can earn it back.

98 wts going on with GNG don;t tell me cynic is right again ..........enough cynic your starting to be a jinx..........lol

Isaiah (aka Cynic) says you should see some respite today, but this is not the end of market turbulence and falls

GNG up today. almost 100k traded: GNG Bid: 66p Offer: 68p Change: 7

Current Forecasts :

HH - No recommendation - 16th Feb 07

2007 PTP ?
2007 EPS = 2.93p

2008 PTP ?
2008 EPS = 5.16p


Seymour - Outperform - 22nd Feb 07

2007 PTP 0.87m
2007 EPS = 2.92p

2008 PTP 1.18m
2008 EPS = 3.69p


Is there a newer HH note ? Given they do not give a recommendation, or even PTP figures, I cannot see how they get to their 08 EPS figure, when they should know a secondary placing should be done before too long imo.

Anyone got a link to the HH update on the 16th Feb ? or indeed any newer one ?

PP:

- firstly, HH are the house broker and like many house brokers (Peel Hunt for one)don't give specific recommendations on in-house stocks, they simply make forecasts which speak for themselves
- secondly, it's obviously Hemscott/your research provider that either hasn't been provided with or picked up the PTP figures. I'm surprised that you can suggest HH don't have PTP figures...you should know better than that
- thirdly, there's absolutely no necessity for a secondary placing imo as GNG had at the last count a cash pile plus over $4m of debtors from blue chip customers which they were intending to factor. In addition, no broker forecasts would ever take account of a "possible" placing in the same way as they wouldn't take account of "potential" contract wins - they use the facts in front of them at the time.

Whether GNG eventually choose to place out some of the founder shares or take advantage of the rise in share price is another matter. Such a move would be beneficial anyway in increasing liquidity and institutional ownership.

All this has been discussed on ADVFN. The HH EPS figures represent a refinement from their pre-IPO note which equated to 5.7p EPS for this coming year based on a much greater level of funding at IPO than was actually achieved. In which case 5.16p EPS for the year about to start to 31/3/08 makes what will be a current year P/E of around 12 look rather cheap imho.

Hi riv,

Thats why I am looking for a copy of the HH report over here, avoiding the AFN BB, its likely to get very nasty like the SOLA one.

I cannot find anyone with the HH report, and I would be very interested to read their latest update.

I agree, if they avoid a secondary placing then potentially they can achieve 5p plus of earnings a share, however, I suspect that SEYP have factored in the placing in their figures, and this is the difference between HH and SP forecasts. However, a company needs cash to grow, they should be thinking of the long term of the company, not the short term headline EPS figure. Raising money at the stage GNG are in is good for them as it builds their battle fund for raising future sales. Growing companies need cash/working cap.

Geong International Limited - Change of Nomad

Immediate release: 13 March, 2007

GEONG INTERNATIONAL LIMITED

CHANGE OF BROKER AND NOMINATED ADVISOR

GEONG International Limited ('GEONG' or 'the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that
Seymour Pierce Limited has been appointed as Nominated Advisor and Broker to
the Company with immediate effect.

-ends-

For further information contact :

GEONG International Limited

Henry Tse, Chairman
Wang Weidong, CEO
T: +86 10 877 30066

Tavistock Communications Limited
Matt Ridsdale
Simon Compton
T: +44 (0)20 7920 3150

Seymour Pierce Limited
John Depasquale
Parimal Kumar
T : 020 7107 8000

Embargoed: 07.00am, 27 March 2007
GEONG INTERNATIONAL LIMITED
NEW AUTOMOTIVE CONTRACT WINS

FURTHER PROGRESS IN THE CHINESE AUTOMOTIVE INDUSTRY
GEONG International Limited ("GEONG" or "the Company"), the AIM listed, Beijing based, provider of content management software and solutions, announces that it has signed two contracts together worth US$460,000 to provide its PortalAge software solutions to Shanghai Automotive Industry Corporation ("SAIC"), one of the largest companies in the Automotive industry in China and a constituent of the Fortune Global 500, and Shanghai General Motors ("SGM"), an existing client of GEONG.
GEONG will provide SAIC with its leading PortalAge software as well as providing technical assistance in order to establish a Dealer Management System ("DMS"). The award of this contract follows GEONG's successful creation and installment of a similar DMS solution developed for SGM. Such DMS solutions enable effective management of data between head office and the company's network of dealerships as well as offering customer relationship management functionality. For SGM, GEONG will provide product support and application maintenance services to help upgrade their customer relationship management (CRM) systems.
Commenting on the contract wins, Wang Weidong, Chief Executive Officer of GEONG said: "We are very pleased to be providing our PortalAge product to a member of the Fortune Global 500. Contracts such as these are establishing GEONG as one of the leading providers of content management solutions in China.
" We are establishing a strong presence within China's automotive industry and continue to seek further growth in this area of our business, " he added.

Very good news.

GNG Bid: 54p Offer: 57p Change: 4.5

i think there will be a lot more to come from this company this week soul traders 65p by friday

We're all in favour of more good news, Micky. I agree it would be good to see the mid-sixties again, as that would double my money :o)

149k traded. Mkt cap 15 mil.

GNG gets its skates on again: GNG Bid: 58p Offer: 62p Change: 3.5 87K traded

65p is looking good s-traders

Yep. Still on low volume, too.

However, I'll add that I'm in this for at least the medum term, if I can help it, so won't be too worried if we don't hit that 65 mark.

More good news - posted elsewhere by wanglong1981 from the SmartBox web site:

"27/03/2007 Geong has signed a contract with Beijing Jinguanfangzhou Paper Logistcis Co., Ltd. to provide its smartbox software solutions. It does not specify the contract value.

According to Jinguanfangzhou Paper's website, They are the Chinese leading wholesaler of paper products and raw materials. The paper and relevant products has the third largest market value in China wholesale business only less than oil, steel but larger than automobile."

Good to see just before the year end - since SmartBox sales are accounted for immediately from memory this contract could impact the 31/3/07 figures nicely.

Yet another blue chip then - how impressive is this as the "Chinese leading wholesaler of paper products and raw materials"?

Good stuff. Nice post, Riv.

I thought SmartBox would be inherently less valuable in revenue terms as it is an off-the-peg solution (correct me if I'm wrong about any of this!).

However, the contract sounds like a very decent endorsement of GNG's product, and is clearly a good one for Geong to point at when asked "Who are your customers for this product?"

PDYOR, etc.

i'll back you up on that med / long trem but i also think 65p friday

LOL - full marks for your persistence! All right, we'll see. :o)

Do we have a broker target price for this stock.?
I have re-read all the previous posts, but not found any mention.

Soul Traders, not sure I agree there - SmartBox is imo the product that could transform GNG as it's a mass-market product with instantly recognisable profits as opposed to PortalAge's spread of revenue over a period of time. The amount of small and medium-sized businesses in China which must need modernisation and efficient content management is mind-boggling, and hopefully GNG have the commercial and governmental contacts to make SmartBox work.

By the way, I've never seen a broker price target for GNG - maybe after a 31/3 trading statement or the year end results?

rivaldo don't overlook vialogy-it's just as exciting as gng. I hold both.

Smartbox will bring in a greater % profit but, per unit, will bring in less than PortalAge.

Thanks Riv, I sit corrected :o)

Yep, I would expect a price target after the FY results. however, you know how it is with these smaller co's - many get overlooked by the analysts.

Having a nice recovery this morning after recent profit-taking: GNG Bid: 55p Offer: 59p Change: 5 only 20K traded so far, and no news that I can see.

Putting on a spurt suddenly at the end of the afternoon: GNG Bid: 60p Offer: 63p Change: 4

results soon maybe?

Probably sometime in May, MP.

Meanwhile, how about this?

Geong International Limited - Contract win

Embargoed: 07.00am, 25 April 2007

GEONG INTERNATIONAL LIMITED

CONTRACT GAIN

GEONG SUPPORTS OLYMPIC 2008 SPONSORS

GEONG International Limited ('GEONG' or 'the Company'), the AIM listed, Beijing
based, provider of content management software and solutions, announces that it
has signed an annual contract to provide its PortalAgeTM software and services
to Lenovo Group Limited ('Lenovo') which the Directors estimate has the
potential to be worth between US$1,860,000 and US$2,620,000.

Lenovo is the third largest PC supplier in the world employing 24,500 people
and supplying PC's to over 160 countries. Under the terms of the contract with
Lenovo, GEONG will design, build, deploy and operate a bespoke system based on
its leading PortalAgeTM Enterprise Content Management software establishing a
worldwide dealer communication and management system.

The system will be an extension of the ThinkWorld Users Club system which was
designed by GEONG and has been used by IBM PC/Lenovo since 2003. GEONG intends
to seek further agreements of this kind and further applications for its
PortalAgeTM software.

Commenting on the contract, Wang Weidong, Chief Executive Officer of GEONG,
said: 'The contract signed with Lenovo highlights the calibre of our software
suite, the quality of our services and the successful execution of our
strategy. I am delighted that PortalAgeTM will be used to support Lenovo in
their global operations and key strategic decisions.''Companies are looking to make the most of the increase in revenue that will
come as a result of the 2008 Beijing Olympic Games and we are seeing an
increase in demand for our software and services. GEONG has now signed
contracts with a number of leading sponsors including Lenovo, Bank of China,
Air China and FAW Volkswagen.

-ends-

Up again today:
GNG Bid: 63p Offer: 66p Change: 3

291K traded. 18 mil mkt cap.

This is just the early days in what looks to be a potential giant of a company. It has most of china's blue chip companies as clients and is a long term hold for me!

MP, I like the way this one is shaping up, too, and may top up the next time it hits a trough. I was back up to double money briefly this morning, so that was nice :o)

soul-what do you think of my new selections on drivers tips? I'm also waiting to buy some SFT sold at a loss but now coming back, Tol and I like SGI very much. sold prty and bought EPY for my isa today as I think that one is coming back now.
nice day today!!

MP, I think EPY may well be heading in the right direction - I'd call that a pretty stunning upturn in revenues and earnings, however, I haven't done more than scan the highlights in the last results.

When you say "nice day" I assume you don't mean the weather! I had a good one too. Have been experimenting with momentum trading and chart-watching, using T+20 or T+25 settlement. Today I bought LVD when it was up approx 40p, so I have done nicely there. Sold my WGB for 5% profit in 8 days. Also got into CCT which I think is primed to go higher.

NOP seems to be a good buy-and-hold. Got back into this yesterday.

By the way, do you subscribe to "Momentum Investor" or any of the tipsheets? good luck with all of yours.

ST.

Hi soul yes I take red hot penny shares but not very impressed with it and I signed up to Lemming investor.com well worth 60 as I have made more from that than ever before. just about every share they research has done very well eventually--they did TMC and I didn't buy until yesterday kicking myself for leaving it so long!
epy I found myself. I've just been pointed in the direction of cdn--again left it late but I'm now in. I also look carefully at the first page of the other side and pick up some shares that seem to be causing great excitement-certain posters I respect are good at telling each other to check out certain shares.I tag along as well!

Hi folks - not a bad contract yesterday was it? Only Lenovo, one of the biggest companies in Asia, and only achieving around 20% of the forecast turnover to March '08 in just one contract, that's all...

I've just come across this which hasn't been posted before from earlier this month.

Note that they expect a "rapid revaluation" from 64.5p....and this was written before yesterday's news:

http://www.growthcompany.co.uk/market-research/254572/gall-eke-corporate-partners.thtml

"Gall & Eke Corporate Partners
Companies: GNG
03/04/2007

Gall & Eke reckons that investors should take a look at Geong International. It is a leading provider of content management software and solutions and possesses the second-largest market share of collaboration software products in China, according to the China Centre of Industry Development. Geongs products are provided to a wide range of companies including the top five Chinese banks and two of the top three Chinese futures exchanges, as well as multinational corporations such as IBM and Dell.

Geong recently strengthened its core market through contracts with Haitong Securities and China Asset Management and has reached agreements with Volkswagen and Shanghai General Motors deals that mark its expansion into the automobile sector. Geongs first half results were also impressive, with gross profit up 51 per cent to $1.55 million. The multitude of recent contract wins, coupled with the companys impressive results, demonstrate strong growth potential. Currently trading at a 12-month rolling forward p/e of approximately 11, with earnings growth of 22 per cent, the stock is attractive.

The markets within which Geong operates are forecast for strong growth, particularly Chinas information and technology sector. Gall & Eke believes that this, when combined with the implementation of Geongs strategy to gain penetration into the second tier of Chinese banks, will provide a catalyst for rapid revaluation of the shares. (Gall & Eke associates are holders of this stock.)

GEONG International AIM 16.96m 64.50p"

Rivaldo is definitely one to take notice of-he talks about some good companies.
I'm pleased to say I beat him too it on this one!

Chuckle :o) Up nicely again today, peeps: GNG Bid: 66p Offer: 70p Change: 3.5

Running away with itself this morning: GNG Bid: 80p Offer: 82p Change: 10

GNG Bid: 80p Offer: 85p Change: 11.5

wow--people waking up to this one at last! Glad I topped up recently. :0)

MP, I wish I had topped up too. Crazy - a week ago I looked at this and thought, "The SP has done nothing for a while; should I top up?"

Would have been an easy 50%, but never mind.

BTW take a look at AMBR - up about 35% since mid-Feb. PE 9

thanks

BUY BUY BUY... This will go to 250p!

is that all ? :-0

another little nudge up today: GNG Bid: 83p Offer: 87p Change: 2

And going for it again today: GNG Bid: 93p Offer: 97p Change: 10

Another couple of pence and I'm on a three-bagger :o)

Don't jinx it, soult! We're in with you on this one (thanks to your tip). But it can't go on forever.

Harry, you are dead right - I decided that perhaps the valuation might be getting a little bit fruity and have sold half my holding at 90p. Pity I didn't wait until just now, as the SP is:

GNG Bid: 95p Offer: 98p Change: 11.5

However, I'd rather not be too greedy and let the profits slip.

Excellent results out today:

http://www.investegate.co.uk/Article.aspx?id=20070515073638PAA67

Basic PAT was $1.53m. Add back:
- $73k share-based payment expenses
- $67k intangible amortisation
- $75k H1 AIM listing costs

Adjusted PAT is $1.745m, which equates to 3.45p EPS....or $6.9c, well above the broker's forecast $5.7c.

Nice. And GNG has $1m net cash, with $4.7m of blue-chip debtors too.

International SmartBox sales are about to start...

GNG deserve some kudos, and not just for the excellent figures:

- they've produced results within just a month and a half of the year end. This is more than can be said of most PLC's
- and they've issued the full Annual Report with all the Notes, disclosures etc within that month and a half. No buggering around with a couple of desultory Notes, just get the whole lot out there!

If you've ever been involved with a PLC reporting process you'll now how difficult it is to get the whole shebang out in good time, let alone as quickly as this.

It's a credit to GNG's professionalism and a positive for their credibility.

I'm guessing 5p+ adjusted EPS this year is realistic with the contracts already secured, with further upgrades along the way as new contracts get announced.

It's worth noting that GNG increased their core profit after tax by 68% from $1.215m to $2.046m after adjusting for intangible amortisation, share-based payments and full AIM compliance and listing costs.

A similar increase would take this year's core PAT to $3.44m, which equates to 13.17c or around 6.7p EPS

Going with the cautious 5p EPS and $2.6m PAT I'd say a current year P/E of 15.8 at 79p is hardly demanding given the trading history, the potential, the blue chip client base - and the safety margin given by the already secured contracts.

If you subtract the $1m cash pile and the $4.7m of trade debtors which is effectively cash the P/E would reduce to just 13.6....

Seymour Pierce's forecast was for $1.9m PAT this year. This is clearly over-cautious garbage imo given GNG made $1,745m adjusted profit last year! Do they really think, especially given the Lenovo contract, that GNG will increase PAT by only 8.8% this year?!

Incidentally, the Bank of Communications, one of China's largest banks, IPO'd in Shanghai today, raising 25 billion CY for expansion and acquisitions:

http://www.marketwatch.com/news/story/chinas-bank-communications-a-shares-soar/story.aspx?guid=%7BAA7D05A0-D30C-405D-B22E-6B521A55BF37%7D

The relevant part is that both Bank of Communications and Ping An, the brokerage commenting on the IPO in the above piece, are both clients of little 'ol GNG.

It's nice that the results are out so early in the week too. It means that there's a chance of some nice coverage in Thursday's or more likely Friday's share magazines.

Good post Rivaldo,
Very pleased with results and more than happy to hold for at least 2 years minimum here - in other words nice to see the results confirm everything is on (high growth) track.


Financial Highlights

* Revenue up 48% to US$8.12 million (2005: US$5.48 million)

* Gross profit up 51% to US$4.47 million (2005:US$2.97 million)

* Gross profit margin 55% (2005: 54.3%)

Just to add from from your post above:
With Revenue growth of near 50% on a very healthy gross profit margin of 55%, combined with the contracts won of late (giving some forward visibility) and to cap (pun intended) it all on a low market cap of 21m approx. Leaves plenty of mileage left in this one.

I owe you a drink on this one Rivaldo, (what a great find). Thanks.

Affc21, perhaps when GNG is at 200p (which would still only be a 50m /cap) we'll all meet up for a beer or five!

I've talked to the PR agency. GNG will be in the UK next week presenting to institutions (that's heavyweight institutions, not private client brokers, private investors etc). They'll also be meeting the press.

GNG have a rather good story to tell. Progress should be interesting over the next few weeks.

Thanks for the update Rivaldo, will certainly look forward to any feedback from any presentations that are given.

When you mentioned above "perhaps meeting up for a beer or five" - I'm glad you mentioned no more than five (that's just about my limit these days)!!!!! LOL

Joking aside Thanks for all the time and input that you put into your posts, I have found them a mine of information.

anyone know of this week's presentations

Well I did say numerous times that a secondary placing would happen, and that is why no EPS forecasts were out.

Will have to see what SEYP now come out with in terms of EPS forecast for this year..... around 3.5p max is my guess.

Yes PP, you said the same on other bb's too, well done! And we agreed that if it happened such a fundraising would be a good thing for liquidity and institutional ownership.

Just look at that director and staff involvement! They've bought 700,000 of shares between them :o))

I'd assumed that in any placing directors/staff/founders would actually sell some of their stake....instead we have completely new funds being raised and heavy director and staff share buying...

What does that say about their confidence going forward and their commitment?

I wonder how much GNG employees get paid - it can't be much by Western standards. Yet they've stumped up 700,000 at 65p.....rather meaningful I feel.

And note the institutional involvement....

The final para gives the clue as to what's expected:

"These additional funds will enable GEONG to do this at a faster rate than self funding growth as we did last year."

And furthermore, GNG specifically talk about the roll-out of SmartBox internationally, starting in Canada....

GNG has a fantastic business with PortalAge and a captive client base of blue chips providing a profitable core - but the business is also now about the exponential growth possible from the SmartBox roll-out across China and Canada, Singapore etc.

Evidently the institutiona have now seen the light too, investing at more than twice the IPO price a year after that IPO.

That's why GNG should be priced on not just a pure P/E basis, but by factoring in the potential which must be obvious to anyone with any knowledge of the company - including the directors and staff as per today's RNS.

If this placing results in additional SmartBox marketing/sales the benefit could be felt this year to 31/3/08.

Thanks Rivaldo sensible comments and encouraging in a down market today.

Interesting stuff - will be watching again!

Yep riv, for the long term its good, its only the shorter term traders who will be unhappy at the news. All growing companies need cash, its par for the course and good to see they got it away at 65p.

An edited (though still detailed) version of a recent Investor's Champion note is now online for all to see.

Note that it was written pre-fundraising when the price was 84p, and that the writer believes "the sky's the limit" and prospects are "phenomenal" for GNG.

This kind of praise might be usual from a house broker, but coming from the writer - who is EXTREMELY sparing in his praise - is extremely UNusual (he also loves CHNS by the way....):

http://investorschamp.blogspot.com/

"12 June 2007
Geong International, little IBM in big China-it looks a great story!
Author: IC | Posted: @ 16:32

I recently had a very interesting meeting with the senior management of Geong International (AIM:GNG), a market leader in China in providing Enterprise Content Management (ECM) solutions. I know its a tough one for most of us to understand!

Its not your usual offering from China where manufacturing related activity is more the norm but the growth potential for this business appears to be phenomenal. I know that applies to many Chinese businesses but this is a little different!

Geong floated on AIM in June 2006 raising just 750,000 to cover float costs (yes, they can be that high). Unfortunately due to the errant ways of its first supporting broker it saw its share price initially fall c20% from the float price (30p) in a matter of weeks. Since then it hasnt disappointed and the shares have risen to the current level c70p with a current market capitalisation of c22m. Thankfully it has also changed broker!

Geong focuses on the development, implementation and maintenance of Enterprise Content Management software solutions in China. It sells two products PortalAge and SmartBox to a wide spectrum of clients, and in addition supplies consultancy services.

Management possess excellent experience with a number having been with IBM China.

I met Henry Tse (Executive Chairman) and Weidong Wang (CEO) both of whom have been with the company since its founding.

Mr Tse (aged 60 but a youthful 60) worked for IBM for 30 years and his last position was General Manager of Personal Computer Group of IBM China/Hong Kong. From 1997 to 1999 he also served as the Managing Director of Compaq China. He was named The Man of Honour of Chinese Software Industry by the China Centre for Information Industry Development, China Software Industry Association, and Software World Magazine in 2006.

Mr Wang (aged 40 and also youthful!) was one of the founders of Geong and previously worked for the Peoples Bank of China, which he joined after graduating from the University.

Directors and staff currently hold 55% of the shares with the balance seemingly spread across numerous private client accounts in nominee names i.e. there dont appear to be many real institutional holders, although that could change following the recent placing.

Almost 40% of Geongs revenue is recurring with the other 60% from one-off customised contracts.

Blue-chip clients include the top 5 Chinese banks and 3 out of the top 4 futures exchanges in China. The top 10 clients generate 65% of the revenue with a dominance of blue chip names such as IBM China, Motorola, Air China, Shanghai Bank

Twelve months ago, Geongs revenue stream was dominated by the financial sector. Over the last six months, Geong has not only increased its presence in the financial industry but has developed a presence in the automotive, transportation and technology industries.

Geongs growth is looking assured as Chinese companies make enormous strides to catch up with western organisations in terms of systems and processes. The house broker is of the view that the 20% pa profit growth should begin to look timid (interesting turn of phrase!) as Geong begins to expand within China.

Currently it generates all its revenue from Beijing and Shanghai and there are significant opportunities for Geong to expand in the new cities springing up in China. Brokers forecasts currently assume no such growth, and they are taking an extremely prudent view in terms of cash conversion.

The 2007 full year results highlight the increased expenditure on R&D from $95k a year ago to $181k this year. It is likely that such expenditure will be maintained as Geong begins to roll out new products over the next twelve months.

The headcount also increased from 240 to 304 within twelve months and this is likely to grow by another 20% over the next year.

Whilst the valuation looks fairly rich for a business of this type, especially relative to a UK peer group, one has to consider how fast this market is growing, largely from blue chip clients.

If one simply adds back the exceptional costs of cUS$400,000 incurred in 2007 in respect of the flotation I calculate a PEG for 2007 of .62 and based in the brokers estimates a forward PEG for 2008 of 0.79. Ok, you can never really trust estimates but it still looks encouraging!

For 2008 the house broker is currently forecasting revenue of US$11.44m, operating profit of US$2.63m and earnings per share of 7.3 cents. This is after prudently allowing for a 15% tax rate although realistically its likely to be a lot less than this.

With the speed of change in this market I think its irrelevant to look further ahead than 2008.

The house brokers full year forecast looks all the more achievable since Geong secured a contract with Lenovo Group to design, build, deploy and operate a bespoke dealer management and communications systems, based on PortalAge. The contract is to be completed within one year and the value is in the region of $2m.

Investors Champion Opinion

Geong has done fantastically well since floating in June 2006, having extricated itself from a potentially disastrous relationship with its first broker. It also effectively raised no new money, other than something to cover the exorbitant broker costs, to support the business and has managed things well given the rapid expansion experienced during the period.

The current shareholder base with Directors and 30 senior staff holding 55% of equity surely gives confidence to UK shareholders. Relative to UK peers one can also assume that salaries are extremely fair-to say the least!

More cash is needed to help with research and development, expand the sales force and market SmartBox so the recent placing which raised 3.4million will support this. Surely the skys the limit if this business can really make the most of all the potential in the Chinese SME market and keep a tight rein on increasing working capital demands."

I like this co. and I added some yesterday while it's quiet. when the sp shoots up which it regularly does it's impossible to buy a decent amount---I think it's about due another lift up!

Agreed moneyplus. And Investors' Champion today added a second post-fundraising note which couldn't be more enthusiastic:

http://investorschamp.blogspot.com/2007/06/geong-share-placing-thats-what-i-call.html

12 June 2007
Geong share placing - that's what I call management support
Author: IC | Posted: @ 17:06

Geong International announced its placing at the end of last week which raised 3.4 million to principally support the development, sales and marketing of its SmartBoxTM product range for SMEs across China and internationally.

It is very pleasing to note from the announcement the material share purchases by Directors and most encouragingly by management in general.

Chief Exec Weidong Wang applied for 62,051 shares 40,333), Chairman Henry Tse applied for 100,000 shares (65,000) and Non Exec Peter Williamson applied for 38,461 shares (25,000).

Members of the Company's Management (all Chinese remember!) acquired an eye watering 870,214 shares raising approximately 0.57 million. I consider this to be a material sum, and not just because they are Chinese and clearly earn substantially less than us overpaid folk in London and the South East, but for management in any small cap 22m market cap business.

Thats what I call a vote of confidence!"

but do rmemeber that this is a mini-minnow and assuredly seriously illiquid.
while the chart below is not horrid and rsi is very low, sp is still below both 25 and 50 dma, both of which could provide resistance.

rivaldo555,thinking of going into Geong ,however any ideas why the sp is all over the place.

CW, have a read of this morning's stunning AGM statement and then forget about why a small relatively illiquid Chinese company has been disproportionately marked down in recent weeks along with the rest of the market - just think of the prospects and potential here:

http://www.investegate.co.uk/Article.aspx?id=20070806070018PAFFF

"AGM Statement

* Expect to exceed market expectations

At the AGM being held this morning of GEONG International Limited (AIM: GNG),
the Beijing based, provider of content management software and solutions, the
Chairman, Henry Tse, will make the following statement:

"I am pleased to announce that trading for the first four months since the year
end has been particularly strong and that the Company expects to report
significant growth over the remainder of the year.

The current and expected growth is partly as a result of the additional funds
raised at the time of the share placing in June. These funds are enabling us to
continue the development of our sales and marketing channels and also to
accelerate the roll out of our award winning PortalAge and SmartBox related
products.


SmartBox
Sales of the full version of SmartBox, which is aimed at SMEs, have continued
to grow through both our conventional sales channels and by winning contracts
to supply organisations directly.

There are two contracts of particular note in relation to SmartBox I would like
to mention. The first, worth US$70,000, is with Beijing Jingzhou Logistic
Company and is to increase the number of users they have and add new solution
modules. The second contract, worth US$68,000, is with Guangzhou Hongfeng Group
and is to provide SmartBox to their headquarters and five subsidiary offices.

With typical orders for our SmartBox product being in the region of US$5,000,
winning contracts of this size signifies the potential to grow SmartBox in
installed accounts. As the SmartBox customer base builds, so will the full
market potential of this product.


SmartExpress
SmartExpress is the entry level product of the SmartBox product family. As part
of the development of our sales strategy, in June we launched a three year
"Loyalty Programme" for SmartExpress (which was formerly called SmartBox
Express). This is aimed at very small businesses (VSBs).

The Loyalty Programme is structured such that VSBs pay a minimal initial fee
per user in the first year and then pay double that amount for the second and
third year. The aim of this programme is to allow quick penetration into the
VSB market by providing a low cost, basic, ECM solution, which can be upgraded
or added to at a later date.

We believe that by stimulating the adoption of our products by very small
businesses, we will benefit as these companies grow and upgrade/migrate to the
full version of SmartBox. Additionally, by structuring the licence fee for our
product in this way, we become far more accessible to businesses and ensure
recurring revenues of twice first year sales in the second and third years.

So far the Loyalty Programme has been launched in two cities, Beijing and
Shijiazhuang in the Hebei Province, and the level of uptake has been very
promising. To date, we have provided over 17,500 user seats to 875 SMEs and we
are expecting sales of this product to accelerate over the coming months as we
extend the Loyalty Programme to further locations.

PortalAge
In addition to the growth opportunities provided by the additional funding from
the share placing, we continue to maintain very high levels of quality in
relation to the services, products and solutions we provide. With regard to our
PortalAge system this is reflected in a number of new contract wins since the
year end.

We announced in July, that we had been awarded a contract in partnership with
Oracle China, to deliver the fourth phase of Shanghai General Motors' Dealer
Management System which is based upon the GEONG PortalAge infrastructure that
we originally designed and installed in 2005.

As I said at the time of that announcement, being involved in the fourth phase
of Shanghai General Motors' DMS programme is testament to the scalable and
adaptable nature of GEONG's PortalAge products and solutions and the continued
high levels of quality and service we pride ourselves in providing. Partnering
with the likes of Oracle means we are able to provide quality solutions and
services to large organisations, whilst retaining the innovativeness and
flexibility that being a much smaller company brings.

This approach and the belief that our larger partners have in GEONG is further
highlighted by the fact that today, I can announce that GEONG has been awarded
core supplier status by Huawei-3COM for the second year running. As a result,
GEONG will continue to work with Huawei-3COM on a number of projects, based
upon our PortalAge solution, and we expect the contract to be worth up to
US$350,000 in the current financial year.

In addition, I can also announce two further contracts relating to our
PortalAge solution.

The first contract is an annual agreement with the Bank of Communications to
provide support for the PortalAge related system GEONG has developed for them
over the past four years. This contract is worth US$400,000 in the current
financial year. The second contract is with the China Bond Company and is also
worth US$400,000. This contract is to provide a PortalAge based solution to
improve their Web-based customer service system.

Alliance Agreements
During the period we have signed two Alliance Agreements which are aimed at
enriching our solutions offering.

The first of these is a Master Territory Agreement with Responsetek Networks
Corporation which is a world leading Customer Experience Management (CEM)
provider. Together we are providing a value-added CEM solution, based upon the
PortalAge platform, to our joint and separate clients who are sponsors of the
2008 Beijing Olympics.

The second Alliance Agreement is with Unistrength Consulting Company, is a
leading risk management consulting company in China. We are working together to
research, develop and promote internal control solutions based on the PortalAge
platform.

Other sales and marketing strategies, for both our PortalAge and SmartBox
product range across China and, internationally through GEONG's Canadian
representative office, are also currently being developed and we will update
the market on these developments when appropriate.

In conclusion, the successes we have had to date, the activities we are
undertaking, the continuing opportunities we are facing, the positive signs
within our market and the additional funding from the share placing, which will
help us to accelerate our growth plans, mean that we expect to be ahead of
current market expectations for the full year to 31 March 2008.""

A very bullish statement after only 4 months into the current Financial year.

PRO REFERENDUM MARCH AND RALLY
LONDON
SATURDAY 27TH OCTOBER

WWW.PRA.UK.COM

GNG is looking better and better....

http://www.newratings.com/analyst_news/article_1586662.html

Geong International upgraded to "buy"

Monday, August 06, 2007 10:31:28 AM ET
Seymour Pierce

LONDON, August 6 (newratings.com) - Analysts at Seymour Pierce upgrade Geong International Ltd (ticker: G2Z) from "outperform" to "buy." The target price is set to 90p.

In a research note published this morning, the analysts mention that the company has recently raised funds worth $6.5 million and its order book is overflowing with contracts. Geong International is expected to achieve 25%-30% annual EPS growth over the next three years, the analysts say. Geong Internationals stock is trading at a 20% discount to the technology sector, which is unwarranted, given the companys market potential in China, Seymour Pierce adds. The profit estimates for 2008, 2009 and 2010 have been raised by 20%."

And there's an investment fund manager fan here:

http://investorschamp.blogspot.com/2007/08/geong-international-now-thats-what-i.html

"Geong International - now that's what I call an AGM statement
Author: IC | Posted:07 August 2007 @ 22:41
GEONG International the Beijing based, provider of content management software and solutions came out with a cracking AGM statement yesterday.

As a shareholder and big fan of this business I admit to being a little biased but it really was a good one with the sort of clarity that is so often absent from the old stagers of the market.

Naturally the house broker came out all guns blazing (quite right too!) upgrading their profit forecast for 2008, 2009 and 2010 by 20%.

Trading at 16x March 2008 earnings, they commented that GEONGs almost 20% discount to the Technology sector is undeserved considering the potential market available to the company in China-the problem seems to be that we sceptical Brits dont generally appear to entirely trust whats going on in China! Anyway the good old broker is upgrading their recommendation from Outperform (18 May 2007) to BUY with a price target of 90p.

Revised broker estimates now indicate forecast sales of US$17.6m for the year end March 2008 with earnings per share of 7.3 cents resulting in a PER of c16.5x based on a 60p share price and sales of US$20.8m for 2009 with earnings of 10.0 cents a share resulting in a PER of 12x. By now you should know me well enough to realise that Im not bothering about 2010-pure fiction!

It was an excellent announcement that surely justifies a material uplift in the share price even in the current market. Im not being paid to say this but as a shareholder you might be inclined to dismiss this as sales waffle in an attempt to push the stock! However, in its defence this little group hasnt disappointed and the staff and management have just forked out a load of hard earned money to buy shares in the placing.

They have (or had a few weeks ago) 3.4m of net cash to help realise their dreams and with the projected earnings growth of over 25% per annum over the next 3 years the valuation surely doesnt look very demanding.

The house broker considers their forecasts beyond 2009 are prudent (come on chaps, you always do!) and cautious with margins (55% last year), forecast to decline to around 45% this year as GEONG increases sales and marketing spend to expand its geographical coverage in China. They are also assuming that, in 2007/2008, the group will increase selling and distribution costs almost three-fold (that sounds reasonable) to establish its presence nationally.

While PortalAge remains the key revenue earner for the time being (c80% of turnover) SmartBox and SmartExpress, aimed at medium and very small businesses respectively is where the future lies. GEONG is steadily making significant inroads into SMEs and very small businesses where competition is apparently almost non-existent.

I will be interested to see if they can keep on top of the increased working capital demands. The Loyalty Program model that they are now adopting for very small companies alters the cash flow profile somewhat-we know what the Chinese high growth merchants are like at credit control!

The China risk is ever present to rein back the share price and in the current market Geong will have to keep coming out with positive news to really satisfy the doubters! However, little Geong has delivered of late and surely merits a great deal more attention."

added to Quantum Leap portfolio, but as the mag added, watch out as stock is very thinly traded

Definitely one to tuck away as it's difficult to buy and sell at times but look at the recent contract wins with some of china's biggest companies. A minnow now but it won't be in a couple of years if it keeps growing like this! I wonder if Soul Traders is still around.

chart certainly looks quite tasty ..... see post 187, but the caveat remains

I've been in and out of this one a couple of times. I'm sure it has good long-term potential - maybe now is the time to hold onto this stock. And yes: it can be difficult to sell at times.

Since Seymour Pierce issued their last forecasts, GNG have RNS'd a further ten contracts worth $2m - a significant sum for this still small company (the m/cap is only 26m). Seymour Pierce have noted that their current forecasts are conservative. One could conclude that these new contracts plus any further news will lead to more upgrades - and there are still five months to go before the 31st March year end.

Seymour Pierce reiterated their Buy argument last Friday, saying:

""With early stage R&D on SmartBox complete, the R&D expense should decline quite rapidly and GEONG is expected to increase its marketing and infrastructure spend to drive up the sales of SmartBox". The broker added that it reckons the company's almost 20% discount to the sector is undeserved. It also said there is the potential for upgrades in 2008 and 2009."

Given that the new financial year is only five months away, I wonder if anyone could describe GNG as other than decent value if it remains at the current price on what would then be a current year P/E net of cash/debtors of 14, a forward P/E of say 11 and a PEG of 0.6?

At 83.5p GNG are on a forward P/E of around 16.7 based on 5p EPS next year and a P/E of 13.2 based on 6.3p EPS the next year. But on known facts GNG have around 5.6m of cash/blue chip debtors against the 26m m/cap, or around 21%. If you strip this out, a P/E of around 14 and then 11 looks pretty decent value for a company growing as fast and with such huge national and international potential as GNG.

In addition, the PEG is recognised as being as valid a measure of worth as the P/E, if not more so. On current forecasts GNG are on a PEG of just 0.6 - this before taking account of net assets or any upgrades to come.

No-one making a sensible valuation of any company should simply look at the P/E and ignore both the rate of forward growth via the PEG and a cash/asset mountain relative to the m/cap.

A few more factors to take into account:

- GNG have announced a series of contract wins over the last 18 months, and SmartBox has made an "explosive" start to the year. Given these we can imo be fairly sure that revenues will at least match broker forecasts for the next couple of years
- GNG also have security of income going forward due to their blue chip client base, who are "locked in" to PortalAge once installed
- a quick calculation of revenue "per seat" from SmartBox/SmartExpress achieved per the last trading statement will tell you the potential for this product...
- GNG haven't put a foot wrong since they floated, unlike many other companies, they have a consistent and improving track record, and they're run by a "Westernised" management who are all ex-IBM, Motorola etc.
- and GNG directors and staff bought 700,000 of shares in the recent 65p placing - when you consider this sum relative to the TOTAL directors' remuneration last year, which was just 140,000 from memory, and to incredibly low Chinese wages by Western standards....

The recent placing will have a minimal effect between H1 and H2 EPS - H1 will be based upon 29.8m shares and H2 upon 30.6m shares, so the difference is miniscule and immaterial.

Secondly, it's an unfortunate fact of life with Chinese companies that debtor days are high due to the slow payment culture. However, GNG's trade debtors are fully recoverable due to the nature of their client base - the top 5 Chinese banks, 15 of the top 20 Chinese securities houses, the top Chinese futures exchanges, auto manufacturers, airlines etc - I read a while ago that they had barely had a single bad debt.

The newly launched SmartBox/SmartExpress is a different kettle of fish, as it's aimed at the mass market. There are two points to make here:

- the sale is immediate as it's an "out of the box" solution, so cash receipt is instantaneous
- and it seems per a poster on ADVFN that income for the 3-year loyalty programme is received on day one, split 20/40/40 for each year (i.e a discount incentive for year one), so this will again boost cash flow in a big way if SmartBox continues its terrific start.

In other words, we could find that cash flow improves inordinately assuming SmartBox thrives.

Short-termers might be put off by the high seasonality in GNG's results which on a simplistic view will lead to a low EPS for H1 relative to the share price. But anyone taking a view longer than a few weeks should imo see the secure income streams referred to above, note the seasonality from prior years and wait for further contract RNS's, news of SmartBox sales and hopefully more forecast upgrades.

Another two contract win RNS's today - that's around $3.8m of contract wins announced in just the last 6 weeks....not bad going :o)) Almost 50% of last year's entire turnover....

Since the last broker forecast was prior to any of these we should see broker upgrades, unless Seymour Pierce choose to keep their powder dry till after the interims.

Sony are on board now - for the first time I think? How much more work will they require in future as they build their presence in China?

And the quality of GNG's work is obvious from the follow-on contracts with Lenovo and Shanghai Motors:

http://www.investegate.co.uk/Article.aspx?id=20071113091658PB927

"GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, today announces
that it has signed contracts with Lenovo Group Limited (Lenovo) and SONY China
Limited (SONY) worth US$535,000."

and:

http://www.investegate.co.uk/Article.aspx?id=20071113091919P0941

"GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management ("ECM") software and solutions, today announces
that it has signed two contracts with Shanghai General Motors ("SGM") worth
US$1,189,000."

GNG's excellent recent interims to 30/9/07 in which they stated they'd beat market expectations for the year are here:

http://www.investegate.co.uk/Article.aspx?id=20071122070000PCAE0

At 30/9/07 GNG had an $11.1m cash/blue chip debtor pile against the 24.9m m/cap at 79p. If you exclude cash and debtors from the m/cap GNG are next year expected to make $3.8m PAT on a net 19.4m m/cap.

SmartBox (SmartExpress for small businesses) is GNG's newest product being a boxed solution for SME's. It's now being promoted to 337,000 SME's in the Shanghai area alone thanks to the recent alliance with the Shanghai Enterprise Information Promotion Centre. Further such alliances are being sought, and international SmartBox sales are starting in Canada and Singapore.

In addition PortalAge and SmartBox are now available in English, and distributors have been appointed for the US and Canadian markets.

GNG also inked a deal in Nov'07 with IBM to bundle SmartExpress with all IBM PC servers sold in China:

http://www.investegate.co.uk/Article.aspx?id=20071122070000PB6ED

The latest Nov'07 broker note is here:

http://www.buisseret.com/gng/Seymour%2022_November_2007.pdf

The increased forecasts are undoubtedly cautious as they not only include tax at 15%, but are only slightly up this year although much increased the year after - they now go for 7.5c EPS this year and 12.2c EPS to March'09.

The PEG at 79p is just 0.34!!

The PBT figures are for $2.7m this year and $4.3m next year. Assuming 5% tax both years, and a weighted 30.44m shares this year and 31.5m shares next year, the EPS figures would be:

March'08 - 8.43c, or 4.21p
March'09 - 12.97c, or 6.48p

I'd say an imminent current year P/E of 12.2 isn't exactly demanding. If you exclude the $11.1m cash/debtor pile that P/E probably drops to around 9.5 or so.

Other bullish points from Nov'07's interims:

- 13 new PortalAge clients signed in H1 alone
- over 100 presumably blue chip clients now using PortalAge
- GNG are partnered with Microsoft, IBM, BEA and SAP
- a possible acquisition soon. Maybe overseas, and maybe earnings-enhancing?
- SmartBox/SmartExpess sales up 740% installed in 1,550 businesses already
- SmartBox being rolled out to 9 major Chinese cities
- SmartBox winning large-ish contracts like the $67k Beijing Paper win
- Guangxhou branch now established
- new contracts with Bank of Anhui and EMC China not previously announced

I am extremely confident about this company's prospects.

A constant stream of good announcements plus another good one today---this co. is taking a long time to really get noticed! sp steady but doesn't reflect the huge progress this co. has made--perhaps the new year tipsters will pick up on it. I'm happy with my early bird holding but puzzled at so little reaction.

GNG looks cheap at 72p now. BUY

only budgerigars go cheep! ..... as for GNG, rationalisatioin could argue that a bounce is on the cards, but with sp now challenging 200 dma, beware should that fail

Yet another terrific RNS from GNG on Monday - the $3.5m contract will fall into the year about to end on 31st March, and compares to last year's ENTIRE turnover of just over $8m!

GNG will soon be on a current year P/E of only just over 10 based on 6.3p EPS to 31/3/09, although imo we may see further broker upgrades with/after a likely March trading update or the results. GNG also has almost 30% of its 20m cap in 5.7m of net cash/contract debtors - strip this out and the P/E falls to probably 8 or so.

In addition, GNG has high recurring income (around 40% from memory), and also high visibility of forward revenues for the next couple of years - just look at all the RNS's for a start. A great comfort in these times where shares with visible weaknesses on that front will be punished.

Incidentally, one could only buy 5k (3k's worth!) GNG shares maximum onli ne this morning, so things look pretty tight once any buying interest comes in.

Here's the RNS - I look forward to GNG being recognised as undervalued soon given all the above. DYOR etc:

http://www.investegate.co.uk/Article.aspx?id=20080121070000P0CE2

"GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, today announces
that it has signed an extension to a contract with Lenovo Group Limited
("Lenovo") worth US$3.5 Million (1.75 Million) in the current financial year.

The extended contract is to expand Lenovo's Dealer Incentive System (DIS) over
the coming year. The DIS is based on GEONG's PortalAgeTM content management
system and infrastructure and was originally designed and implemented by GEONG
last year. The DIS is now being expanded to support Lenovo's high level PC
products and to provide an English option allowing its use in Lenovo's offices
worldwide.

GEONG also announces that it has signed a two year extension to a contract with
one of the world's leading computer manufacturers worth US$700,000 (350,000)
per year. The extended agreement, which runs until December 2009, is to provide
general e-business services for the company's China website as well as the
extension of some PortalAgeTM solutions.

Commenting on the contract extensions, Wang Weidong, Chief Executive of GEONG,
said: "The extension of contracts with such internationally renowned companies,
including Lenovo, confirms the quality of the systems we have already implemented
for them and demonstrates the adaptable, scalable nature of the PortalAge
platform.""

SP gapped up as tipped on RHPS over weekend

Silvermede, t'was a decent enough summary by RHPS - and in talking about the placing at 65p the writer doesn't even mention the 700,000 of shares taken up by management and staff at that price, compared to the current 67.5p.

If Seymour Pierce forecast $6.5m of cash at 31st March, then cash plus receivables could amount to say $13m - at say 7m that would be almost a third of the 21m m/cap on its own.

I see the pound is now down to 13.98 Chinese yuan - that's down from 15.4 six months ago. Likely to fall further too I'd have thought.

Which means GNG's profits should be 10% more in pure translation terms.

For this coming year that would mean almost 7p EPS and a P/E of 9.6 - the PEG would be something like 0.25!

Here's the full narrative:

"China: the new dot-com boom

China is fast getting wired up. Last year the number of internet users in the PRC rose from 137m to 210m and this year the total will overtake that for the United States. Individuals are getting online and business too is fast embracing information technology. Total spending on IT rose by 16% last year and with businesses all over this vast country of 1.3bn people keen to cash in on the attention that will be generated by this summer's Beijing Olympics these trends are not about to come to a halt.

Another trend in China has been the growth of 'Small and Medium Enterprises', otherwise known as 'SMEs'. There are now 4.3m, often family run, SMEs in China and they account for about 60% of the country's gross domestic product and employ about 75% of the workforce. They have the blessing of the Chinese government, well aware that the creation of jobs in this sector can replace lost jobs in the inefficient state-run sector and consequently head off any social unrest. It was not always thus. Small entrepreneurial businesses were an anathema to Chinese governments before the 14th Party Congress in 1992. This saw the announcement of the 'socialist market economy', which for the first time accepted that firms in the non-state sector could play an important role in national economic development. The 15th Party Congress in 1997 made this position official, and one of those many slogans which decorate Chinese life was born.

'Grasp the large, release the small', referred to the Chinese government's policy of keeping hold of giant enterprises, while allowing small collective enterprises to move into the hands of private owners. Thus sanctioned, hundreds of thousands of small state-owned firms effectively moved into private ownership and this number has since been swelled by the establishment of new firms by budding Chinese entrepreneurs.

So these various forces have come together to produce a huge and very dynamic group of SMEs, all in a hurry to make money and all well aware of the importance of the effective use of technology. Giving them just what they require is GEONG International, a firm with its headquarters in Beijing and other offices in Shanghai in the north and Guangzhou in the south. If China is the country of slogans, then IT seems to be the industry of awards. And GEONG has a few of them. It has been named `Most Successful Content Management Software Enterprise in China 2006' and identified by Deloitte as one of the 50 fastest growing IT companies in the country and a member of its 'Technology Fast 500 Asia' list.

GEONG must be doing something right, and so for that matter must its executive chairman, a man with 30 years of experience with IBM in China before he joined GEONG in 2000. Henry Hak-Yan Tse was listed in the book entitled Knowledge Heroes - the 50 People affecting Zhong Guan Chun (Beijing's equivalent of Silicon Valley) and more recently as 'The Man of Honour of Chinese Software Industry' by the China Centre for Information Industry Development.

Alongside Mr Tse, who holds 11.6% of the shares is 40-year-old chief executive and holder of 12%, Weidong Wang. But when the pair listed GEONG on AIM in June 2006, they found investors in a particularly unreceptive mood, and managed to raise just 273,000 through selling shares at 30p. A year later and the City demonstrated its fickleness by happily subscribing 3.4m in a placing of shares priced at 65p. Does this mean that City investment managers merely lick their finger and invest according to the prevailing wind, or have they been persuaded to change their view by GEONG's performance? Plenty of the former, I would say, but certainly some of the latter as well because GEONG is building up a highly impressive record of growth.

Sales in this financial year to March 2008 are expected to be six times the $2.9m recorded in 2003/4, and the progression of profitability has been scarcely less impressive. There is no sign of this stopping. In its latest set of interim results in November GEONG reported that organic revenue growth was 27% ahead of its planned 60%, and Mr Tse said that 'the Board is very positive about the future of GEONG and expects full year figures to exceed current market expectations.'

So what is the source of this explosive growth? It is IT and, increasingly, it is demand for IT from China's SME sector. Since 2000 GEONG has established itself as one of China's leading providers of Enterprise Content Management (ECM). ECM software is an internet-based suite of products that enable organisations to capture, store, manage, save and deliver structured and unstructured content, documents and data. In other words it is really the backbone of any organisation. ECM software provides databases that store varied information and then allow differing levels of access dependent upon the identity of the user and his or her level of authorisation. So, for example, an authorised employee might be able to add, delete and edit all content, whilst customers might only be able to view certain content and generate reports relevant to themselves.

This is pretty much standard within organisations in the Western world and China is fast catching up. But while big Chinese organisations have largely adopted ECM software, many SMEs are only just starting to understand the benefits - and equip themselves with the technology and internet connections to employ it. Espousing its very own slogan 'Deep And Broad' GEONG offers a range of products designed to suit any size of customer. For large organisations it offers the 'PortalAge' suite. 'SmartBox' is designed to for the SME sector.

PortalAge has achieved strong market recognition over the last six years. Early sales were predominantly to the financial sector, and today China's top five banks and five of the top 12 securities firms are amongst GEONG's 100 customers. Now PortalAge has gone well beyond the finance industry. Air China, which of course has the critical job of handling travel to and from the Olympic Games, has followed Shanghai Airlines and China Travel International in deploying PortalAge. Motorola, China Electronics, Shanghai Telecom, Lenovo and DELL are customers. And GEONG has had notable success in the motor industry, where it cites FAW Volkswagen, the Shanghai Automotive Industry Corporation and Shanghai General Motors. For these customers PortalAge is providing dealer management systems, centralised e-procurement systems, design and auto manufacturing systems, and an employee collaboration and information sharing portal.

SmartBox is an 'off-the-shelf' software product aimed at SMEs. This has a simple architecture made up of optional modules plugged in to a web-based platform. With a typical order worth just $5,000 it is easily affordable, and has also received various accolades including being named as one of 'China's Top 100 Most Influential and Innovative Products' by the magazine of the Chinese Ministry of Science and Technology.

With these basic foundations GEONG is now pushing sales and broadening the scope of the products. For instance, it has introduced several versions under the Smart BOX umbrella including Smart ISO for ISO9000 and 'SmartExpress' which were launched in July and August of 2007, while in September it introduced an English version of SmartBOX which has sold in Canada and Hong Kong.

SmartExpress is the entry level product of the SmartBox product family, and a 'Loyalty Programme' aimed at VSB's (very small businesses) allows them to pay a minimal initial fee per user in the first year, then to pay double that amount for the second and third year. This scheme was initially launched in Beijing and the city of Shijiazhuang in Hebei and has proved so successful that GEONG is ready to expand the programme to nine other major cities in Northern China. Another sales initiative was announced last Febrrruary in the shape of an alliance agreement with the Shanghai Enterprise Information Promotion Centre, the latter a joint venture between the Shanghai government and a number of leading Shanghai universities, which aims to help SMEs to improve their information systems and business management processes. There were, according to the Shanghai government, 337,353 SME businesses in the region alone in 2005.

Now, with the launch of the English version of SmartBox and the development of an English version of PortalAge, GEONG is ready to tackle overseas markets and has signed partnership agreements in the USA and Canada. It has also for the first time raised the possibility of growth through acquisition, saying that it is 'in the process of identifying a few companies in local and overseas markets which we believe will complement GEONG in terms of market coverage, product and technology development, talents and skills.'

GEONG has been awarded core supplier status by IBM China Global Business Services, and has also gained recognition from, and partnered with, other IT leaders. These include Oracle, with whom GEONG holds core supplier status; Microsoft, for whom GEONG is a 'Gold Certificated Partner'; enterprise infrastructure software provider BEA, with whom GEONG signed a territory alliance for over 110 city commercial banks; and SAP for whom GEONG is an official enterprise resource planning partner.

These are all excellent endorsements for GEONG's software products and can only further improve its reputation and accelerate sales. To date, GEONG has signed up 100 corporate clients for PortalAge while SmartBox has already being installed for 50,000 users in over 1,500 SMEs - a good start but still only a fraction of the addressable market.

RHPS Verdict: My only concern is GEONG's cash performance. At the end of September it was owed $6.9m by its customers, attributed to the fact that 'slow payment is a common factor when dealing with large organisations in China', However, GEONG has no bank debt and broker Seymour Pierce forecasts that its net cash balance will have swelled from September's $4.2m to $6.5m by the March year-end. Assuming that this is the case then GEONG is a growth share on a very modest rating. BUY. "

GNG announced yesterday a series of annual contract maintenance wins worth $1.2m with four of the biggest banking and financial services companies in China:

http://www.investegate.co.uk/Article.aspx?id=20080219070000P...

This is in addition to the $4.9m of contract wins announced a month ago with Lenovo and one of the "leading computer manufacturers" in the world:

http://www.investegate.co.uk/Article.aspx?id=20080121070000P...

It's worth noting that this $6.1m of contracts compares with last year's entire annual company turnover of $8.1m, and with a 20m m/cap at 65.5p.

As a result, GNG's brokers Seymour Pierce have now increased their forecasts for the third time this year to March'08 and March'09 as follows - GNG are now on a 2008/9 P/E of only 9 and the broker has a 120p target price, i.e 83% upside this year:

"Geong (GNG.L) Market Cap: $40m BUY
Contract wins and profit upgrades

With this contract wins of $1.2m to be delivered over the next 9 to 12 months, we raise our profit forecast for financial years to March 2008 and March 2009 by 7.5% and 15% respectively. For March 2008 our new PTP is $2.9m compared to $2.7m and for March 2009 PTP goes from $4.5m to $5.2m.

Trading at 9x March 2009 with almost $7m of net cash, March 2008 forecast well on its way to be delivered and the management continuing to win new contracts, our 12 month target of 120p is looking excellent value. BUY."

The P/E to March'09 around 9 equates to a ridiculously low PEG of something like 0.12.

What has happened to Geong today falling drastically despite good results.

Very strange drop. No recognisable bad news, nor particularly heavy trading in GNG.
GNG is also traded on the german stock exchange & the opposite happened, with the sp increasing by 2.2%

A few things to think about, after the profit warning released earlier. Quite awful to say ahead on the 10th of April RNS, and then say now below forecasts.


1/ Remember SMC, WNG.........does GNG now also fall into this category, loved by PI's, not by insti's, ramped on the BB's, and funny ways of accounting for revenue and pumping out growth ? Are there "more corrections" coming up, just like the SMC situations ?


2/ Costs - China is no longer cheap, and costs are rising fast. Wages in Shanghai and other western cities are going through the roof - be interesting to see admin costs movement.


3/ Sentiment. They have made a terrible mistake and misled the market. After such a feat even a 10 times historic price is not too much (and that might be 35p). Who is going to believe their next statements so easily, are there more stones to be unturned ? and more corrections needed.


4/ Ramping and hyping of GNG. Its had more than its fair share. Tips galore.......will the tipsters all now be issuing "sell" signals as they do not want to say hold on to a stock where such a misleading statement has been made, and also now a profit warning has been issued.


Traders will be in now to try to ramp a rebound, will it be sold into as people now escape for the summer. Or will it just continue to crash down as the poor liquidity that made it rise so fast, makes it fall fast too, as I have been saying it could for months at AFN.

Anyway, lots and lots of egg on faces with this one.

In case anyone is wondering what happened. Broker forecasts were 3.94p.


On the 10th of April they made this "pre-close" statement :

http://www.investegate.co.uk/Article.aspx?id=20080410070000P372A

10 April 2008

GEONG International Limited
("GEONG" or "the Company")

Pre-close trading update
Strong performance, ahead of market expectation

GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, is pleased to
provide a trading update for the year ended 31 March 2008.

The Board expects to report that revenue and profit before tax for the year
will be ahead of market expectations. In addition, trading for the new
financial year has started strongly.

The better than expected results reflect ........................

*************************************

That should have been the last trading update, as it was the pre-close update. So to issue another update means that someone has rejected the draft figures. Accounts issues ?
From being ahead of expectations, they now say in the new update (and remember forecasts are circa 3.9p)

http://www.investegate.co.uk/Article.aspx?id=20080603122234PFC48

Date: 3 June 2008

For immediate release

GEONG International Limited

("GEONG" or "the Company")

Trading Update

On 16th June 2008, GEONG International Limited (AIM: GNG), the AIM listed,
China based provider of enterprise content management (ECM) software and
solutions, will announce its preliminary results for the year ended 31 March
2008. These results will be the Company's first set reported in Sterling. The
market expansion and investments in opening a new branch office in southern
China and the additional hiring of staff will result in the Company's revenues
being not less than 7.6 million, profit before tax being not less than 1.15
million (excluding amortisation) and earnings per share of 3.5 pence (excluding
amortisation).............................

******************************

In effect they are now saying, without openly saying it, that results will be "below market expectations"


So, you have an emergency de-facto profit warning RNS rushed out yesterday. And that is why the SP has tanked. Its a profit warning plain and simple imv, and it means that the earlier statement of being "ahead" was total and utter bull. Now, what other surprises are going to come out, and also, who will so easily believe anything they say again. Someone at board level should be walking the plank for this imo.

At the end of the day what they have done is, imo, disgusting.

The SP got ramped up ahead of the 10th April "pre close trading udpate" release about being ahead. So insiders were buying ? in before the company released the "were wonderful and ahead of expectations" statement.

And then, they try to hide a "profit warning - in fact we are below market expectations" with an "AFTER PRE CLOSE TRADING UPDATE, TRADING UPDATE".



They should have come out yesterday with the full reasons for the release, and why they are now below after saying they were ahead.

Its not good enough, imv, to not only have to correct an "ahead" to now "behind" - but also try to spin it off as "not a profit warning" and then also give no details about why the change has happened.

More bad news ahead..........jolly well looks likely.

Broker forecasts were 3.94p??? PP, you know the importance of a decimal point. Are you sure that's right?
G2Z:GR German Geong just dropped 30%!

So GNG might go down lower then...

Yep, that was the forecast for the prelims to be announced soon. 3.94p of earnings.

Now they say not less than 3.5p..........so a profits warning was made.

Still amazes me people on AFN are saying its just a "PR mistake" or "just a small problem".


It is not a small problem imv. It has been commented on (by me a lot as well) that GNG are pumping out news flow, even the smallest little cluster of contracts gets a press release. They seem, for some reason, to want to drive the price with as much PR and nonsense as possible imo.

What does that suggest ? Get rich quick scheme ? The underlying outlook is not as rosy as some think ? Pump it fast and dump your holdings before everyone catches on ? Get the price up for another placing soon ?

It is not the markings of a company with years and years of growth ahead, it is the markings of someone trying to be in the right place at the right time for a short period of time, and "bubble" here we go imo.

The simple fact is, they overstated their earnings and revenues in the April 2008 "ahead" statement.

WHY ?

Some reason must be behind this, and no matter how its spun from now on, I think most can appreciate the gravity of the situation, to have to release another update just before results to say "behind".

What are they up to ? What are their motives ? Can anyone believe what they say in future without always thinking back to this episode ? and perhaps another corrective statement will follow any future statement.

Still amazed at how the blinded large holders (obviously) are trying to portray this as a little mishap........its a major and very serious breach of trust to say "ahead" and then correct it weeks later to "behind" imo.


It would be very understandable to see wholesale dumping of GNG once results are out and any initial spike fades away fast.

A bit harsh PP -I fortunately sold most of mine before the fall but I have not lost confidence in this company. It has contracts with most of China's blue chip cos and is growing very rapidly, it's employees who are not well paid by our standards bought shares at 65p and Henry Tse has said he will clear up all doubts at results time on the 16th. I am involved with a co. that due to new accounting rules has to move over 2 million pounds worth of contracts into next year because work in progress but not all money received I suspect that GNG being a young company has fallen into this trap and is obliged to restate. We know the work is there and growth is rapid--I look forward to next year and feel this is a blip. They are still making good profits and doing well IMO.

what makes you think that chinese accounting rules have anything but a passing resemblance to those in the west?

reporting in sterling this time and I think? a UK based accountancy firm.

55p down 3p...GNG looking vulnerable... the graph looks like another tumble on the way.

I agree. 50p looks likely, imo

Results are going to be very interesting.

The "Pre Close" update of being "AHEAD" of expectations has not been retracted.

This is the update.

http://www.investegate.co.uk/Article.aspx?id=20080410070000P372A

10 April 2008

GEONG International Limited
("GEONG" or "the Company")

Pre-close trading update
Strong performance, ahead of market expectation

GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, is pleased to
provide a trading update for the year ended 31 March 2008.

The Board expects to report that revenue and profit before tax for the year
will be ahead of market expectations. .............

++++++++++++++++

With no retraction of the "AHEAD" statement, and with broker forecasts established at that time of

2008 PTP 1.46m
2008 EPS 3.92p


It must be therefore expected as the company have said "AHEAD" of market expectations in their "PRE CLOSE" that PTP and EPS are going to be well ahead of these figures.


Should they fail to be ahead of these forecasts that were in place at the time of the pre-close, well, it will shatter confidence in the company imo.

It will be very difficult for anyone to comprehend, imo, that with no retraction of an "ahead" statement that they could now publish results below those broker forecasts.

Therefore, total expectation must be of "ahead" results, in excess of the broker forecasts - that will please GNG holders if it is - or shatter their confidence if not, imv.

Geong announced that they will be ahead of market expectations in their Pre Close update on the 10th of April.

Broker forecasts at that time were :

2008 PTP 1.46m
2008 EPS 3.92p


So, with no retraction of that "ahead" and with no correction of expectations in any statement since, the minimum values to be expected should be 10% above the broker forecasts, that quantifies an "ahead" statement.

So in fact we must be looking for :

PTP of 1.6m
EPS of 4.3p

Come on Geong, you said ahead, you have not retracted it, or offered any guidance on the levels to be expected with reference to market expectations, apart from the earlier "ahead".......so lets see them figures.

Put a few figures together, which provide an easy reference point to investigate the GNG results once released.



Broker Forecasts in place at "AHEAD" statement in pre close update 10th April :

2008 PTP 1.46m
2008 EPS 3.92p

"AHEAD" means +10% or more of the broker forecasts.

So in fact we must be looking for minimum on Monday of :

PTP of 1.6m
EPS of 4.3p

___________________________________________________________

Therefore, figures to watch compared to Interims are :

Expected PTP = 1.6m Actual PTP = ????

Expected EPS = 4.3p Actual EPS = ????

Interim Cash level was : 2,148m Cash level now is ???? (more is good)

Net cash generated from ongoing ops : -1.4m Now is ???? (Negative means eating cash in working cap)

Trade receivables was 3,494 Now is ???? (Less is good - not eating cash)

Other receivables was 712K Now is ???? (Less is good - not eating cash)

Inventories was 173K Now is ???? (Less is good - not eating cash)



Figures are approximate, and using 1.97 exchange rate.

Links :

Pre Close update - "Ahead" not retracted - http://www.investegate.co.uk/Article.aspx?id=20080410070000P372A

Interims in US$ - http://www.investegate.co.uk/Article.aspx?id=20071122070000PCAE0


.

Well, sorry for the late response to results, busy today. Well, below below below BELOW.

Below even the standard broker forecasts. How can these people, get away with saying in the April 10th statement "Pre Close Trading Update" that they were ahead, and now put results below even what an "in line" statement would have made the market expecting.

Awful.

Inventories rising, working cap requirements rising, what now looks like a very misleading April 10th Pre Close update, cash falling....

The April 10th update saying they were ahead is, well, damn awful imo.


*****************

Broker Forecasts in place at "AHEAD" statement in pre close update 10th April :

2008 PTP 1.46m
2008 EPS 3.92p

"AHEAD" means +10% or more of the broker forecasts.

So in fact we must be looking for minimum on Monday of :

PTP of 1.6m
EPS of 4.3p

___________________________________________________________

Therefore, figures to watch compared to Interims are :

Expected PTP = 1.6m Actual PTP = 1.13m (WELL BELOW)

Expected EPS = 4.3p Actual EPS = 3.53p (WELL BELOW)

Interim Cash level was : 2,148m Cash level now is 1,996m (GOING DOWN)

Net cash generated from ongoing ops : -1.4m Now is -1.47m (Negative means eating cash in working cap)

Trade receivables was 3,494 Now is 5,363 (OH DEAR - RISING)

Other receivables was 712K Now is 761K (OH DEAR - RISING)

Inventories was 173K Now is 191K (OH DEAR - RISING)



Figures for interims are approximate, and using 1.97 exchange rate.

Links :

Pre Close update - "Ahead" not retracted - http://www.investegate.co.uk/Article.aspx?id=20080410070000P372A

Interims in US$ - http://www.investegate.co.uk/Article.aspx?id=20071122070000PCAE0

Papalpower, are you saying that Geong is doing creative accounting?

tut tut! how could you ever think such a think of a chinese company?

:o))

GNG now has an 17.8m m/cap at 56p. Against this it has 7.2m of tangible net assets, basically comprising 2m of net cash and 5.4m of blue chip trade debtors.

The EV is therefore only 10.6m, against which GNG made 1.24m adjusted PBT last year (3.7p EPS). GNG is now forecast to make 2.36m PBT this year and 3.38m PBT next year. These equate to 6.5p EPS and 9.1p EPS.

Seymour Pierce have a target price of 120p. They've assumed 15% tax this year again, which I think will again be conservative as last year GNG only paid 5% and they have a tax reduction scheme in place.

I note that the Chairman bought abother 30k of shares today at 60p.

Debtor days are very poor and trade debtors high. But there are good reasons for this - read the ADVFN thread for more - and in particular this year it seems that a company restructuring to reduce tax has led to debtors being temporarily high. Those who attended today's presentation say that GNG have reduced the year end debtors by 1m already.

The presentation attendees also note that the order book is up to 5m from 2.5m last year. Recurring income is up to 44% from 40%. GNG forecast they'll have 4.4m of net cash by the year end.

Given the defensive characteristics above, plus the director buying at 60p (today)and 65p last year, the high order book and the consistent profit growth in the past and as forecast, I don't consider a historic P/E of 15 and a current year P/E of 8.6 to be expensive.

GNG cocked up their reporting by essentially booking certain contracts as completed last year which on review were agreed to be completed in this current year. Some may hold this against them for a while, which is fair enough.

Personally I believe the fundamentals and prospects are too good to ignore.

Here's the new broker note which came out today - there's a typo as there's actually 130,000 SmartBox user seats, not 13,000:

"Sustainable delivery continues

Having grown revenues and profits by 77% and 33% respectively for
the financial year to March 2008, and forecast to grow profits by 90% in
2009 and by 43% in 2010, Geong, currently trading at 7.5x March 2009,
looks extremely attractive. March 2008 PTP of 1.24m was below our
forecast of 1.4m as revenue recognition milestone led it to defer
revenue from 2008 to 2009. We remain keen buyers with a price target
of 120p and utmost confidence in the management to deliver our
forecasts for 2009 and 2010.

In October 2007, Geong established itself by increasing its presence in
Guangzhou, Southern China, a region and area that is seeing significant
growth compared to the rest of China. Administrative costs increased from
1.1m in 2007 to 1.7m in 2008. R & D cost increased by 95% as Geong
introduced SmartExpress, the entry level product of the SmartBox product
family, designed for very small enterprises. Margins dropped from 55% to
47% as the revenue mix began to shift towards reselling of 3rd party licenses.

With 2m of net cash, Geong should expand into new markets and new
products thus significantly increasing its customer base. It currently has
relationships with over 100 blue chip companies in China who either have
used or are using its ECM product PortalAge and revenues from its top 10
PortalAge clients doubled during 2008. It has almost 13,000 licensed users
of SmartBox and SmartExpress in over 2,000 SMEs.

Geong has the capacity to generate underlying growth of 40% to 50% quite
comfortably. Recurring revenue continues to increase, 44% in 2008
compared to 40% in 2007. 2009 order book is strong and growing as
evidenced by the signing of 4 new contracts today. The management is
focused and workforce has grown from 330 a year ago to 520 at March year end.

Trading at 7.8x March 2009 Geong is extremely undervalued.

BUY."

a synopsis would have been more readable, but i happened to note "Debtor days are very poor and trade debtors high" ..... i don't want to hear the excuses ..... from running my own biz and seen others, i know that cashflow and credit control are paramount ..... perhaps the chinese can delude themselves that book debt = profit .... not until it's banked it ain't, any more than a profit on shares! ..... in fact it is a truism that any debt 90+ overdue becomes progressively harder to collect .... it is also self-apparent that Geong don't pay their bills either .... well, i guess that's no surprise iof they don't collect what is owed!

the graveyard is full of companies that were theoretically profitable but just ran out of cash .... this can happen through over-trading or under-capitalisation or, as in this case, incompetent credit control

oh dear .... not more misrepresentation surely? ...... booking certain contracts as completed last year which on review were agreed to be completed in this current year".

oh dear again ...... company running significantly less profitably .... "Margins dropped from 55% to 47%".

and you STILL want to buy these shares????

Cynic, you certainly live up to your name :o))

The debtors comment was mine, not the broker's (as you seem to indicate?).

Cash is king. So:

- it's fortunate that GNG have 2m of the stuff
- almost all its 5.4m debtors are blue chip, so GNG barely has any bad debts. The bad debt write-off has risen to just 35k from 1k last year! Thus any comment about debts over 90 days being hard to collect is just not relevant
- the high year end debtors appear to be due to a specific company restructuring, creating a new debt-collecting company entitled to collect all the debts, which apparently will bring about a lower tax charge. Attendees at the presentation say this has been completed
- as a result cash inflows post year-end are reported as healthy and debtors have reduced by 1m since then
- further, the cash position is such that those attending the presentations report that the flagged acquisition will likely be paid for from cash rather than in shares
- GNG expect to have 4.4m of cash at the year end, i.e 25% of the m/cap

As for your comment on creditors, these are tiny at 1.45m compared to trade debtors of 5.4m.

The small reduction in margins is fully explained and was flagged previously. It's not a surprise to those who've read the company's RNS's.

There are bear points to be made, the cocked-up trading statement and working capital amongst them, but it seems that GNG have addressed working capital and are currently on an institutional tour to address the former.

In particular, there are many, many bull points. It would be a treat to see some balance and a measured response to those points I've laid out in post 227.

small typo in the accounts booking orders in one year when they belong in the next.

margins .... small reduction??????? .... 55% down to 47% ..... what planet were u born on?

trade debtors ..... disgraceful credit control assuredly damages cashflow and some of that may well turn out to be bad debt in the final analysis.

pah! .... stinks of the gullible being conned by silken words from the management.

Broker downgrade for EPS forecast for next year in a new note.

Prior forecast was 7.23p for 2009, now reduced to 6.5p


Given the appalling "Ahead" statement in April which was missed totally in the results, its no surprise the broker is lowering estimates. The question is, can anyone believe what the company say anymore so easily ?

How the hell can you say "Ahead" in pre close in April, put out another trading update just prior to results and NOT CORRECT the ahead to being below, and then deliver results below expectations.

So even with the reduction in EPS target, can anyone actually easily have confidence that even just prior to results they say in line or ahead, will they again put results in BELOW.

Papalpower, can you paste the broker downgrade as above-mentioned? Thanks.

Rivaldo's post 227 contains the 6.5p forecast EPS from the new broker note. Link on AFN.

This is the new figure against the 7.2p+ that was in place before results.


= DOWNGRADE OF EPS figure.

Interesting post by AinW on TMF. The full post, on the link, is well worth a read :

http://boards.fool.co.uk/Message.asp?mid=11098219

.................Geong Geong Gone

SER is not an isolated example of an ADVFN thread where sanity seems to be in short supply.

The MDX threads, and there are more than one, have been a case book in the insanity of investors fingers crossed a PhD student writes a thesis on the madness of Meldex one day. (Fingers crossed to all MDX followers with regard to the meeting to be held with management on Monday.)

The Caledon thread is manic as well.

But the other thread that I want to highlight is Geong International (GNG) where the number of posts is not high by ADVFN manic levels, but for a small Chinese-based AiM-listed company the number of posts is surprisingly high. What is interesting from the outside is how IMV the share appears to have been ramped: take a poster who well-known on ADVFN, who posts on GNG on a regular basis (the posts are often on press releases, news stories, anything that Google news locates that has a passing relationship to Chinese software companies), hints dropped from time to time that he has been in contact with management, highlight what the company is going to achieve not this year but in the following year, and hey presto, the SP looks undervalued. PIs relax and stop looking at the share in a critical eye. The SP ticks up over time, oh the power of momentum trading, and then along comes an ugly trading update.

Having attended the Sinosoft AGM last week, I can assure PIs that the cultural gulf between Chinese companies and UK private investors remains very very wide. Investing in Chinese companies is a risky business, always add a risk premium.....................

last para .... how politely put if perhaps a bit too subtle!

.

Comment from RHPS - cannot blame them, most sensible call imo. It did look ok, but with those trading updates and the results - very sensible call.

http://www.fspinvest.co.uk/Investment-Services/Red-Hot-Penny-Shares.html


GEONG (GNG): After the confusion caused by Geongs two recent trading statements the actual results for the year to March 2008 have raised further questions. First of all the gross profit margin has fallen from 55% to 47%. This was attributed to a higher percentage of sales of third-party products, which carry a lower margin. I raised this matter with GEONG and was told that the percentage of third party product sales had risen from about 5% in 2006/7 to 10% in 2007/8. But even if I accept these numbers and assume that GEONG makes no profit whatsoever on its sales of third party products, the gross profit margin on its proprietary software has fallen from 58% to 52%. The second major question mark over the figures concerns the cash position. In its presentation GEONG showed an increase in its year end cash from 515,000 to 1,996,000. However if we exclude the 3.4m of new cash raised last summer it is clear that there has actually been an outflow. The reason for this is easy to spot. The amount owed to it by its customers has increased from 946,000 to 3,276,000. Again I quizzed GEONGs directors on this and was told that GEONG had decided to set up a new company through which to transact some of its business, and that some customers had withheld payment to this new company until it had received proper clearance from the authorities. If this is the case I would have thought that GEONG would have explained it in the results statement rather than hoping that nobody would notice or ask probing questions. The good news is that sales growth continues at an impressive rate. Revenues increased by 77% last year and have continued at a similar pace in the new financial year. GEONG is now looking to make an acquisition to help its software to break into new industries, and it is also looking to take the product to overseas markets. So this is a difficult one to weigh up. GEONG has a good record of growth, and one must make some allowances for the fact that priorities of Chinese companies are not necessarily the same as those of UK investors. All the same, I am not convinced that GEONG can maintain its historic profit margins, or has proper control over its cash management. So, although the share price has rallied and chairman Henry Tse has bought some shares at 60p, this one bothers me. And I would rather not be bothered. SELL

Papalpower, good call, support at 50p has been broken...now 45p.

Thought I'd pop in for a little bit of balance :o))

At 43.5p GNG's m/cap is 13.7m - with net tangible assets are 7.5m comprising blue chip debtors and a 2m cash pile! Probably up to 8m net assets by now too.

GNG's consistent PAT record in sterling is (using $2:1):

Y/E 31/3/04 - (0.14m)
Y/E 31/3/05 - 0.42m
Y/E 31/3/06 - 0.65m
Y/E 31/3/07 - 0.84m
Y/E 31/3/08 - 1.18m
Y/E 31/3/09 - 2.03m (per forecast)
Y/E 31/3/10 - 2.88m (per forecast)

So the 6.2m Enterprise Value (EV) compares to a historic PAT of 1.18m - a multiple of 5.3. Even the historic P/E is down to a pretty respectable 11.7. The current year P/E is down to 6.7, the forward P/E is 4.8 and the PEG is at a ridiculously low 0.15.

Using the current year the EV multiple reduces to 3.1 :o))

You can say what you like about recent cock-ups, but given 44% recurring revenues, a 5.6m order book and a multinational client list the fundamentals are pretty telling.

Here's what Evolution wrote about GNG after a post-results meeting (remember they're not the house broker, Seymour Pierce are):

"GNG MV 15m at 56.5p
Morning After attended the analysts meeting for Geong International, a Chinese software company which trades on Aim.

Why bother? Mainly because it opens the eyes to the coming challenge for western software companies. Were used to the code-writing giants from India: Geong looks the first of, no doubt, many Chinese vendors selling their own products. The Chinese are intensely nationalistic and go to great lengths to avoid using western, ie US, software.

520 employees
Geongs core product, PortalAge, is a Java-based suite that allows large companies to place a customer web interface on their core software, whether from Oracle, SAP or IBM. It sells to a range of blue chip Chinese companies. Geong has 520 employees and is expanding at break-neck speed. (A year ago there were 375 on the payroll.) A UK software company would need sales of 200m to support such a headcount.

Debtors: slow boat from China
Clearly there is an alarming number here closing debtors which needs serious explanation. Geong set up a new company, Geong International, during the year. Its customers seem to have used this as an excuse to delay payments while they completed inquiries. (This is China, after all). About 2.7m of debtors related to this issue. The Company says it had collected 1m of this amount by 31 May. Hmmm China is a slow-paying country and we assume software pricing takes this into account.

From October Geong will begin marketing an English-language version of a separate package, Smartbox. In Canada this will be fronted by the Canadian Development Bank. Geong says no sales are assumed in its budgets.

Buy or not buy? Any UK software company clocking up growth on this scale would either be a market star or seen as the next Isoft-style car crash.

It seems likely Geong really is a star performer, Chinese-style. It has already booked 5m sales in the current year, so forecasts of 10.7m for the full year are plausible. It just needs to show it can collect the renminbis."

After that Pre Close "ahead" statement and then delivering results BELOW expectations at the pre-close this stock should in the 25p to 35p range perhaps.


Terrible !!!!

Margins also falling and working cap requirements going through the roof - its not any wonder most people are selling it..........

The misleading pre-close statement on the 10th of April will be very off putting.

Is there anybody out there gullible enough to actually read the half truths and laughable misunderstandings in PP posts let alone accord them any credibility?

Thread Set up price then Price now
IPL Jun08 120p 28p
PMHL Apr08 140p 110p
AST Feb 06 12p 6p
LEAD Feb 08 47p 21p
VYKE Sep 07 180p 55p
VLK Feb 06 83p 60p
TAG Feb 06 60p 12p when namechange occured and consolidation
SCE Sep05 45p 15p

GNG is truly going downhill now. 36.5p today.

If a company has a "mickey mouse" auditor, they fully deserve to be on a "mickey mouse" rating, thats my view on many stocks, not naming any, just a general comment.

Just name and shame, papalpower. You can't let loose these wild fatcats.

20K dumped at 34p (under the bid) then 50K dumped at 32p (3p under the bid).

Looks like its going to keep going down, and maybe faster too if now some large holders are quickly offloading a few lumps.

Denial in these market times is the worst enemy of the private investor.

They try to deny things are bad, they do this as they do not want to "sell at a loss" - they fervently search for people or writings that give hope and then comfort themselves that someone else is bullish.

They deny themselves the chance to benefit from market bottoms, by refusing to sell when markets tank, and then having no spare cash when markets really do bottom (FTSE circa 3K or 3.5K ?).

The deny to themselves that the rampers are rampers, that the people desperately trying to ramp prices up are in fact the same as them, trying to not sell at a loss, hoping that ramping will get prices up and they can sell at breakeven.

Denial is what causes PI's to lose - and sadly lots of people today appear to be in denial.


A simple an effective tool in bull and bear markets is, 20% down and sell. Any stock that falls 20% below the price you purchased, dump it, admit you were wrong to buy it at that time, preserve your capital, and move on. If its dropped 20% since buying, its plain obvious you purchased at the wrong time.....is it not ?


Beware of denial, its the PI's worst enemy.

Nice to see the 6.5p bounce today to 42.5p - Seymour Pierce produced an update today FYI as follows:

"Geong International (BUY) - Business as usual

GNG.L (36p, Target price 120p) Market Cap: 15m

Geong continues to thrive and flourish. The management has been successfully recruiting top quality staff with the employee count of 520 currently set to rise to 550 by March 2009. The business continues to attract new clients. Our conversations with two of the existing clients revealed that Geong's product streamlines management information within a client's organisation and improves their outdated MI systems. One, a global Chinese bank, is an old client since 2003, whilst the other an educational establishment, is a very recent addition. In both cases the partnership with Geong according to clients is "becoming deeper and broader" over a period of time. With over 40% recurring revenue, our revenue and profit forecast are well within reach.

BUY up to 120p, 18x March 2009."

Regardless of the "house broker" trying to ramp up some interest in GNG, other things are more important to consider.


The misleading pre-close statement on the 10th of April will be very off putting to many many potential investors.

When they take in the other things too, the weakness of GNG and minimal interest is easy to understand.

The RHPS article sums things up well, here is a copy, and they say "SELL" :


http://www.fspinvest.co.uk/Investment-Services/Red-Hot-Penny-Shares.html


GEONG (GNG): After the confusion caused by Geongs two recent trading statements the actual results for the year to March 2008 have raised further questions. First of all the gross profit margin has fallen from 55% to 47%. This was attributed to a higher percentage of sales of third-party products, which carry a lower margin. I raised this matter with GEONG and was told that the percentage of third party product sales had risen from about 5% in 2006/7 to 10% in 2007/8. But even if I accept these numbers and assume that GEONG makes no profit whatsoever on its sales of third party products, the gross profit margin on its proprietary software has fallen from 58% to 52%. The second major question mark over the figures concerns the cash position. In its presentation GEONG showed an increase in its year end cash from 515,000 to 1,996,000. However if we exclude the 3.4m of new cash raised last summer it is clear that there has actually been an outflow. The reason for this is easy to spot. The amount owed to it by its customers has increased from 946,000 to 3,276,000. Again I quizzed GEONGs directors on this and was told that GEONG had decided to set up a new company through which to transact some of its business, and that some customers had withheld payment to this new company until it had received proper clearance from the authorities. If this is the case I would have thought that GEONG would have explained it in the results statement rather than hoping that nobody would notice or ask probing questions. The good news is that sales growth continues at an impressive rate. Revenues increased by 77% last year and have continued at a similar pace in the new financial year. GEONG is now looking to make an acquisition to help its software to break into new industries, and it is also looking to take the product to overseas markets. So this is a difficult one to weigh up. GEONG has a good record of growth, and one must make some allowances for the fact that priorities of Chinese companies are not necessarily the same as those of UK investors. All the same, I am not convinced that GEONG can maintain its historic profit margins, or has proper control over its cash management. So, although the share price has rallied and chairman Henry Tse has bought some shares at 60p, this one bothers me. And I would rather not be bothered. SELL

GNG target price = 120p...is this a joke of the year?

Fundamental Asset Management, a well-known fund manager (also with a web site called Investors' Champion) have recently issued an update not posted here before:

"Its all happening at Geong - Results, contract wins and Directors loading up!

20th June 2008: Results

Preliminary results for the year ended 31st March 2008 showed turnover up 77% to 7.61 million, gross profit up 51% to 3.58 million, profit before tax up 28% to 1.14 million and basic earnings per share up 12% to 3.53 pence with the last of these somewhat diluted by the impact of a share placing in June 2007 which raised 3.41 million. Cash at the year end was 2.00 million (2007: 0.52million).

Gross profit margin was 47%, down from 55% previously due to increased sales of lower margin 3rd party software products which leverage on the groups relationship with its customers. Over the course of the year Geong has also had to absorb increased R&D spend, new office openings and a big expansion in people (520 from 330).

We even got a back track from management regarding the trading statement on 10th April which initially promised that the financial results would be ahead of market expectations. Unfortunately management subsequently determined that the revenue recognition milestones from two long-term projects had not been met in full and hence that the revenue from these contracts should be recognised in the current financial year; hence the somewhat bizarre second trading update on 3rd June. Lets hope the lesson has been learned!

The funds raised in the placing have helped the Group to develop and strengthen its sales and marketing channels, including opening a new office in Guangzhou to target Southern China, and to accelerate the roll-out of its award-winning PortalAge and new SmartBox product range targeted to SMEs. At the year end SmartBox had over 130,000 licensed end users in approximately 2,000 SME its not clear what initial targets were so its hard to gauge the success of this to date.

The group has a decent footprint in China with the HQ in Beijing and branch offices in Shanghai and Guangzhou in the South. The representative office in Vancouver, Canada also promises a great deal although I see Geong as a China market play rather than a China low cost/international market model!

The cash flow surrounding its key Portal Age product remains somewhat of a worry to me with operating profit of 1.1m resulting in a net cash outflow of just over 1.4m. Accounts receivable at the year end were 5.3m on annual turnover of 7.6m. The reason given for this horrendous position was as a result of delays surrounding approvals for the new Geong Information Technology business formed for the purpose of securing tax benefits on sales in China. The delays resulted in invoicing being delayed and therefore a longer wait for the cash to arrive. Management reassured that the September interims will show a reversal of this position and a marked improvement in the cash position. The current cash position is apparently 2.5m against the 2m at year end. The groups blue chip customer base in this regard is also reassuring with the likes of Lenovo, Shanghai General Motors, Huawei, China Construction Bank key customers.

Recurring revenue now represents c44% of top line and as at the year end the order backlog for 2009 delivery was c5m. The new SmartBox product contributed c6% of the top line with estimates for this to be around 10% for 2009 and longer term targets of around 35%. This should also help improve the cash flow going forward. The bundling arrangement with IBM X-Server due to kick off in September 2008 should also help. Despite the attractive margins that could be earned in Canada with Geong working through a local partner for me Geong remains very much a China play. Look out for an acquisition in the short term to help expand the PortalAge coverage into new sectors.

Contract wins

Geong announced that it has signed four contracts with second tier banks across China worth a total of 648,000 (US$1.29million) that will be recognised in the March 2009 results.

Share purchase: Henry Hak-Yan Tse, Chairman, purchased a further 47,500 shares at a price of 60p per share and now holds 3,703,673 ordinary shares in the Company. The house broker has utmost confidence in the management to deliver against 2009 and 2010 forecasts and have set a price target of 120p that is confidence!"

But were they not having a good old fashioned hype up of this at 80p levels ?

Given its now half that - well.....say no more...........


LOL :)

Directors buying doesn't mean much these days...plenty of shares going down despite directors buying.

.

Would be a bad thing for many many companies in China, ramping up costs, ramping up wage increase demands etc...


http://in.reuters.com/article/asiaCompanyAndMarkets/idINPEK34395420080723

China parliament warns on inflation, export slowdown

Wed Jul 23, 2008 10:24am

BEIJING, July 23 (Reuters) - China's inflation is in danger of worsening and the government should liberalise pricing of oil and power to reduce the risks, the country's parliament said in a report published on Wednesday.

China should adjust policies for exports of textiles and toys, to avoid any slump in the export sector, according to the report by the financial committee of National People's Congress, which was published on the Xinhua news agency website.

"The national economy is moving from the stage of 'high growth and low inflation' to a state of 'high growth and high inflation' or even 'low growth, high inflation'," the report said.

The report was written at least a week ago, since it only included economic figures of the first five months instead of the first-half figures that were released on Thursday.

The report did not specify a timeframe for the proposed policy changes, but it noted the Chinese government's current policy of keeping some prices deliberately low through price caps would only worsen inflation in the long-term.

"It is just ineffective to control inflation through price controls," it said.

The report cited Venezuela as an example to support its view: "Venezuela, an oil producing country, has kept its oil prices artificially low, but the country's inflation was still 20 percent."

Liberalising oil and electricity pricing, on the contrary, can be helpful to curb inflation because it eases demand, even though such measures can push up short-term inflation.

On the export sector, the report said China's policies aimed at curbing exports of polluting products and balancing trade were badly timed because they coincided with the economic slowdown in the United States and the EU
"We suggest to pause the launch of any new policies targeted at the processing trade to maintain stable policies and to give exporters breathing time in order to avoid big impacts on the export sector," it said.

It added that a tight monetary policy and prudent fiscal policy should be maintained, but advocated "flexibility" when carrying out the policies. (Reporting by Zhou Xin; Editing by Ken Wills)

PP's posted around 100 times on ADVFN alone today, let alone the other seven or eight bulletin boards he regularly posts the same mis-info on. Almost all are negative posts on Chinese companies.

Do you think he has an agenda? :o))

Whether 1.3 billion Chinese suffer a little more inflation or a few interest rate rises over the coming months is irrelevant. The fact is that China is a massive place on an upward growth path, and some companies in that environment are going to do very well indeed at some point.

As an example, I read that 97 new airports will be opening in China over the next few years. My initial thought was that this would benefit RCG, but of course GNG now have a good entree into the airline industry via Air China, who alone will surely be growing nicely over the coming years, let alone the many other airlines which will be started up or expanding.

With GNG's influence and management I'd be surprised if they're still a 13m m/cap minnow - with around 8m of tangible NAV comprising cash and debtors - for too long given the opportunity.

This is an interesting new article re JP Morgan and China - the shift towards high-end producing should hopefully benefit GNG as the Chinese market leader in ECM. The need for greater business efficiency will grow and smaller competitors may fall by the wayside or be snapped up by the likes of GNG:

http://www.citywire.co.uk/professional/-/news/other/content.aspx?ID=309076&ViewFull=True

"JP Morgan: Reappraise Chinese manufacturing
By Daniel Grote | 00:01:00 | 23 July 2008

Investors need to re-think their attitudes toward China as the Asian giants shift towards high-end export manufacturing fails to shake off its reputation as the workshop of the world, says JP Morgan.

JPMs Pinakin Patel (pictured) pointed to the impressive growth Chinese high-end manufacturing has seen over the last decade, rising from 24% in 1997 to 48% in 2007, but argued the trend was not being acknowledged by investors who still viewed it as a home for low-skilled labour.

Its the predominant view from people that should know better, said Patel, client portfolio manager on the companys Far East equity desk. Our perception of China being a low-end manufacturer just is not reality.

He added: Profit growth from high-end manufacturing is improving. China has been making this progression for some time.

Patel says that this growth is set to continue, highlighting Chinese investment in research and development that currently makes up 1.6% of GDP, but is set to rise to 2% in 2010 and 2.5% in 2020.

Within Asia, China continues to be the driver of growth. We are seeing no sign of GDP falling over the last quarter, he said.

Patel identified inflation and energy prices as some of the challenges facing the Chinese economy, but claimed that government action could see them overcome.

Inflation will start to come down from a 12-month high. Were starting to see signs of that moderating, he said, attributing the shift to better supply side policies and the recent good harvest.

Although energy prices have increased they are still low when set against non-oil producing nations, and Chinese government policies mean households are exempt from the heavy new tariffs.

Berkshire-based adviser Colin Last said that sophisticated investors were switched on to the changes China was undergoing, but that the man on the street would be wary of investing.

Last has personally invested in China, as do some of his clients, but he cautioned that it was not suited to all investors and that they should be made aware of the volatility in such a market.

However, Patel thinks that ideas about risk should be re-evaluated to avoid the misconception that developed countries posed less risk."

Its coming up to results, its also late summer, this is when the normal pump and dump crew start to buy stocks (they buy now ready to sell into any results spikes in late August through end September). Therefore, expect to see "old faces" start to return to threads as they start to pick up their little holding now, ahead of trying to ramp the bottom off of it into results time. This happens all over AIM, especially on the stocks where a good ramp could be got going (say China stocks - low PE's - thats a great ramp to attempt).

So, as summer draws to a close watch trading volumes on AIM tiddlers, expect some buying to be going on, and then the threads start to get busier, old names re-appear as do new names start to appear.

All telling you how cheap this stock is and what a bargain.

But do not forget, these are in the most just trying to ramp the price up and will disappear before or just after results are out in the Autumn

Its time for Rampton........unlimited attempted ramping to create as many AIM spikes as possible into results season - that they can sell into whilst posting on BB's how wonderful the results will be/have been

My opinion if anyone wants it, LOL :)

If anyone is thinking of buying AIM stocks ahead of results, do it now, do it until end July, then stop.

Don't be the ones caught buying the results spike and holding the baby as the SP crashes after results - beat the rampers at their own game, and be the ones selling on the spike ahead of them getting out for their small gains.

Price spikes might be subdued this year, owing to a risk of bad economic news making markets tumble, so the buying should be lower and less risk taken - they do not want to be caught with their pants down if the tide goes out.

Excellent contract wins announced this morning with a value of almost 1.5m in the current financial year. GNG have now announced 13 new contracts worth around 4m in the current financial year since the 31st March year end. The value of these announced contracts already represents circa 55% of last years total sales....and that's without adding on day-to-day sales which aren't RNS'able and also 44% recurring revenues.

At 45p GNG remain on a current year P/E of only 7 based on 6.5p EPS, and the 14.4m m/cap is backed by 7.5m of NTAV, represented by a 2m cash pile and a multinational blue chip set of debtors comprising the likes of Lenovo, Huawei, Dell, IBM etc.

Today's agreement with PTC is extremely interesting:

- PTC are HUGE. Quoted on NASDAQ with a billion dollars annual turnover...yet here they are using little ol' GNG. Yet more kudos for GNG. Take a look at PTC's web site - they've just won contracts with EADS for starters....

- this is a lucrative entry into the manufacturing sector. Chinese manufacturing is moving upstream, and this will be the way the surviving manufacturers will all be going

- finally, these contracts represent around 20% of last year's turnover. How many companies regularly announce such huge percentage wins ? The answer is - not many :o))

The AGM is later this month. The trading statement should be pretty upbeat judging by newsflow.

Here's the two RNS's from today for the record:

"GEONG Wins Contract Extension Worth 1.2m
5 August 2008

GEONG International Limited (AIM: GNG), the AIM listed, China based provider of enterprise content management (ECM) software and solutions, today announces that it has signed an extension to a contract signed in April 2008 with a leading global provider of next generation telecommunications networks ("the Client"). The contract, which is in its second phase, is worth in the region of 210,000 per month from July through to 31 December 2008. Under the terms of the contract, GEONG will continue to source and manage a number of freelance consultants who will assist the Client in developing a management system relating to its Global Financial Planning and Risk Management requirements. Commenting on the contract win, Wang Weidong, Chief Executive of GEONG, said: "The extension of this contract demonstrates GEONG's continued ability to help its clients at a high level."

GEONG Signs New Contract Worth 215,000
5 August 2008

GEONG International Limited, the AIM listed, China based provider of enterprise content management software and solutions, today announces that it has signed a contract with Parametric Technology Software Co. (PTC), a world wide leading Product Lifecycle Management (PLM) solution provider, worth 215,000 with at least 190,000 in the current financial year. Under the contract, GEONG will develop an integrated PLM solution based on its PortalAge platform. The new solution, which has already been extensively and successfully tested in four pilot studies in the Manufacturing and Aerospace industries, will significantly enhance GEONG's product offerings within manufacturing related industries which is one of the largest and fastest growing sectors in China. Commenting on the contractwin, Wang Weidong, Chief Executive of GEONG, said:"By partnering PTC we have been able to quickly develop a product which will significantly enhance our product offering in what is one of the fastest growing sectors of the Chinese economy."

You mean like the April Pre-Close update said "ahead" and then later they delivered results "below"............... ??????? ;)


rivaldo55555 - 05 Aug 2008 17:01 - 259 of 259

...........The AGM is later this month. The trading statement should be pretty upbeat judging by newsflow.

GNG announced today a defacto downgrade going forward. Their trading update remains in line, but the outlook is not so good now, and they admit that China is slowing down, this is what you will see, as it becomes apparent over all the hype that in fact recession is coming the way of China.

Chinese stocks certainly should be excellent shorting candidates for 2009 and 2010.

Excellent trading update today, about as good as can be expected.

GNG are confident that they'll meet 6.5p EPS expectations this year given the high recurrring income and huge order book, but with any new contracts or an acceleration in SmartBox they could quite easily beat expectations yet again.

Not a bad year then - PAT to be up at least 72% :o))

A spectacular increase in the order book too - up to 9.6m now is excellent news going forward.

And even better, recurring income is now up to 4.5m, a tremendous buffer for future years. GNG's clients are locked in to using PortalAge, so GNG will continue to have this excellent buffer, as they will from SmartBox.

Last month Legal and General anounced they'd bought 5% of GNG, 1.61m shares in total. Perhaps today's statement will encourage further institutional buying.

Interesting to note that last year's tangible NAV was around 7.2m. Add on 2m PAT this year, and revalue upwards for the almost 20% movement in exchange rates since then, and the tangible NAV becomes around 11m.

Which means that the remaining 1.5m EV in the business on the 12.5m m/cap at 40p is represented by an annual 2m PAT!!

And the cash pile is likely to be up to 3m - and maybe even 4m - if cash receipts are as good as indicated in the trading statement.

But that is not what people look at is it, you of all people should know the market is forward looking.

When a company mentions the 2nd half will be impacted a bit, and given the crisis started well into the 2nd half, this means that the 1st half of the next year, and all of next year could see significant reductions in business levels.

This is why, despite such bullishness by certain posters, the SP has done nothing.

The market looks forward, the outlook is not looking so bright, so why should anyone buy this, which is precisely what happened today.

You cannot continue to try to hype these China stocks rivaldo, the outlook for China is deteriorating fast, and the potential impact over there is bigger than the impact when it all went pear shaped in the USA.

On top of the GNG admission that things are slowing down, today also saw ZTC (Chinese telecoms) say this which again is more evidence to say that things in China are under pressure, and those who said 2009 would be a bad year for anything China related, might well be proven correct :

"As has been widely reported, trading and credit conditions for SME's in the PRC have become increasingly difficult throughout the third quarter of 2008. This is due to deteriorating macro economic conditions outside the PRC and slowing economic growth and restrictive credit policies in China. As a consequence, our markets have become increasingly competitive, disruptive and oversupplied. ZTC has therefore achieved sales significantly below those seen in the same period last year.

As a consequence, the Company's working capital available to operate and expand its business has become constrained, as has been previously announced. The Company continues to review all aspects of its operations to reduce costs and improve efficiencies to improve the availability of working capital for new model and market development. The possible sale of assets referred to above is one example of a potential method of cash generation that is being actively considered."

GNG will not survive as China starts to slow down. Selling at 35p would be wise.

I believe the facts speak for themselves at the current valuation which already prices in any downturn. To reiterate....

At an 11m m/cap at 36p GNG is trading at only just above tangible asset value at current exchange rates, despite having say 3m cash now plus blue-chip debtors and confirming it should make 2m PAT this year.

Recurring income has surged to 4.5m now - against total overheads last year of just 2.5m (admin, selling, R&D costs etc). Not a difficult equation to work out.

And the order book is worth around say 11m at today's rates, against just 7.6m turnover last year.

GNG said two weeks ago they're confident of making 2m PAT this year. That could be reduced to 300k and GNG would still be good value, since it's trading at only just above NTAV :o))

If GNG were priced at 100p there might be an issue. At 35p it's a no-brainer imho given the cash pile, locked-in client list (big barriers to entry), profitability and huge potential.

The high recurring income, low overhead base, cash pile, locked-in clients with high barriers to entry, multinational customers etc make GNG a far more defensively secure option than most companies.

The accelerating yuan also means that this year's challenging forecast of 6.5p EPS is even more likely to be met or beaten - not something that most companies can say, especially only halfway through the year.

it's also a no-brainer to to remember that China is slowing down rapidly and a lot of these overhyped Chinese companies are heading for the incinerator ..... i know markets have been dire worldwide, but it is worth taking a look at the performances and recent pathetic trading volumes of such former darlings as GNG, WCC, TAIH and even SOLA, a company where it has been impossible to open a new short position for 6/8 weeks or more

Yes cynic, all there is now in China stocks is lots of longs all trapped in with big losses.

This means lots of selling pressure to come, as they have to bail out, or sell on any rises to get some of their cash back out.

Weak stocks, no appeal, and of course China is going to be lots of bad news to come.

Thats the chart..........ramped up and now falling down.

and furthermore, no volume

The above five posts are revealing in their xenophobia and lack of reference to the current rather than historic valuation of the company.

The comment about no volume recently, when this is an 11m m/cap company with limited free float in the worst month in recent stock market history, is priceless :o))

And the chart posted above somehow begins at the all-time high, rather than at the IPO at 30p compared to the current 38.5p or my buying point at 18p (or the start of this thread at 26p). I wonder why?!

Some comment about the FACTS below would be appreciated :o))

At 38.5p GNG's m/cap is just 11.9m - but I expect net tangible assets at current exchange rates of say 9m at 30th September'08, comprised entirely of cash and cash equivalents of say 3m cash and 6m blue chip debtors.

GNG's consistent profit after tax (PAT) record in sterling is (using $2:1):

Y/E 31/3/04 - (0.14m)
Y/E 31/3/05 - 0.42m
Y/E 31/3/06 - 0.65m
Y/E 31/3/07 - 0.84m
Y/E 31/3/08 - 1.18m, or 3.7p EPS
Y/E 31/3/09 - 2.03m (per forecast), or 6.5p EPS
Y/E 31/3/10 - 2.88m (per forecast), or 9.1p EPS

So the 2.9m Enterprise Value (EV) compares to a historic PAT of 1.18m - a multiple of only 2. The historic P/E is down to a pretty respectable 10. The current year P/E is down to 5.9, the forward P/E is 4.2 and the PEG is around a ridiculously low 0.1.

Given 4.5m per annum recurring revenues, a 9.6m order book and a multinational client list like Hitachi, Dell, Lenovo, Adidas, IBM, Huawei etc the fundamentals are pretty telling.

your money to lose, so do as you wish ... the fact that there is such a small free float should give you much warning as to how the price can readily be manipulated

FACTS - yes very recently GNG said "ahead" then delivered a defacto profit warning and then delivered results below.

After this "fiasco"........

Then they give a trading update saying in line for the next results but "credit crisis" is having an impact.

Makes GNG an AVOID for most people, and the price reflects that.

All IMO.

Yeah, agree with u, proselenes. You have to read between the lines with GNG. Sell.

Only on these boards does PP (Proselenes) actually get taken seriously. You have to laugh.


LEAD crashing since PP recommended.
Oil going to $200? LOL

Trolling around on over 20 threads over the weekend. Sad indeed. And squelched of course.

Well, GNG warned over the credit crunch, the poor results just out from CESG also inform us the Chinese economy is just as messed up as anyone else.

Avoid.

Is there a post missing ? I do not see post 276.


hlyeo98 - 24 Nov 2008 17:20 - 275 of 277
Yeah, agree with u, proselenes. You have to read between the lines with GNG. Sell.

Proselenes - 25 Nov 2008 02:52 - 277 of 277
Well, GNG warned over the credit crunch, the poor results just out from CESG also inform us the Chinese economy is just as messed up as anyone else.

Avoid.

riv is quiet, wonder why ? SP falling after poor results, again ?

Lets rewind. Many lucky people sold this doggie when RHPS said "get out" "sell" some time back.

Lets read again the RHPS comments from many months back - did they see things going wrong back then ?????????

July 2008

"http://www.fspinvest.co.uk/Investment-Services/Red-Hot-Penny-Shares.html


GEONG (GNG): After the confusion caused by Geongs two recent trading statements the actual results for the year to March 2008 have raised further questions. First of all the gross profit margin has fallen from 55% to 47%. This was attributed to a higher percentage of sales of third-party products, which carry a lower margin. I raised this matter with GEONG and was told that the percentage of third party product sales had risen from about 5% in 2006/7 to 10% in 2007/8. But even if I accept these numbers and assume that GEONG makes no profit whatsoever on its sales of third party products, the gross profit margin on its proprietary software has fallen from 58% to 52%. The second major question mark over the figures concerns the cash position. In its presentation GEONG showed an increase in its year end cash from 515,000 to 1,996,000. However if we exclude the 3.4m of new cash raised last summer it is clear that there has actually been an outflow. The reason for this is easy to spot. The amount owed to it by its customers has increased from 946,000 to 3,276,000. Again I quizzed GEONGs directors on this and was told that GEONG had decided to set up a new company through which to transact some of its business, and that some customers had withheld payment to this new company until it had received proper clearance from the authorities. If this is the case I would have thought that GEONG would have explained it in the results statement rather than hoping that nobody would notice or ask probing questions. The good news is that sales growth continues at an impressive rate. Revenues increased by 77% last year and have continued at a similar pace in the new financial year. GEONG is now looking to make an acquisition to help its software to break into new industries, and it is also looking to take the product to overseas markets. So this is a difficult one to weigh up. GEONG has a good record of growth, and one must make some allowances for the fact that priorities of Chinese companies are not necessarily the same as those of UK investors. All the same, I am not convinced that GEONG can maintain its historic profit margins, or has proper control over its cash management. So, although the share price has rallied and chairman Henry Tse has bought some shares at 60p, this one bothers me. And I would rather not be bothered. SELL "

This RNS has come out from BSST today and projects big problems in the Chinese Banking system with orders being cut and capital expenditure being slashed.

This does not bode well going forward ?

Order books not being translated into sales ? No cash being generated ?

Is this GNG too ? It cannot bode well for GNG, they must be taking a hit the more time goes buy with lack of sales conversion, lack of cash conversion etc.. IMO


http://www.investegate.co.uk/article.aspx?id=200812310700149334K


RNS Number : 9334K
BlueStar SecuTech, Inc.
31 December 2008

Trading Update

BlueStar SecuTech Inc. (AIM: BSST), a leading provider of digital video surveillance solutions in China, announces that the global financial crisis has started to affect its own market, and the impact on the banking industry in China is becoming apparent. Although the Company has a strong order book, including signed contracts and framework agreements, the Directors have now noted that certain of the Company's major customers, being many of the largest banking groups in China, are becoming more cautious in placing their orders and some have not made purchases in the important end of calendar year trading season. Accordingly, the strong orders have not yet been translated into sales as had previously been anticipated.

The Board expects tha......................................

GNG probably only worth 5p at the most.

Trading update out, which is a little bit disappointing for holders IMV. Lots of puff and whiz about December cash collection, but this is a normal time for payment prior to year end, so you'd expect that.

December (end of year) tends to be a time of lots of contracts, and yet they appear to have picked up just a few small ones.

Also hidden in there is this line "Company believes that this launch will support the sales of PortalAgeTM as well as SmartBoxTM in the current economic climate.

When companies say "in the current economic climate" you know what it means, it means sales are tough, and this is likely shown in the low amount of December orders IMO.

No doubt the ramps and hypes will be out in force today, but its very revealing that one line.......the other stuff is just normal for end of year.

It's been a long time since there were any relevant or useful posts on this thread :o))

Firstly, here's the contract wins and extensions from December 2nd - note 3.3m of contracts in the middle of a supposed recession...

And note that GNG (with a mere 10m m/cap at 32/5p) had a 9.6m order book at the 30th September interims date - this additional 3.3m of contracts was won in just two months following the interims!

http://www.investegate.co.uk/Article.aspx?id=20081202070149P7A3F

"Contract wins and contract extensions worth 3.3m

GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, today is pleased to
announce that it has signed a number of contracts within the Chinese financial
services, telecommunications and automotive sectors worth a total of
approximately 3.3 million.

The largest of the financial services contracts is with China Construction Bank
(CCB) and is for a new Generation Portal. This Portal will help CCB build
on-line marketing, research, trading platforms and service functions for their
financial products to significantly improve their on-line business. The
contract, which covers the period of six months, is worth approximately 0.38
million (RMB 4.2 million).

GEONG has also signed two contracts with the Bank of Communications worth 0.4
million (RMB 4.4 million). One contract, worth approximately 0.3 million (RMB
3.2 million) is for the annual maintenance of Bank of Communications current
Enterprise Information Portal whilst the other contract is to build an
E-Learning system based on the PortalAgeTM platform. The new E-Learning system
will be used by the bank to train its 50,000 employees. This is the first
E-Learning system GEONG has developed and will now be offered to existing
customers.

In addition, GEONG has signed contracts with three new clients in the banking
sector: Everbright Bank of China, Industry Bank of China and the Bank of
Shandong. The contracts, worth a combined total of approximately 0.54 million
(RMB 5.9 million) include providing new solutions based on the PortalAge
platform. These include a financial trading and services portal, and a combined
Enterprise Customer Information system and Business Intelligence system.

Approximately 2.3 million of the contract wins and extensions will occur in
the current financial year. Non-disclosure agreements prevent GEONG from
disclosing detail with regards to the telecommunications and automotive sector
contract wins.

Commenting on the contract wins, WeidongWang, Chief Executive of GEONG, said:
"Even in these difficult times,GEONG is continuing to sign new customers,
extend contracts with existing customers and develop innovative new products and
services in new and existing sectors. The nature of our PortalAge customer base,
which is constantly expanding, demonstrates the quality of the products and
service GEONG hasto offer.""

Today's RNS was terrific - another 1.2m of contracts won in just one month since the last 3.3m contracts RNS!

Again, this is in the middle of a downturn when a contracts win is something unheard of...

The cash pile is also up nicely to 1.5m, against a 10m m/cap:

http://www.investegate.co.uk/Article.aspx?id=20090106070000P711F

"Trading Update

GEONG International Limited (AIM: GNG), the AIM listed, China based provider of
enterprise content management (ECM) software and solutions, today is pleased
give shareholders an update on current trading.

The Company has signed eight new contracts worth 1.17 million (RMB11.7
million) in December within the financial services and automotive industries.
These include China Construction Bank ("CCB") (600,000/ RMB6 million) and
Rural Bank of Shandong ("RBS") (240,000/ RMB2.4 million). The CCB contract is
for building a new online financial services portal, to significantly improve
customer services, and the RBS contract for building a new Business
Intelligence and Core Banking System. Other contracts won include Industrial
Bank of China, China Bond, Changshen Mutual Fund, Guoshen Securities,
Shanghai General Motors, and Shanghai Volkswagen. Despite these challenging
times, the contract wins demonstrate GEONG's ability to strengthen their
relationships with new and existing customers within these industries.

In December, GEONG also launched PortalAgeTM SaaS (Software as a Service)
offering which can be integrated with SmartBoxTM SaaS offering. This service
offering is best illustrated by EMC Corporation (EMC2) in China which adopts
PortalAgeTM SaaS for their eBusiness and eCommerce application by linking to
their resellers across China using SmartBoxTM SaaS. This highly cost effective
solution will be very attractive to customers. The Company believes that this
launch will support the sales of PortalAgeTM as well as SmartBoxTM in the
current economic climate.

The Company's cash balance has increased to 1.49 million (30 September 2008:
0.47 million) by the end of December which is in line with management
expectations. GEONG will continue to improve the cash collection system
throughout FY2009. The Company's cash management system is proving to be
effective.

Commenting on the contract wins, Weidong Wang, Chief Executive of GEONG, said:

"We are delighted to announce these significant contract wins, which again
demonstrate our continuing development and quality of our solutions to provide
first class service to our customers. The contract wins together with our
improving cash balance underpins our position as a leading provider of ECM
solutions in China.""

To summarise GNG after today's news:

- 10m m/cap at 32.5p
- compared to say 9m of net tangible assets now, including 1.5m net cash
- forecast to make 2m of profit after tax this year to 31/3/09
- i.e 6.5p EPS this year and a P/E of 5
- forecast to make 3.4m of profit after tax next year
- i.e 9.1p EPS next year and a P/E of 3.6

GNG have already stated (in December) they're confident they'll meet expectations this year. With all the above contract wins and favourable currency fluctuations they may well exceed them imho.

In addition, Seymour Pierce have noted that the scale of GNG's recurring income and contract wins is such that next year's 9.1p EPS forecast looks too low.

GNG also expect to have a net 2.5m cash by 31st March (against that 10m m/cap).

Other excellent news:

- GNG are launching their products as SaaS offerings (Software as a Service) - this is cheaper to operate and utilise for both GNG and their clients
- there's an exciting new partnership with EMC. EMC are one of the largest companies in the world:

http://www.emc.com/about/emc-at-glance/corporate-profile/index.htm

- listed on the S&P500, 38,000 employees, $13 billion of sales...etc

EMC join GNG's existing partners IBM, Microsoft, Dell, Lenovo, Huawei, Oracle, SAP, BEA, Momentum et al....an unbeatable contacts list.

Finally, some broker comment today:

"STOCKS NEWS EUROPE - 06 Jan 2009 - Geong International up after trading update
--------------------------------------------------------------
Shares in Geong International rise over 10% after a trading update in which the content management software provider highlights eight new contracts worth 1.17m in the financial services and automotive industries.

"Today's trading update illustrates that despite the challenging economic
environment, Geong is still executing well and closing new deals," Seymour
Pierce says in a note. "We see Geong, which has an expanding presence in Telecom, as a likely beneficiary of the roll out of 3G services in China, which is expected to trigger $40 billion in investment," says the broker, which rates the stock as "buy". "

The statement talks about the contract win and the cash pile. There was an opportunity to state profits and eps which it didn't take. At a time when disclosure is becoming very important, it is surprising and as such suggests all is not what it might be. There is no way an investor can gamble some hard earned cash on the back of that.

the chinese are not keen on transparency, which is why i (nearly) always recommend avoidance, which advice is often ignored but at considerable cost to those who dive in headlong

If cynic ever made a comment that wasn't negative and showed the remotest sign of balance I would fall off my chair in amazement!

Dealerdear, this was not a trading statement. The interims were out only a month ago! In those interims GNG confirmed they were on track to meet expectations of 6.5p EPS. In a month since then GNG have won 1.2m of contracts (along with the 3.3m announced in December).

It would seem then that things are going fairly swimmingly. Today's RNS was, as promised to shareholders who'd contacted the company, confirmation that GNG are on track in cash collection terms - the contract wins were a bonus!

The year end is 31st March. No doubt around that time or just afterwards (as opposed to three months before the year end) GNG will, as all other companies do, issue a more detailed trading statement. One thing is for sure - if anything had changed from GNG's statement that they would achieve 6.5p EPS then they would be obliged to say so.

In RNS terms it's often what is not said that is as important as what is not said, since you're only obliged to comment if something material/fundamental has changed.

Well said dealerdear and cynic.

Sadly the ADFN ramping crew are at the very worst at the moment, desperate to try and claw back massive losses and ramping like made.

As I said earlier :


Proselenes - 06 Jan 2009 08:10 - 283 of 289
Trading update out, which is a little bit disappointing for holders IMV. Lots of puff and whiz about December cash collection, but this is a normal time for payment prior to year end, so you'd expect that.

December (end of year) tends to be a time of lots of contracts, and yet they appear to have picked up just a few small ones.

Also hidden in there is this line "Company believes that this launch will support the sales of PortalAgeTM as well as SmartBoxTM in the current economic climate.

When companies say "in the current economic climate" you know what it means, it means sales are tough, and this is likely shown in the low amount of December orders IMO.

No doubt the ramps and hypes will be out in force today, but its very revealing that one line.......the other stuff is just normal for end of year.

Looks like the ADFN ramping crew are selling out - LOL

Its lucky there are places like MoneyAM where people have realistic opinions and its keeps those who hype in check.

Nice article here from T.M.F - the title says it all :o))

Good mentions for my Asian faves GNG and CHNS (doesn't mention RCG, but you can't win 'em all!):

http://www.fool.co.uk/news/investing/company-comment/2009/03/24/stocks-so-cheap-theyre-nearly-giving-em-away.aspx

"Stocks So Cheap They're Nearly Giving 'em Away
By Steve Scott

Published in Company Comment on 24 March 2009

"China Shoto (LSE: CHNS) looks like another successful and growing business. The Company manufactures and supplies batteries, mainly to the Chinese market. Its recent trading statement revealed that profits in 2008 will be ahead of market expectations and 50% higher than in 2007. There is some bank debt although it looks comfortably manageable at only 23% of the value of total tangible assets. So why does the market value China Shoto at only 2.9 times 2008 earnings, especially when there is a forecast dividend yield of 4.3% on offer?

It's not alone amongst Chinese based companies in that respect. Fast growing and debt free software provider Geong International (LSE: GNG) may be valued at a more realistic 5.2 times expected current year earnings, however this would fall to only 3.9 times earnings if they meet next year's forecast by broker, Seymour Pierce.

Clearly investors are very sceptical about the sustainability and quality of earnings from Chinese companies. That's not helped by high profile disappointments such as Bodisen Biotech (LSE: BODI). But if the market is wrong, then there is clearly huge upside in these shares."

GNG now 22p - keep collapsing...don't listen to Seymour Pierce. For interest, SVS securities is another which give very bad advice...


GEONG profit lower than forecast

Pre-tax profits at enterprise content management software and solutions provider GEONG International will fall short of expectations.

The firm said profits would be 1.6m for the year to the end of March - up 45% on last year but below the 2.2m expected.

oh dear, oh dear, oh dear!
not yet another chinese company failing to deliver?
what a surprise!

I said it would fail, and it does !!!! You have to be very careful of that rivaldo IMO, blindly ramps crap stocks sometimes, along with Glasshalffull the alter ego.

CHNS is the one to watch in terms of the Chinese companies, that will deliver, but most other Chinese companies are right in the crap.

Surprise, surprise.

Today Seymour Pierce downgrade GNG from BUY to outperform. SELL at 22p.

what's that?
good politico-speak ..... still called as "outperform" but "sell at 22p" ...... have i missed something?????

turnover well up, profit well up but not as high as anticipated, trading excellent despite difficult times for patient investors plus cash in the bank increasing---- I'd call this a good investment. I'm not in at the moment but may well buy back soon.

The current share price is 20p, with a 6.3m m/cap.

Seymour Pierce's new forecasts are:

Y/E 31 March'09 - 4.9p EPS, 1.6m PBT
Y/E 31 March'10 - 6.1p EPS, 2.1m PBT

So the 6.3m m/cap at 20p now plays a likely historic PAT of 1.5m - and maybe a fair amount more - for a historic P/E of 4, plus 3m cash and 10m or more tangible net assets.

I posted this summary on T.M.F for reference a few days ago which sets out the issues raised in the recent trading statement:

http://boards.fool.co.uk/Message.asp?mid=11506384

Assuming GNG confirm in their upcoming results:

- a stated minimum historic PBT of 1.6m
- the stated 3m net cash pile
- 10m+ net tangible assets
- a stable outlook
- an order book comprising x plus say 5m+ annual recurring income
- further contract wins

then the current price will look even sillier than it does currently at a 6.3m m/cap.

The chart says it all for Geong.

Nope, it only shows what you've chosen it to say since the startpoint you chose :o)) It doesn't show that I'm still in profit by 10% and that this thread is only in relatively small loss since it started - which is excellent by most AIM companies' standards.

It also fails to recognise the current situation, which is that imo GNG is extremely undervalued.

To reiterate - and lets have some comments on the actual business for a change...

The current share price is 20p, with a 6.3m m/cap.

Seymour Pierce's new forecasts are:

Y/E 31 March'09 - 4.9p EPS, 1.6m PBT
Y/E 31 March'10 - 6.1p EPS, 2.1m PBT

So the 6.3m m/cap at 20p now plays a likely historic PAT of 1.5m - and maybe a fair amount more - for a historic P/E of 4, plus 3m cash and 10m or more tangible net assets.

I posted this summary on T.M.F for reference a few days ago which sets out the issues raised in the recent trading statement:

http://boards.fool.co.uk/Message.asp?mid=11506384

Assuming GNG confirm in their upcoming results:

- a stated minimum historic PBT of 1.6m
- the stated 3m net cash pile
- 10m+ net tangible assets
- a stable outlook
- an order book comprising x plus say 5m+ annual recurring income
- further contract wins

then the current price will look even sillier than it does currently at a 6.3m m/cap.

It's also now been established that the order book figure given in the last RNS was before 5m of additional annual recurring income. It's therefore likely that GNG already have over 11m of turnover in the bag (per posters on ADVFN) for this year, against the 14m for the whole of last year. Not bad for a 6m m/cap company.

Nice - up 30% or 6.5p on the day to 28.5p now.

GNG are now on a minimum historic P/E of just 5.5 based on 4.9p EPS, with 6.1p EPS forecast for this year. With 35% of the m/cap covered by 3m cash.

Other points worth noting:

- its Balance Sheet strength (3m cash, tangible NAV greater than m/cap)
- its high recurring income and 10m order book
- its top tier client list
- the potential upside given a mere 9m m/cap relative to a minimum historic 1.6m PBT and GNG's market-leading position in China

It's always better to invest at the bottom rather than at the top.

depends on if going long or short....

Based on the above - very definitely long :o))

Legal & General disclosed last week that they'd doubled their stake in GNG, buying another 1.6m shares to go to 3.2m in total, i.e 10.16% of GNG:

http://www.investegate.co.uk/Article.aspx?id=200905191634135241S

Quite a vote of confidence.

Not only that, but it just so happens that the particular fund involved, L&G's Alpha Trust, is "the number one fund in the UK All Companies sector over three years to 31 March 2009." That's THE best performing fund out of more than 300.....

http://www.easier.com/view/Finance/Investments/Trusts/article-246633.html

"Legal & General UK Alpha Trust tops the pile
23 April 2009

Legal & General's UK Alpha Trust, managed by Richard Penny, was ranked the number one fund in the UK All Companies sector over three years to 31 March 2009.

Out of more than 300 funds, UK Alpha sat top of the pile over three years' cumulative performance. The fund, which identifies companies which have potential to return high alpha over an eighteen month or 2 year time-frame, has benefited from investments in diagnostics and healthcare stocks such as Tepnel Life Sciences Plc and Immuno Diagnostic Systems Holdings, as well as mining firms such as Allied Gold Limited through to online gaming software companies such as Playtech Ltd.

etc"

GNG is:

- on a current year P/E of 5 at 32p
- probably still trading at below tangible NAV
- has 3m cash against a 10m m/cap
- has a 10.6m order book and high recurring income
- has a market-leading position
- and has high barriers to entry and locked-in blue chip clients

GNG has a history of profit warnings.

GNG is not in good shape in terms of their business outlook.

Their sales and admin costs are going through the roof as their outlook is going not so good means that profits and cash are going to come under pressure.

Working cap needs and the needs to provide good and services up front free in order to win business is going to mean going forward more cash is going to get sucked out. They have already had the swing one way, as business slows existing working cap comes back to cash, but now it should swing the other way in the coming couple of sets of results.

Legal and General, that in itself means nothing, they all make mistakes, and they are now into a "lobster pot" scenario.......they have too much that they could never sell to get out of it.

Just my view but to buy a larger number of an illiquid small cap business with a history of profit warnings and with a poor outlook........well, say no more, someone is now trapped in. They likely felt the only way to support the price and hide any error was to buy more and pray things turn around, or if cash becomes an issue they can use their weight to get a discount price in a placing.

Likely means they will be looking at providing cash at a very big discount in order to average down in future. Placing alert ?


Too many far better shares out there, like WCC, CHNS or RCG.

GNG is, IMO, a real "avoid".

Sadly, PapalPower/Prosolenes' posting rationale is totally discredited as a joke.

For two or three years he posted negatively about RCG on a dozen bulletin boards as often as he could. But as soon as the share price reached a level he was happy with he turned ultra-bull and was ramping it everywhere!

And during that time he did the same about China Shoto (CHNS)....until quick as a flash he turned position and became an ultra bull.

And then re West China Cement (WCC)...guess what? The same again!! he's now an ultra bull.

I've no doubt that if GNG ever goes low enough he will be the first to start buying before pronouncing what a wonderful stock it is.

Despicable.

Good news in another holdings RNS today:

http://www.investegate.co.uk/Article.aspx?id=200905261714498411S

Legal & General have increased their holding yet again.

They now have a total holding of 3,312,000 shares, having added another 105,000 shares to their holding. This gives them 10.5% of GNG.

It's a fantastic vote of confidence for a 10m m/cap company like GNG.

And judging by today's trades the buyers are continuing to accumulate shares.

Interesting results today. I say this not from the point of what they say, but what they fail to say.

Results here :

http://www.investegate.co.uk/Article.aspx?id=20090623070000P...



BUT, ignoring the attempts of hype and promotion there are some very worrying underlying things not said.


Firstly, they have

2009 Revenues of 14.666m and Profits (after tax) of 1.359 so quick ratio is 9.26% for 2009
2008 Revenues of 7.612m and Profits (after tax) of 1.077 so quick ratio is 14.1% for 2008

What happened to margins, seem to have been smacked down on top of tax increases.



More worrying is the lack of reporting of the exchange rate. This is an RMB business but reporting in Sterling. Fine, but in the period of then to now the RMB has strengthened against sterling by near 40%. This means revenues, profits and earnings should have risen 40% at least. Anything less than 40% shows contraction.

So looking at

Profits in 2009 were 1.359 and in 2008 were 1.077 so growth is less than 30% BUT this is after 40% changes in currency. So actually profits in RMB terms have fallen.

Earnings in 2009 were 4.31p and in 2008 were 3.53p so growth is less than 30% BUT this is after 40% changes in currency conversion rates. So actually earnings in RMB terms have fallen.



Quite amazing that when profits have reduced and earnings reduced in RMB terms, the company highlights growth while quoting pounds sterling figures.


What does that tell you ?

Amazing if you take the 2008 figures and times by 14RMB to 1 pound, and take the 2009 figures and times by 10RMB to 1 pound, and then compare 2009 RMB figures to 2008 RMB figures. Worth doing.

Excellent results today. A very positive statement, and EPS and cash are ahead of expectations.

The true adjusted EPS was 5.3p compared to 4.9p as forecast, and cash is 3.6m as opposed to 3m.

- the outlook is very bullish
- the order book has improved from 10.6m since the year end (they don't say by how much)
- and there's 600,000 of savings to come through this year in reduced SmartBox costs, i.e almost 20% of total admin and selling costs

The beating of forecasts was also achieved despite a 20% tax rate, higher than forecast, so this is even more praiseworthy.

SmartBox sales were miniscule at 200k - but this appears to be being turned around by going for the reseller market.

Tangible net assets are 12m compared to the 10.5m m/cap - 3.6m of which is represented by cash, with a further 10.8m of blue chip debtors.

Everything is on track and no surprises. The overriding point is that at the current 34p GNG is trading at less than TNAV and is on a historic P/E of only 6.4, which probably reduces to 4.5 or so if you strip out the cash pile.

Incidentally, I agree with Prosolenes that GNG should show their results in RMB, but he shows a failure of understanding of accounting - the results are translated at average exchange rates during the year, not year end rates. Exchange rates only benefited GNG by around 20% during the year, since the average RMB rate only improved from 14.95 in 2007/8 to 11.83 in 2008/9.

That compares with:

- Turnover up 93% to 14.7 million (2008: 7.6 million)
- Profit before tax up 48% to 1.7 million (2008: 1.1 million)
- Underlying profit before tax* up 55% to 2.0 million (2008: 1.3 million)
- Basic earnings per share 4.3 pence (2008: 3.5 pence)
- Adjusted basic earnings per share* 5.3 pence (2008: 4.0 pence)
- Net cash up 78% to 3.6 million (2008: 2 million)
- Order book of 10.6 million (of which 5 million recurring revenue)

And GNG will continue to benefit slightly from improved exchange rates this year since rates have settled slightly to around 11 to 11.3 now.

SmartBox sales are almost a free blue sky option now in the valuation since they won't cost much to sell any more (of course SmartBox is the reason margins fell from 47% to 40% - the core PortalAge business is thriving).

The rise in debtors was predictable in these times, but the debts are with the bluest of blue chips and so will all be paid, if slowly in line with the local payment culture.

The bear points are SmartBox and debtor days, but neither of these in itself is enough imo to take away the fact that GNG's current valuation is cheap on both asset and P/E calculations.

Not to mention GNG's strong defensive qualities with high recurring income of 5.6 at the year end.

Nice attempt to talk it up but I think everyone knows you have historically been the most rose tinted poster ever on the stock GNG.


RMB chart here.

http://uk.finance.yahoo.com/q/bc?s=GBPCNY=X&t=5y&l=on&z=m&q=l&c=


I used 14 and 10 and 40% as its easy to use and year end values, and not far off reality. Its probably more like 15.x average for 07/08 and 11.x for 08/09, but 40% is very close and good enough for me and simple to use. Perhaps its 35% but it still poinds out that profits and earnings in RMB have fallen and margins have fallen.

A clear "avoid" to most people who will not get sucked in to the "hype" of the sterling figures covering PPP..........thats P... Poor Performance (in RMB).

Prosolenes, you have posted the same incorrect info on a number off bb's. There is no need to "talk things up". I am merely putting GNG's results in the context of its current valuation and using the correct method of exchange rate translation, whereas you are not.

I repeat - your understanding of accounting is incorrect. The P&L results are translated at average exchange rates during the year, not year end rates To use year end rates because they are "easy to use" is misleading and (simply put) wrong.

Exchange rates only benefited GNG by around 20% during the year, since the average RMB rate only improved from 14.95 in 2007/8 to 11.83 in 2008/9:

http://www.oanda.com/convert/fxaverage_result

That compares with:

- Turnover up 93% to 14.7 million (2008: 7.6 million)
- Profit before tax up 48% to 1.7 million (2008: 1.1 million)
- Underlying profit before tax* up 55% to 2.0 million (2008: 1.3 million)
- Basic earnings per share 4.3 pence (2008: 3.5 pence)
- Adjusted basic earnings per share* 5.3 pence (2008: 4.0 pence)
- Net cash up 78% to 3.6 million (2008: 2 million)
- Order book of 10.6 million (of which 5 million recurring revenue)

GNG will continue to benefit slightly from improved exchange rates this year since rates have settled to around 11 to 11.3.

Keep on ramping it riv, try your best.

Impale more on that awful spread that see's short term buyers nearly always selling at a loss as they cannot make it past the spread of the bid/offer prices.

The overriding point is that at the current 32.5p GNG is on a historic P/E of only 6.1, and a likely current year P/E of 5 which probably reduces to 3.5 or so if you strip out the 3.6m cash pile.

The true adjusted EPS was 5.3p compared to 4.9p as forecast, and year end cash was 3.6m as opposed to 3m forecast.

There's also 600,000 of savings to come through this year in reduced SmartBox costs, i.e almost 20% of total admin and selling costs

Tangible net assets are 12m compared to the 10.2m m/cap - 3.6m of which is represented by cash, with a further 10.8m of blue chip debtors.

The presentation GNG made to analysts this week is now available for all to view at:

http://www.buisseret.com/gng/GEONG%20FY09%20Final%20Result.pdf

It's extremely impressive, and there are a number of points to note:

- most importantly : "Order Book has seen strong growth since year end", so from 10.6m it could now be say 12m, including say 6m annual recurring income
- Significant new contracts post year end
FSI: ABC (Portal and UxD Consulting), Guangfa Securites (Investment Banking
Management), Bank of Guangfa (UxD Consulting), Bank of Dongguan (UxD
Consulting) and CCB (Portal MA)
Auto: SGM (Dealer Management System MA)
Telecom: China Mobile (Portal)
Other: Giant Gaming (Enterprise Search)

- Microsoft anyone? "Extend partnership with Microsoft: working together to sign new contracts, including ABC and Giant Gaming"

- "Long-term agreements, adding to FY10 recurring revenue
Renewed the Core Service Supplier Agreement with IBM Global Business Service
Signed new yearly CSP Agreement with IBM Global Technology Service
Renewed yearly Freelancer Management Agreement with Huawei"

- the number of PortalAge clients has increased again, to 180 - this compares to 170 from memory only a couple of months ago

- this is a rather tasty quote : "GEONG is the only vendor in China who can provide end-to-end ECM consulting, software solutions and services ( including SaaS) for business transformation and information management to clients"

- there's a case study of GNG's client CCB (China Construction Bank) - the world's second largest bank! The "Opportunities for 2009" indicate no let-up in the stream of work:

"Opportunities in 2009
New internet banking portal for Credit Card transactions, marketing and branding
Online CRM services portal
Customer Experience Management for internet banking feedback
Phase II of project enhancing functionality of online sales & marketing and client servicing"

- 21 new clients signed during the year including Rural Bank of
Shandong, Rural Bank of Dongguan and Huawei

- "Outstanding orders have completed in Q1"

- Clients include 4 of the top 10 banks in the world in terms of market cap
World No. 1: Industrial and Commercial Bank of China
World No. 2: China Construction Bank
World No. 4: Bank of China
World No. 6: Bank of Communications

- there are 195 second tier banks in total, and GNG currently has 15 second tier banking clients. Many opportunities here since GNG is far and away the market leader.

Incidentally, the true spread is only 2p as sellers are currently getting a good premium to the bid at 31.9p, whilst buyers are having to pay the full 34p offer.

why the f*** would anyone want to get excited about this stock? ..... for goodness sake, there were only 39k shares traded today, which tells you plenty

Cynic, that's because it's a 10m small cap. If you can't see the low rating and equate it to the historic growth, defensive qualities, blue chip client list and future potential then perhaps others will.

I'm 75% up already on GNG. Another 75% to 56p in the next few months would still only see the P/E on a current year P/E of 9.1 based on 6.1p EPS. That's more than exciting enough for me.

no one else seems to wear your rose-tinted specs either

The price has ticked up 0.5p, and there's a nice situation online with a seeming shortage of stock.

The maximum stock available to buy is just 1,500 shares at the full 35p offer, whereas you can sell a number more at 32.9p, a big premium to the offer.

GNG has also been tipped by Trendwatch:

"Main points
*Sales almost doubled to 14.7m
*Pre-tax profit increased by 54% to 1.7m
*Basic eps of 4.3p - adjusted eps 5.3p.
*Positive cash inflow of 1m
*Net Cash balance of 3.6m.
*Year-end order book 10.6m with almost half recurring income.

Positive Factors for 2009/10
*Banking & Telecomm sectors remain strong
*Auto sector shows positive signs of recovery.
*SmartBox to be marketed as a PortalAge component eliminating around 600k in costs.
*Concentration on larger customers and online solutions.
*Core strategy providing end-to-end solutions based on consulting, software & service.
*SaaS roll out should increase recurring revenue and improve cash collection
*Eps of 6p achievable with a good chance of more
*Projected earnings multiple of around 6

Conclusion
Company has a good franchise, a good record and a share price that's only around 10% above its original IPO.

BUY at 33p"

go fill your (own) boots then!

Up by 1.5p and almost 5% today. At 34.5p the historic P/E is still only 6.5 based on 5.3p EPS.

There are a maximum of only 1,500 shares available to buy online, and you can sell more shares at 33.5p now, still a large premium to the bid price.

Given 5.3p EPS for last year, the previous 6.1p EPS forecast for this year looks light given the 600k reduction in SmartBox costs and the strong order book. The SmartBox cost reduction alone represents almost an additional 2p EPS for this year.

But let's go for a cautious 6.5p EPS this year with 20% growth. For next year GNG could be looking at say 7.5p EPS.

If the share price does double to 69p, this would still represent a P/E of only 9.2 - with in addition a 21m m/cap covered by 12m of tangible net assets including (at present) 3.6m net cash.

An optimistic scenario might see 8p+ EPS this year given that 2p of EPS in cost reductions, which would leave the current share price looking even more ridiculous.

does this sound like desperate ramping to anyone else?
totally illiquid with today's volume a totally risible 22,300 shares, a spread of 1p on a mid of 34p, no free stock and a chinese company to boot, sounds like a disaster just waiting to happen

Perhaps cynic should address his rather xenophobic and aggressive posts to the best performing all-share investment fund in the UK - L&G's UK Alpha Trust - who have taken over 10% of GNG in recent months, spending probably 1.5m in the process.

There's also the matter of GNG's client list, which reads like a who's who of the world's top companies - and this for a 10m m/cap company making 2m PBT:

GNG's client list includes the top 5 banks in China, 12 of the top 20 securities firms, 4 of the top 10 fund management companies, 2 of the top 5 insurance companies, major stock/future exchanges as well as financial management institutions.

Other clients include China Mobile, Air China, Sony, Hitachi, Adidas, Huawei-3COM, Motorola China, China Unicom, Shanghai General Motors, Lenovo, Volkswagen, Shanghai Telecom, Dell etc etc.

GNG are also in partnership with IBM, Microsoft, SAP, Oracle and BEA.

They have a 17% share of the fast-growing Chinese ECM market and are the largest domestic provider after Oracle and IBM, who as stated before also act as their partners.

GNG say they've never lost a client, and those clients are all locked in to GNG because their systems are dependent on GNG's software, thus providing recurring revenue streams currently at almost 6m per annum.

Given that my 2 1/2 year investment is now up 90%, and I fully expect another 90% over a shorter or similar timeframe, I'm perfectly content.

i happily admit that, with good reason, i do not trust chinese companies in general, nor companies that are as illiquid as this ...... while all in the garden may look rosy today, God help you when (not if) the markets turn ugly again and you are trying to sell stock .... and always remember, that a profit is only a profit when it's in the bank!

GNG were up 6p on Friday, or 18% on the day. Not bad.

Legal & General with over 190% and most GNG investors are not in for the short-term - though the fundamentals do make this an attractive short/medium-term play. We're in for a multibagging opportunity over the next two to five years.

I repeat - there's also the matter of GNG's client list, which reads like a who's who of the world's top companies - and this for a 10m m/cap company making 2m PBT:

GNG's client list includes the top 5 banks in China, 12 of the top 20 securities firms, 4 of the top 10 fund management companies, 2 of the top 5 insurance companies, major stock/future exchanges as well as financial management institutions.

Other clients include China Mobile, Air China, Sony, Hitachi, Adidas, Huawei-3COM, Motorola China, China Unicom, Shanghai General Motors, Lenovo, Volkswagen, Shanghai Telecom, Dell etc etc.

GNG are also in partnership with IBM, Microsoft, SAP, Oracle and BEA.

They have a 17% share of the fast-growing Chinese ECM market and are the largest domestic provider after Oracle and IBM, who as stated before also act as their partners.

GNG say they've never lost a client, and those clients are all locked in to GNG because their systems are dependent on GNG's software, thus providing recurring revenue streams currently at almost 6m per annum.

strange isn't it .... no one else posts here and no one trades the stock except in joke amounts ..... keep filling your (own) boots!

Excellent stuff - back to parity today with the bid price the same at 37p after being down 2.5p first thing. An excellent turnaround showing the underlying strength in demand.

Online one can buy a maximum of just 1,500 shares at the full 42p offer - sellers are getting 39.6p for many more, almost the mid-price!

Yet still GNG trades at barely its 12m tangible NAV, with a 3.6m cash pile and a P/E of just 6, with high recurring income and an unbeatable client list.

The EPS this year could conservatively be 6.5p and perhaps as much as 8p after 5.3p last year.

Which would justify a 100% rise to 80p at the least imho with such a strong Balance Sheet.

this board is pretty dead.riv, so you are pushing a large stone uphill here
Guess as you are posting the same stuff on other boards, of which there is no harm in that at all, its not too much extra effort.
Get the feeling you would be pleased to see the back of these, its all a bit too earnest, imo.

serious excitement here today .... 700 shares traded already!

Notlob, agreed - the moneyam bb seems like a wasteland, which is why I rarely post here except about GNG and CHNS.

The only reason I ever started posting here was because a certain other poster (not cynic!) was posting such ridiculously inaccurate stuff about GNG and CHNS on this and a multitude of other bulletin boards. Otherwise I really wouldn't have bothered.

I believe GNG to be a great opportunity for short-term gains and long-term multibagging. Not much more to say! I'll be holding for some time to come as the company grows.

not really having a major dig, but CHNS is another of these stocks (would much hold those than GNG) with a farcically small daily volume and wide spread

fair play, riv, I know who you are talking about now.
good luck to you with GNG

Let's bring this thread up to date, since the share price has continued to increase and is now 48p.

Two weeks ago we had ridiculously good news - last year's total revenues were 14m, and here at a stroke GNG have secured what are annualised revenues of 4.8m....and Q1 is normally a quiet quarter.

And in case anyone missed it, the last paragraph amounts to what is a very strong trading statement.

GNG is STILL trading at barely above its 12m tangible net asset value (including 3.6m net cash) at the current 15m m/cap - despite making 2m PBT and 5.3p EPS last year.

For the record, here's the RNS:

http://www.investegate.co.uk/Article.aspx?id=20090722070100PC935

"GEONG International Limited (AIM: GNG), the AIM listed China based provider of enterprise content management (ECM) software and solutions, is pleased to announce that it has signed a contract extension with a leading international telecom solutions provider.

The agreement sees GEONG extend its high-level management consultancy contract with the client for a period of one year, from 1 April 2009 to 31 March 2010.

The agreement generated revenues of USD1.9 million (1.2 million) during the three month period from 1 April 2009 to 30 June 2009, compared with USD4.5 million (2.8 million) for the twelve months to 31 March 2009.

The contract forms part of GEONG's `import' strategy, in which the Company works with its Chinese clients to help them build their overseas operations. As a result of this, revenues for the contract are chiefly derived in US dollars and are therefore reported as such.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted to have signed this contract extension with one of our key clients and remain confident of continuing our long-standing relationship with this major global player. This clearly demonstrates our considerable success in helping our clients accelerate their expansion into overseas markets.

GEONG has continued to successfully secure new business, both with new and existing clients, during the first quarter of 2009, and we are confident of this trend continuing throughout the remainder of the year.""

Another contract win RNS at the end of last week - and more than 200 tier two Chinese banks to go for. With an AGM trading statement likely in the next two to three weeks there should be more good news to come imho:

http://www.investegate.co.uk/Article.aspx?id=20090810070000PA5D3

"Contract Wins within Tier-Two Banking Sector

GEONG International Limited (AIM: GNG), the AIM listed China based provider of enterprise content management (ECM) software and solutions, is pleased to announce that it has recently signed a number of new contracts with tier-two Chinese banks worth a total value of RMB 7.1 million.

GEONG has signed four contracts that will see it leverage existing PortalAge solutions, already used by tier-one banks, to help clients build their internet banking facilities and employee portals. These contracts have been signed with the Rural Bank of Dongguan, the Bank of Qilu, the Guangdong Development Bank and the Bank of Dezhou and are worth a total of RMB 2.9 million.

The Company has also been developing a number of new PortalAge solutions during the past six months, specifically tailored to meet the core banking and CRM needs of tier-two banks. The solutions have been developed in swift reaction to an emerging and fast growing demand from tier-two banks for more efficient IT systems and are priced and positioned appropriate to the sub-sector.

These new solutions are already proving popular with two recent contract
signings, including a RMB 3.2 million contract with the Rural Bank of Shangdong and a RMB 1.0 million contract with the Bank of Dalian.

In addition, an advantage of these contracts is that tier-two banks in China typically offer more favourable payment terms and GEONG expects the full impact of this to be realised in the 2nd and 3rd quarters of the next financial year.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted with these contract signings which demonstrate the versatility of our PortalAge solutions and represent a significant breakthrough for GEONG within the fast growing tier-two banking sector. There are over 200 tier-two banks within China, most of which are just beginning to build their IT systems, presenting considerable opportunities that we feel we are well positioned to benefit from.""

More huge contract wins - and 3.9m represents over 25% of last years total sales!

At 43.5p and a 13.8m m/cap GNG still trades at barely above tangible NAV, with a 3.6m cash pile, and on a current year P/E of only 7, though probably less since imo forecasts of 6.1p EPS will be well beaten:

04 September 2009
GEONG International Limited

Contract Extensions

GEONG International Limited, is pleased to announce two contract extensions worth
a total value of 3.9m.

GEONG, in conjunction with one of its major partners, has extended a contract
to provide specialist services and products to a major global Chinese bank and
telecommunications infrastructure providers from 29 July 2009 to 1 July 2010.
GEONG will coordinate and manage the services of consultants for a number of
the client's projects across China and the contract is expected to be worth not
less than 1.5m.

In addition, a further contract extension, worth 2.4m to GEONG, has
been signed with a global Chinese telecommunications provider for another year,
from April 1 2010 to March 31 2011. The extension will see GEONG assist the
client in building its overseas operations.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted to
announce the signing of these two contract extensions which, in addition to
generating significant revenue, demonstrate our ability to secure prestigious
partnerships and foster long-term client relationships. We are also becoming
increasingly confident in our future ability to secure further long-term
contracts of this nature."

Looks like Geong might be in some trouble and needing a cash injection, a Friday late RNS out about a placing with no clear reason as to why they need the money. Burying an RNS late on a Friday raises big question marks about it imv.

Its a dilution for all present holders naturally, its at a large discount to the present buy price and there is no clear reason stated why they need it. All points to issues with the business imo, are they getting stretched on cash again ? are they pumping up the sales orders by offering deferred payment schedules and ramping up debtor days again ?

Not a holder but I would guess this news has raised lots of questions for shareholders as to what is going on. This company has issued in the past a veiled profit warning, a profit warning and are not exactly top of the league in terms of investor confidence in their statements imo.

A small placing is fine by me - not too dilutive as only 19% more shares, and at only a small discount to the current share price. Could have been a lot worse a few months ago.

The funds are presumably meant:

- to finance GNG's growth, which is obviously continuing judging by the CEO's comments
- and/or to finance the long-flagged earnings-enhancing acquisition(s)

The order book was, what, 10.6m at the last count? It's now 13.6m.....

Must ask at the AGM if Huawei are additional to the telco customers already known about.

Every reason to continue to be confident. Who knows, the share price might get a boost on Monday from what is effectively a confident trading statement:

"Weidong Wang, Chief Executive of GEONG, commented: "GEONG's growth prospects continue to be extremely good, building on the 48% profit growth achieved last year. We have recently signed a long term contract with Huawei and we are confident of our ability to win and deliver similar contracts in the future.
Our order book has risen by more than 25 per cent. since 31 March 2009 and
currently stands at 13.6 million. With no debt and a fortified balance sheet, the new funds will enable the Group to service large and long term contracts, enhancing our future prospects. We therefore welcome our new investors and look to the future with confidence.""

It'll also be interesting to see if we get any RNS's about new institutional shareholders.

Incidentally, for anyone who isn't aware already, a comment about Prosolenes from another poster on i.i.i:

"Pro_S2009 is just the latest alias of Papalpower/Proselenes and he has been deramping Geong for years and yes he does spend his time deramping certain shares, particularly Chinese stocks, where he is not a holder

As usual, no facts, just pure innuendo. He conveniently fails to mention that their order book is up by around 40% to since their March year end. The Geong AGM is next Friday and no doubt the reason for the placing will be revealed then."

After hours Friday RNS..........that says it all. Its generally where the bad news is always dumped.

Most highly illiquid small caps with a big spread will place at or above their current buy in price if there story is good. This one is a large discount to the current buy in price.

Do not forget, look at the chart, one veiled profit warning and one profit warning and lots of, imo, poor communications about what the business is doing. It would seem there is another cash problem and thats why they need to raise money at a significant discount.

Excellent news re the positive trading statement and the small placing.

One of the most respected posters on ADVFN, eacn, has posted as follows re the placing: "FWIW, I took part in the placing. The company needs working capital to cope with extended payment terms on larger contracts. The trading statement is bullish and the fund raising is a prudent move. "

It's also fine by me - not too dilutive as only 19% more shares. Could have been a lot worse a few months ago. The funds are presumably meant:

- to finance GNG's growth, which is obviously continuing judging by the CEO's comments
- and/or to finance the long-flagged earnings-enhancing acquisition(s)

The order book was, what, 10.6m at the last count? It's now 13.6m..... Must ask at the AGM if Huawei are additional to the telco customers already known about. Every reason to continue to be confident. Who knows, the share price might get a boost from what is effectively a confident trading statement:

http://www.investegate.co.uk/Article.aspx?id=20090918164828PD51C

"Weidong Wang, Chief Executive of GEONG, commented: "GEONG's growth prospects continue to be extremely good, building on the 48% profit growth achieved last year. We have recently signed a long term contract with Huawei and we are confident of our ability to win and deliver similar contracts in the future.

Our order book has risen by more than 25 per cent. since 31 March 2009 and
currently stands at 13.6 million. With no debt and a fortified balance sheet, the new funds will enable the Group to service large and long term contracts, enhancing our future prospects. We therefore welcome our new investors and look to the future with confidence.""

All these companies with poor operating cash flows are making placings. RCG today, GNG recently, CHNS next ?

The market is being rough on them, and so it should really, its to be expected really and any posters attempting to "hype and ramp" them up on revenues is misleading people I think.

A good solid trading update with no surprises:

http://www.investegate.co.uk/Article.aspx?id=20091026060000PD307

The increase in the order book to 13.8m from 10.6m since the year end 6 months ago tells the full story imo.

The cash pile is certainly affected by seasonality - 1.2m consumed in H1. But GNG still had 2.4m prior to the recent small fundraising and now have 4.5m net cash. More than enough to finance the promised expansion.

To clarify re GNG saying they'll meet "market expectations", Seymour Pierce's current forecast on Hemscott etc is re basic EPS, not the true adjusted EPS before amortisation and share-based expenses.

Hemscott shows 2m PBT and 5.4p EPS this year, but let's adjust out 0.2m amortisation and 0.1 share-based expenses as per last year to get a 2.3m PBT, take a 15% tax charge on the 2m as per SP, and use a weighted average of 34.5m shares for the year.

That's 5.8p EPS for this year, against a 45p share price.

Normally I would say a P/E of 7.75 is maybe only a little undervalued for a Chinese company in the current market which has as good a record of growth as GNG has, with such excellent potential.

But for:

- the Chinese market leader in its sector
- a company with such high recurring income
- with a blue chip client base to die for
- a company growing its order book and revenues at such speed
- with such huge potential across sectors and countries
- a company with such a strong Balance Sheet, including 4.5m net cash against a 17m m/cap
- and with an excellent chance of producing a "substantially ahead of expectations" trading statement later in the year

I'd say that the current price is undercooked by some way.

See the price fell on that update. Not surprising.

Er, no, the bid stayed the same, it only fell on the offer. And the price is up 0.5p today :o))

this is another special chinese take-away ..... 43/47 and not a single trade all day

LOL - its a company that specialises in dealing people with "profit warnings" and "veiled profit warnings" based on past experience.

Many people would say "one to avoid", especially as L&G now have a large holding. A big holding in an illiquid stock means the price could collapse if they ever need to offload any, increases the risk for many.

Up another 1p to 46p today on 29k shares traded (including PLUS). The gain since the start of this thread is now 77% (155% for me personally).

L&G have steadily increased their holding over time to the present around 10% of GNG. They're obviously intending to be around for some time and wouldn't have the slightest expectation of disposing except in exceptional circumstances.

The m/cap is now up to 17m. In another two or three years' time the m/cap could be anything from 50m-100m given the Chinese market leadership and expansion into new sectors and geographies, plus expansion into second tier banks etc.

This year could see 7p+ EPS given the cost savings already made clear plus the hugely increased order book.

Plus GNG has 4.5m net cash against the 17m m/cap.

It's nice to be backing a share which is both cheap and has such terrific growth potential.

Interesting article :

http://www.fool.co.uk/news/investing/investing-strategy/2009/11/03/china-and-the-bigger-fool-theory.aspx

.

GNG announced terrific results today:

http://www.investegate.co.uk/Article.aspx?id=201007010700145951O

M/cap at 36p : 13.5m
Adjusted EPS to 31/3/10 : 6.2p
Historic P/E of 5.8

Historic adjusted profit before tax to 31/3/10 : 2.6m
Historic adjusted profit after tax to 31/3/10 : 2.14m

Net cash : 6.4m, i.e 47% of the m/cap

Tangible NAV of 16.7m, including the 6.4m net cash and and 4.7m trade blue chip (i.e fully recoverable) debtors

Order book : 14m (2009 : 10.6m), including 5.6m annual recurring income (historic turnover of 12.5m)

Historic adjusted profit after tax record:

Y/E 31/3/04 - (0.14m)
Y/E 31/3/05 - 0.42m
Y/E 31/3/06 - 0.65m
Y/E 31/3/07 - 0.84m
Y/E 31/3/08 - 1.22m, or 4.0p EPS
Y/E 31/3/09 - 1.66m, or 5.3p EPS
Y/E 31/3/10 - 2.14m, or 6.2p EPS

The usual cash flow concerns with Chinese companies appear to be improving further for GNG with fast-increasing client SaaS usage and a major banking customer turning to quarterly rather than annual payments. Last year saw 0.6m positive cash flow from operations.

Other pieces of good news:

(1) EVO, a much more heavyweight organisation, have replaced the ineffective Seymour Pierce as GNG's brokers and NOMAD
(2) GNG have arranged a 5m equity financing facility to allow for potential acquisitions. I would hope for action on this front sooner rather than later.

From the results:

"Operational Highlights:

SaaS business increased by 819% to 1.7 million with 10 new clients added (2009: 0.2million)
24 new client wins in our core market including in the Banking, Automotive and Telecommunications sectors
New partnership with Oracle and a breakthrough in the insurance industry winning five new clients
Launched new versions of products, along with innovative solutions in IaaS (PortalAge) and SaaS (PortalAge & SmartBox)"

GNG note that "the Group's trading conditions since the year end have been in line with management expectations", so things appear to be continuing to go well.

As a footnote, it's worth noting that GNG's client list is unbeatable for such a small company, including ICBC (the world's largest ever IPO), China Mobile, Air China, Sony, Hitachi, Adidas, Huawei-3COM, Motorola China, Bank of Communications, Shanghai General Motors, Lenovo, Volkswagen, Shanghai Telecom, Dell.

GEONG's flagship product range, the GEONG PortalAge series, is used by the top 5 Chinese banks and 12 out of the top 20 securities firms in China, plus 2 of the top 3 telecoms companies and a number of the top insurance and auto sector companies.

GNG also has partnerships with IBM, Oracle and Microsoft.

Lots of negatives in there.

Price action (down lots) tells you what the market thinks.

At 29p GNG's m/cap is just 10.9m - yet at 31st March 2010 GNG had:

- 6.4m net cash, with forecast 7.3m net cash next March
- net tangible assets of 16.7m
- achieved historic adjusted 2.14m profit after tax to March 2010

GNG's consistent adjusted profit after tax (PAT) record in sterling is (using $2:1 for 2004):

Y/E 31/3/04 - (0.14m)
Y/E 31/3/05 - 0.42m
Y/E 31/3/06 - 0.65m
Y/E 31/3/07 - 0.84m
Y/E 31/3/08 - 1.22m, or 4.0p EPS
Y/E 31/3/09 - 1.66m, or 5.3p EPS
Y/E 31/3/10 - 2.14m, or 6.2p EPS

The historic P/E is down to just 4.7, and the ex-cash P/E is ridiculous at just 2.1.

Given 5.6m per annum recurring revenues, a 14m order book (including recurring income) and a blue chip client list the fundamentals are pretty telling.

GNG is the domestic market leader in its field in China with almost 20% of the ECM market there.

L&G have sold a part of their holding for whatever reason (could merely be rebalancing their portfolio), but at some point fundamentals and value will reassert themselves here.

Talking about "Management Expectations" is a key phrase used to avoid mentioning anything about performance as against market expectations. Smoke and mirrors using that comment.

Talking about "cost controls and cash" is simply padding the statement out, one would expect all companies to do this and its nothing out of the ordinary, perhaps the statement is there to try soften the "quiet 1st half" comment which looks like an excuse for the coming interims being poor ?

I can see perhaps why L&G have been selling down their holding..........

Perfectly good H1 trading statement - note the in line with "management" expectations, which are often better than market expectations.

I'm particularly excited about the move into Vietnam - and leveraging off the back of IBM as well.

Oracle too are deepening their alliance with GNG via contract wins and new SaaS products.

Remember that GNG are still a mere 13m m/cap company...but management have now confirmed that they're in line with expectations for a 2.1m adjusted PAT.

And that GNG had 6.4m net cash at the last results (which in H1 will have dropped to fund key contracts before peaking in H2 again).

And that the m/cap is still far less than net tangible assets!

GNG has the enviable combination of being low-risk given the net tangible assets, 6.4m net cash, high recurring income, core customer base - yet with high growth potential now in not just China but Vietnam too.

Broker downgrade to HOLD (which normally means its a sell)........

Geong (GNG, 35p, 13.24m) In its AGM statement Geong has highlighted the launch of a number of new products, including those on its SaaS platform. It has also reminded investors H1 is traditionally the weaker and it has maintained tight cost controls while focussing on its working capital. We drop the recommendation to a HOLD till the interim results are released to ensure the group has sufficient working capital as it does consume cash on growth. (Julian Tolley)

The interim trading statement is out in early November, so not long to wait.

Per the AGM conference call the initial Vietnam contract is worth $900,000! More substantial than I thought...and the promise of more to come given IBM's involvement.

Plus GNG are riding on IBM's back into Indonesia too. Another 250m people to go for.

And GNG mentioned "other South-Eastern countries" too.

The SaaS component of turnover is continuing to increase, particularly via the partnership with Oracle.

GNG had 6.4m net cash at the year end against a 13m m/cap. I somehow suspect they have sufficient working capital :o))

Absolutely superb post about GNG meeting all the criteria for a Jim Slater Zulu stock from ADVFN which I hope buetowa won't mind me copying here:

buetowa - 4 Nov'10 - 20:31 - 15826 of 15834

I posted this a couple of days ago on Liarspoker excellent thread - 2010 Zulu Thread = ZULU. The investing criteria follows that which was developed by Jim Slater.

GEONG - AIM listed China based provider of online business solutions utilizing Enterprise Content Management (ECM)technology.

I propose GNG which I know is a much unloved Chinese software stock at the moment but has the potential of being a ZULU stock for the following reasons:

MANDATORY

1. Five Year Record (5 years positive earnings growth)

Data taken from ADFVN financial section for GNG as at 2.11.10:
Turnover GBP (07) 4.30 (08) 7.61 (09) 14.67 (10) 12.51
2010 turnover down as a result a strategic decision to exit low margin SME market.
Pre-Tax Profit GBP (07) 0.89 (08) 1.14 (09) 1.69 (10) 2.27
EPS-Diluted GBP (07) 3.11 (08) 3.53 (09) 4.16 (10) 5.13

Comments from Rivaldos thread GEONG New IPO going for a song. GNG's consistent adjusted profit after tax (PAT) record in sterling is (using $2:1 for 2004):
Y/E 31/3/04 - (0.14m)
Y/E 31/3/05 - 0.42m
Y/E 31/3/06 - 0.65m
Y/E 31/3/07 - 0.84m
Y/E 31/3/08 - 1.22m, or 4.0p EPS
Y/E 31/3/09 - 1.66m, or 5.3p EPS
Y/E 31/3/10 - 2.14m, or 6.2p EPS

2. Low PEG Factor (PEG below 1 - ie 10% eps growth on a PE of 10 or less)
- PEG factor as at 2 Nov 2010 0.33

3. Optimistic Chairman's Statement

Trading Statement 1.11.10
- Trading in the first half of the year is in line with expectations.
- Margins increased during the first half as the SaaS business continued to grow.
- Company's continued emphasis on working capital management, the Directors believe that the Company is well placed to meet market expectations for the year as a whole.

AGM Statement 27.09.10
- We commenced our overseas expansion into Vietnam.
- The first 5 months of the current financial year, has continued to perform in line with management expectations

Final Results (Financial Highlights) 1.07.10
- Turnover down 15% to GBP12.5 million (2009: GBP14.7 million)
- Gross margin up 500 basis points to 46% (2009: 40%)
- Profit before tax up 34% to GBP2.3 million (2009: GBP1.7 million)
- Underlying profit before tax* up 30% to GBP2.6million (2009:
GBP2.0 million)
- Basic earnings per share up 21% to 5.2 pence (2009: 4.3 pence)
- Adjusted fully diluted earnings per share* up 17% to 6.2 pence (2009: 5.3
pence)
- Cash up 78% to GBP6.4 million (2009: GBP 3.6 million)
- Trade receivables of GBP4.7 million (2009: GBP4.3 million)
- Trade receivables, including accrued income of GBP13.1million (2009: GBP10.8million)
- Cash and Trade Receivables form 88% (2009: 84%) of total assets and 120% (2009: 115%) of net assets
- Order book of GBP14 million (2009: GBP10.6 million) including GBP5.6 million of recurring revenue (2009: GBP5 million)
(*excluding amortisation and share based expenses)

4. Strong Financial Position
- Cash up 78% to GBP6.4 million (2009: GBP 3.6 million)

5. Competitive Advantage
- Dominant position as the ECM provider for the Financial Services sector within China.
- Strategic alliances with IBM, Oracle and Microsoft


IMPORTANT

6. Something New

18 months ago (June 09) Appointment of CFO.

Within the last year - Deployed their SaaS model which brings forward cash flow which is an issue in the Chinese market where payment of invoice may only occur annually with very large organisations.

Within the last 6 months winning contracts outside China (Vietnam).

Within the last month 29.10.10 L&G was a significant shareholder that has been reducing their % holding in the company. This overhang has been a drag on the share price but it is now coming to the end. Now less than 5% as per recent announcement.

7. Small Market Capitalisation (a small cap stock - anything in the FTSE250 or above is out)

Market Cap as at 2 Nov 2010 - 13.72m

8. Relative Strength (as in the share price movement compared to the FTSE All Share Index)

Strong upward price movement over the past few days which could signal that L&G are close to exiting.


DESIREABLE

9. Dividend Yield (None)

10. Reasonable Asset Position (Yes )

11. Management Shareholding (Yes - http://www.geong.com/Channel/361668)

Number of Shares in issue - Total number of shares in issue of the Company is 37,834,622 shares at 15 October 2009. The Company does not hold any shares in treasury.

Percentage of shares not in public hands - The Directors' and their beneficial interests (including family interests) in the shares of the Company at 15 October 2009 were as follows.

Directors
Henry Hak-Yan Tse: 3,703,673 = 11.7%
Weidong Wang: 5,061,671 = 13.4%
Amit Thakar 17,500 = 0.1%
Minren Guan = 1,027,413 = 2.7%

Even after today's 3p rise, at 34.5p GNG remains on an ex-cash P/E of just 2.7.

This is based on a 13m m/cap, 7.3m forecast cash and last year's 2.14m profit after tax.

Last week's H1 results were good - much better than I thought given the expected reversion to the usual H1/H2 split after last year's exceptional H1 (H2 is always much, much stronger than H1).

- PBT up to 0.7m despite that exceptional H1 last year
- adjusted EPS was 1.6p, so we can likely expect a minimum 5.5p EPS this year
- 4.1m cash is higher than I predicted at H1 given the usual H1 dip
- expansion with IBM into Indonesia as well as Vietnam
- PLUS a 2 year framework agreement with Oracle re Japan and the USA!
- reiterating the positive outlook for the year ahead with an increased order book of 14.8m including 6.9m of recurring revenue

and margins are fast-improving now given the move to SaaS and deliberately reduced 3rd party sales.

Evolution issued a brief post-results note. To summarise:

- results have "comfortably beaten our 1H'11 forecasts"

- reiterate 50p valuation and Buy recommendation

- net cash to exceed 7m at year end - against the current 13m m/cap, and with over 2.1m adjusted profits after tax!

- pending a conference call with the company, forecasts put on hold due to the "much higher than anticipated gross margin"

GNG held a conference call post-results last week.

My own quick summary:

- increasing SaaS revenues mean both reduced overall costs (less need for servicing) and improved margins
- Haier are a new customer from two months ago, and as Mas pointed out are the world's fourth largest white goods manufacturer, a Fortune 500 company and one of China's top 100 IT companies with annual sales of around 10bn
- the IBM Global Services partnership should not only provide big sales numbers in the next year, but will improve cash flows since the customers are international and will pay on IBM's rather than local Chinese payment terms
- trade debtors/cash flows will continue to improve, with the year to come showing the biggest improvement

1.6p adjusted EPS in H1 with the seasonally much better H2 to come implies probably 6p+ EPS for the year imo against a 34p share price, and possibly a lot more, given the increased order books and recurring income.

As was stated in the conference call, the CEO only has to walk out the door and he makes a profit.

Not only that, but cash flows are improving and should give well over 7m net cash against an 12.9m m/cap.

The current share price is absurd imho. It's merely a question of waiting for when the L&G overhang ends, no more, no less. And we were told that EVO will be working on that front....

Masurenguy on ADVFN gave an excellent and much more detailed summary:

"An upbeat conference call with Wade and Amit from Geong this morning.

The anticipated H1 sales deficit was due to a combination of two factors - further planned reduction in low margin TPS plus last years H1 figure incuded a one-off 1.6m consultacy contract with Huawei. On the flip side of this, gross margins increased to offset the lower sales figure with SaaS rapidly increasing its share of the overall sales mix and this is expected to grow by 150% this year which would represent 20% of overall sales. They naturally would not forecast H2 sales but expect a pre-2010 ratio to reassert itself this year (without the H1 Huawei distortion) so on a more conventional 40/60 or 35/65 ratio I would be looking for an annual sales figure in the 12m - 13.5m range this year.

The margins on SaaS business are almost double the established licensed IaaS model (78% v 41%) which last year accounted for circa 85% of total sales. Consequently margin improvement will be a continuing factor as SaaS increases its share of the sales mix. This will also have a knock-on effect in further cost savings too since it it is far less expensive to service and support online SaaS than it is to support offline midware IaaS business.

The forward order book of 14.8m includes 6.9m of recurring sales (47%). The proportion of recurring sales has continued to increase year on year and they expect this to exceed 50% of annual sales in due course. This is highly significant in my view since it constitutes captive income that costs little to service in comparison to the cost of winning new business and will further enhance future profitability.

New partnerships with IBM covering Japan and the USA, plus Vietnam and Indonesia, together with their SaaS parnership projects with Oracle in other SE Asian markets, will feed through into topline sales during the latter part of H2 and throughout the whole of next year with gross margins in a similar range to their conventional business model. Also further developments are already advanced in the creation of CRM social networking applications for direct B2C business and growing mobile internet usage. These are all being incorporated into Geong Online 2.0 which will provide advanced standard & customised services which will also interface with both Oracle and IBM.

They have alspo picked up an interesting new client, via IBM, in Haier (no I'd never heard of them before either) but they are the world fourth largest white goods manufacturer and one of Chinas top 100 IT companies with annual sales of around 10bn. Haier are in partnership with Argos in the UK and Geong will provide them with vertical online B2C application amongst a number of other services.

http://www.haier.com/abouthaier/corporateprofile/facts.asp

This kind of deal really should be RNS'd in my view rather than just 'discovered' at a reporting stage.

The increased debtor levels at H1 have become predictable and, whilst this might be naturally a concern to many, it is worth reiterating that their customers are virtually all blue chip. The banks tend to pay annually in December and the year end always reverses this situation. This scenario is largely a product of large sales accruals which account for around two-thirds of the outstanding total and the timeline on any receivable only commences when the final invoice has been issued. This situation is just a characteristic of this business and will gradually improve as SaaS increases within the sales mix at the expense of the existing core of IaaS offline midware sales. The company has cash in the bank so there are no financing costs incurred and it does not create any cashflow problems for them either.

This is a transistional year for the company with the introduction of Geong Online 2.0, the new framework and strategic partnerships with IBM and Oracle and the move into foreign markets and the growing proportion of higher margin, lower servicing cost SaaS business within the overall mix. I would expect the year end figures to start to reflect the benefits of some of these trends."

Excellent new article on Proactive Investors noting that GNG is a "bargain basement" buy:

http://www.proactiveinvestors.co.uk/companies/news/27654/geong-a-hidden-gem-of-the-technology-sector-27654.html

"GEONG: A hidden gem of the technology sector
Wed 11:24 am by Ian Lyall

GEONG International (LON:GNG) is one of AIMs hidden gems. The expanding China-focused internet software company has a 200-strong blue-chip clients, and in IBM and Oracle, two top-notch industry partners.

It is also profitable and holds the equivalent of half its market cap in cash. The shares, meanwhile, trade at around a third of the average value of equivalent companies in its sector.

GEONG provides social network, mobile internet, B2B and B2C sites for customers including China Construction Bank, Guangdong Development Bank and Haier Group.

"We are not just providing a software solution, says chief executive Weidong Wade Wang. We help our customer operate and integrate the website.

And where there is the opportunity, GEONG also works on a shared-revenue basis, which means it can enjoy some of the upside it has created.

It deploys its expertise in two ways - Information as a Service, or IaaS and Software as a Service (SaaS).

Its IaaS offering means GEONG acts as the consultant, covering the design, development, implementation and maintenance of the project.

These contracts are long-term, account for 75 per cent of the companys revenues and produce a profit margin of 45 percent.

SaaS contracts, by contrast, provide steady and long-term revenue streams built on licence sales that are billed quarterly and monthly with variable volume charges added.

GEONGs SaaS offering is called Social Networking 2.0, contributes around 25 per cent of the companys revenue and produces margins of 50-60 per cent, with a higher cash conversion ratio that IaaS.

"SaaS contracts are very much meant to be pay as you go for the clients, so that they can pick and choose within GEONGs toolbox what they need, when they need it, and how much of it they need, says Philippe Geronimi, an analyst at Evolution Securities, in recent note.

"The SaaS model, towards which GEONG is increasingly migrating, usually generates gross margins of 50-60 per cent.

In July Social Networking 2.0 will be rolled out as a cloud computing solution with five applications. The idea is to create higher barriers of entry to competitors.

GEONGs past strategy was to focused on bidding for large accounts to generate as much growth as possible. However this weighed on its balance sheet, due to increasing working capital requirements.

As a result the chief executive and his team have begun prioritise cash generation over growth.

Integral to this is GEONGs move to the software as a service model where it bills monthly and quarterly, rather than waiting up to a year to receive payment for some projects.

Recurring revenues should also improve significantly with a move to SaaS, Wade adds.

He says its products and services allow companies to work smarter, which on the face of it is one of those awful marketing phrases that means not a great deal.

For GEONG it is actually pretty specific. It is about maximising the clients online offering by making sure the content management and/or the marketing and commerce are sharper and more focused.

A small illustration of this is the work it carried out for China Construction Bank on its social networking site.

That online presence made for a far more efficient interaction between CCB and the owners of small and medium sized business (SMEs) who used its services.

It improved communication between the company and its customers, who previously were looked after by a harried account manager with three or four hundred more clients.

And crucially there were tangible financial benefits to the company. There was an increase in trading volumes and the service to the SMEs improved, Wade says.

The companys sums up its expansion strategy in four words: go deep and broad.

Going deep means signing up second-tier clients, while moving existing customers from the information as a service solution to the newly instigated SaaS model.

Going broad means widening the companys reach from the four main industries it has targeted and coupling this with overseas expansion into key countries in the Asia-Pacific region.

Organic growth may also be augmented by acquisitions, according to Evolutions Geronimi.

The focus is the penetration of new industries, which would add to GEONGs market share in the financial services, telecom and auto sectors, he adds.

Management has disclosed that it would particularly like to acquire a company with a good presence in the healthcare sector, which it believes will continue to sustain good growth rates in the medium to long term.

The focus on cash generation in the short term, which will lead to a strengthening of GEONGs balance sheet, should facilitate the implementation of this strategy.

GEONG is also looking to diversify its product offer and is considering acquisitions that could help it accelerate its development in the fields of social networks, mobile internet and customer experience management.

Evolution, which is the companys broker, expects GEONG to post EBIT of 2.4 million this year on sales of 12.6 million, rising to 3.4 million in 2013 on revenues of 17.3 million.

That means the shares trade on a forward multiple of only six times forward earnings, which is cheap in anyones book.

That puts it on a major discount to larger players in the sector such as China Digital, Kingdee and ChinaSoft.

And while they are not directly comparable companies, it does highlight GEONGs anomalously low valuation.

Evolution reckons GEONG, at 33 pence, is undervalued and has set a 50 pence price target on the shares, which is still 35 per cent below the companys historic PE ratio of 13.2 times since its 2006 IPO.

All we are waiting for now is the market to recognise GEONGs bargain-basement rating."

This is a very boring company... I remember a couple of years ago it was about 50-60p... now 34p.

Which is why it's such a bargain - the market hasn't rediscovered it yet (it initially went up to 80p or so and wasn't quite so boring!).

As the article says, "All we are waiting for now is the market to recognise GEONGs bargain-basement rating."

On top of the likely historic P/E of 5 based on 6p+ EPS, there's the 6m+ cash pile representing almost half the m/cap.

And there's the 6.9m of annual recurring revenues which mean GNG make a profit even before they begin to make any new sales.

The year end trading update in the week of 16th May is only 3 weeks away now - given the excellent news flow recently I cannot believe it will be pretty decent/in line at worst and perhaps a lot better than that.

With all the above factors, and an incredible blue chip client list, GNG should be trading at at least 75p imo rather than the current 34p imo.

Once cash flows are seen to be improving via the transition to SaaS and increased overseas sales, then GNG has every right to be trading at 100p and above.

Thursday's trading indicates that the longstanding overhang from L&G is now over. If so this could be the start of a welcome re-rating.

EVO's latest research shows forecasts of 5.7p historic EPS, 7p EPS this year and 7.8p EPS next year:

http://www.buisseret.com/gng/Evolution%2010_3_11.pdf

The true adjusted EPS (adjusted for amortisation and share plan expenses) is therefore around 6.2p EPS, 7.5p EPS and 8.3p EPS respectively.

On a 35.5p share price this in itself is ridiculously low.

Then consider the 6m or so cash pile, i.e 45% of the m/cap. Plus the net tangible assets still way above the current m/cap.

Plus the ridiculously good blue chip client list and the large annual recurring income.

And the transition to SaaS and the overseas sales which should transform cash flows for the better.

Any re-rating here after the end of the overhang could see 100% upside or more from here imho, with limited downside given the cash pile, recurring income etc. And potentially the re-rating could happen in a VERY quick timeframe given the recent trading statements and the forthcoming results.

Up 11% today, and another 550,000 shares traded makes around 1.2m in the last 2 days (out of a total 37.5m)....no wonder stock is getting scarce.

Online is very encouraging. Earlier this afternoon you could only buy 7,500 shares maximum at 39p, whilst you could sell 25,000 at a nice premium to the offer price at 38.31p.

GNG's current 14.3m m/cap is still well below tangible NAV, and it's still on a very low historic P/E of 6, let alone allowing for any premium for its customer list, its 6m or so cash pile and its recurring income (the latter positives could have been contra'd in the past by poor cash flows in terms of investor sentiment, but these are hopefully about to be transformed for the better).

Plus we know from presentation slides on China Construction Bank and Haier that forecast sales to these two clients alone are expected to be as follows:

to 31/3/11 : 2.0m, including 0.6m SaaS sales
to 31/3/12 : 4.2m, including 2.2m SaaS sales
to 31/3/13 : 7.6m, including 4.6m SaaS sales

Total forecast group sales for the whole 2010/11 year are 12.6m, including the 6.9m recurring income, so this represents excellent potential growth from just two sources.

An excellent trading statement RNS today.

Expectations for the year just gone from EVO were 5.7p basic EPS, or around 6.2p adjusted EPS, against a current 42p share price.

I assume today's RNS means that GNG are on track for at least 6.5p adjusted EPS.

But note that the outlook for the current year is EXTREMELY promising, with a 17m order book, new contracts etc.

EVO were forecasting 7p basic EPS, i.e around 7.5p adjusted EPS.

Perhaps we may see a further upgrade. Though on a current year P/E of 5.6 at 42p GNG hardly needs one to be considered cheap.

And GNG have a 5.4m cash pile against a 15.8m m/cap.

Potential acquisition news too, following today's drawdown of a 2.5m convertible loan - note that this is only convertible at 50p per share. A 20% premium to the current share price shows some confidence :o))

EVO have produced a new broker note on GNG.

Their conclusion is that GNG's share price valuation is so low that it applies to "financially stressed companies" :o))

A value of 0.8 price to book value is jusr ridiculously low, as is the Enterprise Value to Capital Employed of 0.7.

With 7p EPS this year against a 41p share price the fundamentals will get even more compelling, whilst cash flow should be on the cusp of a major improvement.

Hopefully the news flow in the next couple of months - perhaps including an acquisition - will be enoough to drive a major re-rating from here. EVO's 50p valuation will I suspect be increased after GNG publish the full results.

To have around 700,000 shares traded on Friday and for the share price to still be up was terrific, a real platform to go forward with.

Here's the full EVO note:

"Comments

FY11 net profit expected to beat market estimates. According to the trading update, FY11 revenue will come in at c.GBP11m, down 12% yoy, and 13% below our estimate. However, a better product mix towards SaaS has resulted in a 50% FY11 gross margin, ahead of our 46% forecast, indicating that the companys strategy of converting its business towards higher margin products is progressing well. Overall, management expects FY11 net profit to beat market estimates and plans to announce preliminary FY11 results on 12 July 2011.
Healthy balance sheet maintained. GEONG ended FY11 with a net cash position of c.GBP5.4m, lower than our c.GBP6.8m forecast. We believe the difference can be attributed to higher-than-expected account receivables and capex.
Solid backlog, higher visibility. GEONGs long-term partnership with IBM and Oracle continues to bear fruit: as at 31 March 2011, the company reported an order book of GBP15.0m, from GBP14.8m in 1H11. This has since grown to c.GBP17.0m, with another GBP1.9m added during April. We believe this rising backlog gives the company better visibility, which could promote organic growth in the short-to-medium term.
GBP2.5m CULS to bode well for M&A. GEONG will issue GBP2.5m CULS via Evolution Securities, at an annual interest rate of 7.5%. The CULS will become convertible (at GBp50.0) over a 3-year period from 31 December 2011. Full conversion would result in 5m shares, and 13% dilution. We believe the CULS and GBP5.4m YE net cash put GEONG in a strong position to pursue M&A going forward.

Our view

GEONGs trading update confirms our belief that the company has solid fundamentals.

By securing the CULS, GEONG now has an opportunity to grow through M&A. The companys share price has rallied c.20% over the past two months, which in our view reflects the markets recognition of GEONGs new strategy. Despite this, current valuation remains undemanding: based on our historic estimates, GEONG now trades on 0.8x P/B11, and 0.7x EV/CE11, multiples that usually apply to financially stressed companies. We therefore reiterate our BUY recommendation and GBp50.0 target price."

Exciting RNS just out...

- results to be ahead of expectations
- in advanced stages of acquisition talks
- acquisition is substantial, profitable and cash-generative

No doubt GNG feel that they want to complete the acquisition, and can't come and promote the company properly to the City post-results and do the results justice, so are delaying the results announcement so they can sell the whole package properly.

Nice :o))

GNG remains ridiculously cheap imho at 43p with a 16m m/cap.

The forecast adjusted EPS to March'11 is 6.2p, so this is now likely to be at least 6.5p EPS.

That's a historic P/E of 6.6, and probably less.

The current year forecast is already 7p basic EPS and therefore 7.5p adjusted EPS.

That's a current year P/E of only 5.7 just on current forecasts, let alone if there are any upgrades due to either (1) 2010/11 performance or (2) the acquisition.

Plus GNG has:

Net cash of 5.4m
Tangible net asset value of 16m+
Large and increasing order books
High recurring income
Blue chip clients who always pay, i.e almost no bad debts
Improving cash flows going forward via increasing SaaS and international sales

You do the maths.

GNG fails to go higher... now 35p.

Classic double top pump and dump short term chart there.

Final throws of the DUMP stage now ?

Absolutely brilliant post by Masurenguy elsewhere explaining why, with a 7.4m m/cap at 19.5p, yet with cash and cash equivalents of 57p per share, GNG remains incredibly undervalued.

The share price has fallen due to a number of factors, and partly due to the company's inept shareholder relations strategy as much as anything else, but this post lucidly explains why there is so much upside here:

"A week has now passed since the results were published and some tranquillity appears to have returned over the past few days. Having spoken to the company and the broker it is now probably an appropriate moment to review the current situation in order to determine a more rational perspective on the company, its future prospects and its current valuation.

1. Actual Results and Value Metrics

The results that were announced just over a week ago on Sept 30th were virtually inline with the year end trading update that was issued on May 20th.

*Turnover 11.3m (2010: 12.5m) - slightly ahead of Y/E TS

*Gross margin up to 53% (2010: 46%) - slightly ahead of Y/E TS

*SaaS revenue 2.9m (2010: 1.7m), representing 25% of the total revenues (2010: 14%) - very slightly below Y/E TS

*Profit before tax 2.6m (2010: 2.3m) - not projected in the Y/E TS

*Net cash 5.3mn (2010: 6.4m)- slightly higher than the Y/E TS

*Order book 15m (2010: 14m) - as per Y/E TS

*Accrued income 11.4m (2010: 8.4m) - 6% higher than Y/E TS estimate of 10.8m

*Trade receivables 4.8m (2010: 4.7m) - as approx Y/E TS figure

These results put the company on an historical PER of just 3.3 and an EVR of just 0.75 after deducting net cash ! When these results were flagged in the Y/E trading update last May the share price was 41p. After these results have been fully audited and published, with very minor variances just over 4 months later, the share price is 55% lower at 18.25p !

2. Trading History

In the 5 fiscal years since their June 2006 listing on AIM, Geong has consistently increased proprietary sales, profit and eps every year.

Prop Sales TP Sales PAT EPS Y/E Cash OP/CF

2007 4.3 - 0.8 3.1p 0.50 0.3
2008 5.5 2.1 1.1 3.5p 2.00 (1.5)
2009 10.3 4.3 1.4 4.3p 3.60 1.0
2010 11.2 1.3 1.8 5.2p 6.40 0.6
2011 11.3 - 2.1 5.5p 5.30 (0.4)

* Since listing on AIM in June 2006 the company has raised circa 5.5m (net) in 3 placings (06/06, 06/07 & 09/09). Their closing cash balance on 31/3/11 was 5.3m. Therefore, despite the escalating level of accruals and receivables over this 5 year period, the negative operating cash flow (OP/CF) has been a comparatively marginal factor in relation to their cash position (Y/E Cash) and working capital requirements.

* Over the past 3 years the company has increased gross margins from 40.5% to 53.1% and has reduced annual operating expenses by 750K from 4.3m to 3.55m.

* Forward order book (FOB) is 15m including recurring revenue of circa 6m. At 53%, the gross margin on the recurring revenue alone is 3.2m, which represents 89% of last years operating costs of 3.55m. Circa 10.5m, or 70% of the FOB, is projected to be recorded as revenue in the current financial year before adding any new business gained during this year.

NB: Since the year end, the company has raised a further unsecured convertible loan of 2.5m in May (convertible within 3 years at 50p). This loan, together with Y/E cash of 5.3m plus the 5m EFF facility set up last year at 7.5%, furnishes them with over 12.5m to potentially fund the Adbeyond acquisition and provides sufficient working capital to expand their existing core IaaS & Saas business.

3. Accruals and Receivables

The level of accruals and receivables are an intrinsic factor of the Chinese payment culture and very specifically pronounced within the banking and financial services sector. There is one other Chinese company listed on AIM, Bluestar SecuTech (BSST), who service the same financial sector as Geong and they are affected by exactly the same trading conditions. In their July 20th results announcement for the year ending 31/3/2011, they made the following comment. "Our rise in accrued income is directly related to the Group working with banks and government security agencies projects and contracts which results in a lengthened working capital cycle. In addition, customers in the banking sector have been slow payers historically, and as such, it normally takes the Company several months to collect the receivables."

http://www.advfn.com/p.php?pid=nmona&article=48503738&symbol=BSST

BSST, whose accruals/receivables are equivalent to their annual revenues, are predominantly a hardware supplier (CCTV Systems) so they will have shorter contract installation and accrual timeframes than a software company like Geong has with all of the development, installation and testing phases that is applicable to each IaaS contract.

Geong have always been completely transparent about this situation too:

The Group's successful strategy of targeting and winning large long-term contracts has led to extended payment terms with clients resulting in an unusually high level of debtor days. Results RNS 23/6/09

Strong underlying trading, particularly in the IaaS business unit, saw a substantial increase in accrued income by 28% to 8.3m (2009:6.5m) and trade receivables to 4.7m (2008: 4.3m). Our rise in accrued income is directly related to the Group working with IBM and our long-term clients and having taken on larger and longer contracts which results in a lengthened working capital cycle. Results RNS 01/07/10

The Company commenced a number of new projects during the year, and there is therefore a greater proportion of amounts due from customers relating to work that has been done but not yet invoiced, and a greater amount of accrued income, than previously. Since the year end approximately 2.7m of the trade receivables has been received and 1.5m of the accrued income has been invoiced to customers. Results RNS 30/09/11

Nevertheless, it must be recognised and acknowledged that the very high level and continuing escalation of accruals and receivables gives natural rise to both cash flow concern and perceived bad debt risk among predominantly western shareholders who are used to a totally different set of credit risk and payment parameters in their more established developed economies. IaaS sales almost doubled from 5.5m to 10.3m between 2008 and 2009 and, in that year, accruals and receivables collectively doubled from 5.35m to 10.8m. Over the past 2 years the collective CAGR of accruals and receivables has been 22% from 10.8m in 2009 to 16.15m in 2011. In this context Geong are a victim of their own success since this is consequential to the growth in IaaS business and the average 18 month contractual timeframe.

The growth of the SaaS component will start to have a significant impact upon accruals and receivables particularly when it reaches circa 45% of sales as the company have previously stated on several occasions. Last year it increased by 68% to represent 25% of total sales. It should be noted that the current growth in SaaS business is mainly a derivative of IaaS business already undertaken with existing customers.

jonals - 2 Oct'11 - 18429: I was at the mello event earlier in the year and my notes have Amit saying accrued income would not start coming down until SaaS reached 45%-50% of sales. The results and announcements this year have been generally consistent with this

However, the fact remains that these accruals and receivables have been thoroughly audited and no bad debts have been booked or provisions made. This audit process was previously confirmed by Geong at the Mello event earlier this year and was reconfirmed once again to me when I spoke to them last week.

jonals - 3 Oct'11 - 18444: FD said at mello meeting in march that all milestones are signed off in triplicate - auditors, client, and geong.

The quality of the accruals/receivables reflect the blue chip Geong customer base and their global partners who also account for a significant proportion of the outstanding debt.

4. RNS Announcements and the impact on the Share Price

The closing share price on May 20th, following the publication of the year end trading update, was 41p. The share price then remained in a 40p 43p range for the next 7 weeks until the first announcement of a delay in issuing the results was made on July 8th postponing them from July 12th to mid August as a consequence of having reached advanced negotiations with an unidentified acquisition target. The closing share price on that day was 43p.

The share price remained above 40p and closed at 41p on July 18th the day before the more detailed announcement about the acquisition was made and the target company identified. While there was generally a positive reaction to the proposed acquisition there was clearly considerable concern and incredulity over a proposed further convertible CLS funding option for 5m.

This CLS option, if invoked and subsequently repaid rather than converted into shares at a price of 50p after 2 years, would qualify for a guaranteed premium of 17.5% interest per annum in addition to the 7.5% normal rate of interest. Consequently, this would providing the funder with a total return of 25% per annum, or 50%, over 2 years if they chose not to convert the loan into shares. Furthermore it was revealed that the prospective loan provider was an existing major customer. This immediately led some people to speculate that there was some sinister factor behind this proposal, such as some kind of offset agreement against a potential bad debt or billing dispute, despite the fact that it was made perfectly clear at that time that there was: no certainty that the CLS will be issued. If CLS were to be issued, it will be conditional upon receipt of the Shareholders' approval because, as described above, the Directors do not have sufficient share authority. In addition, having regard to the Group's strong cash position, it is also the Company's intention to have CLS conditional upon completion of the Acquisition.

Following the acquisition RNS announcement with the controversial CLS proposal, the share price fell by 21% over the next 4 weeks to August 18th, from 41p to 32.25p. The price then dropped by a further 10% on August 26th when a further announcement was made that the results would be delayed again until the end of September. Over the next 6 weeks the price slowly drifted down by a further 14% to 25p as the uncertainty of what might be contained within those results developed, despite the fact that the company had reiterated on 8/7, 19/7 and 26/8 that: the Board remains confident of reporting a net profit
after tax (subject to audit), ahead of market expectations in the full year results.

During the last week of September there were a couple of false starts from the broker indicating that results would be released by Thursday at the latest and then before the market opened on Friday. When this did not materialize fear and uncertainty clearly reached a peak. Understandably, concerns were being raised that the company would be in breach of AIM rules and likely to be suspended if results were not published that day. When the actual results were finally issued 10 minutes after the market opened, the shares fell sharply to close down by a further 26% at 18.5p with a trading volume of circa 750,000, or just under 2% of the shares in issue. This fall was inspite of the fact that the results largely reflected the year end trading statement issued over 4 months earlier on May 20th and reiterated on at least three subsequent occasions since then.

5. The Perfect Storm

The share price has collapsed by 57% since July 8th when the first results delay was announced. However, the audited results that were subsequently published on September 30th validated the figures contained in the year end trading update on May 20th. Nothing has basically changed in relation to the fundamentals or the various metrics reported by the company over that 4 month period. So why was there such a major negative impact on the share price over that period.

5.1. Without doubt, the most significant reason were the two delays in publishing the results that were originally scheduled on July 12th, then deferred to mid August and then, some 10 days after the expected publication, delayed once more on August 26th until the end of September. Even then, the actual publication did not take place until after the markets were already open on the very last day that they could be published without breaching AIM rules and risking suspension. This was a totally absurd and avoidable situation.

5.2. The second significant factor that spooked the market was the very controversial CLS funding option that was revealed in the detail of the proposed terms of the Adbeyond acquisition announced on July 19th. The backstop premium interest rate guarantee on non conversion made no obvious commercial sense. The fact that a major customer was the potential source of the CLS funds also immediately led some people to draw the conclusion that there was some sinister quid pro quo issue to resolve a potential financial dispute or impending bad debt. The size of the outstanding accruals provided the potential ammunition to sustain this totally speculative allegation.

5.3. The volatile global market conditions that saw the FTSE drop 17% and the AIM index by 20% over August and September, which impacted most stocks.

5.4. The story on the alleged Chaoda fraud, impacting AIM listed Asian Citrus, and the breaking Bloomberg story on September 30th about the US Justice Department considering launching a fraud investigation into accounting irregularities that had emerged with a number of Chinese companies whose shares were traded in the US. A couple of posters sought to tar Geong with the same brush by implication although the wider market was already probably spooked by this news anyway

5.5. It is also very clear that a number of people do not understand the business model, the Chinese financial sector payment culture or the reason for the high level of accruals/receivables, and they immediately jumped upon this as some indication that the companys survival was at risk as a result of major cash flow problems and/or bad debt liabilities. The reality is that the accrual/receivables situation was only marginally different from what was originally reported in the May trading update and the margin, pre-tax profits and net cash were actually marginally ahead of the original estimates. The overwhelming reaction to the May trading update, both on and off this board was very positive, apart from a few niggles relating to the slight delay in releasing it (sounds familiar), and the fundamentals have hardly changed since then. While there is some 16m tied up in accruals/receivables, the company does not have a cash flow problem (as illustrated above) and has a solid balance sheet with net cash of over 7m.

6. The Reason why the 2011 Results were Delayed

The preliminary results were originally scheduled for July 12th. Geong usually publish their prelims between mid June and mid July. On July 8th the results were rescheduled to mid August and then again on August 26th to end September. The delays were caused by two factors.

First, many financial staff were redeployed onto DD activity with Adbeyond. Secondly, as a result of the proposed acquisition and further possible funding requirements related to it, the company was put through the most thorough and comprehensive audit that had been undertaken since their original IPO in 2006, which also involved a considerable amount of extra work for their comparatively small finance department. The company came through this comprehensive audit, which included thorough client checks and validations of accruals and receivables, with flying colours and it is worth noting that no bad debts were booked nor were any provisions made. The quality of the blue chip customer base has always been a key factor in their business model and around 40% of the outstanding accruals/receivables relate to one of their global partners where they are effectively operating as a sub-contractor to the end user. Consequently a set of audited accounts was published on Sept 30th as opposed to preliminary accounts some 11 weeks earlier.

The decision to defer the publication of preliminary accounts in July was a big mistake and management now both accept and acknowledge this to be the case. Despite the fact that they reiterated the same metrics from the May trading update on three subsequent separate occasions (and then delivered them on Sept 30th) the delays, in conjunction with the other factors listed under 'The Perfect Storm' above, created a climate of fear and uncertainty and provided fertile ground for the growth of all sorts of speculative theories and even malicious allegations.

If prelims had been released in July then there is no reason to believe that there would have been any negative impact on the share price since the general response to the May year end update had been very positive. Of course the subsequent CLS controversy and other macro economic factors may have affected the share price over the past couple of months but it is extremely unlikely that it would have then plumbed the current depths where it stands at the moment.

7. The Terms of the Acquisition

This is ongoing as stated in the Sept 30th results announcement. Acquisition of Adbeyond (Group) Limited ("AdBeyond"), for a consideration of up to HK$120m (9.6m), is in the process of completion

The final terms have yet to be clarified by the company. In their July 19th acquisition announcement they made the following comment. If CLS were to be issued, it will be conditional upon receipt of the Shareholders' approval because the Directors do not have sufficient share authority

One might therefore assume that if the CLS, under the terms described in that announcement, was no longer to feature as part of the acquisition funding, there would be no need to obtain shareholders approval in relation to this particular issue. Obviously the company will make the appropriate announcements in this context when they are ready to do so.

8. Current Valuation

The outstanding order book at 31/3/11 was 15m. This increased to 18.5m by the end of June as a result of RMB36m (3.5m) of contracts won up to June 2011.

Recurring revenue on the forward order book continues to be circa 40%. That means it currently represents circa 7.4m and, at last years GP of 53%, that would yield a gross profit of circa 3.9m. Therefore the recurring revenue within the existing forward order book already more than offsets last years total operating expenses and overheads of 3.55m. Clearly expenses are likely to increase in the current year but it is certainly a very strong position to be in when the GP on recurring revenues already exceeds the operating costs for the prior year.

The companys technology and service levels have been endorsed over the years not only by their own blue chip customer base but also through the ongoing partnerships that they have with major global players such as IBM, Oracle and SAP. This clearly helps to reinforce the barriers to entry for other Chinese competitors.

The broker note, issued after the results on 30/9/11, made the following comments: At 31 March 2011, Geongs backlog stood at 15m v 14m last year. Of this, circa 10.5m will be recorded as FY12 revenue, making it possible for Geong to reach our 15.8m FY 12 total revenue estimate. We believe these results confirm the soundness of Geongs current strategy. Moreover the plans to acquire Adbeyond remain on track which (once complete) should contribute substantially to Geongs net profit.

There are currently 37,835,000 shares in issue so the year end cash position represented 14p per share. Accruals and cash totalled 16,161,000 which represented 42.7p per share. Consequently cash and cash equivalents represented 56.7p per share or just under 21.5m. This compares to the current share price of 18.25p and a market cap of 6.9m. The current share price therefore represents a 67.8% discount to cash & cash equivalents and the actual business, with an historic PER of just 3.4 and a blue chip customer base, is valued at zero.

Management can justifiably be criticised for past laxity in meeting scheduled deadlines for publishing trading updates and actual results. Hopefully they have now truly understood the major credibility problem and negative sentiment that has dramatically resulted from this after viewing the share price trajectory over the past 3 months. Insiders hold over 30% of the shares so they are suffering the consequences too. My discussions with them indicate that they are very aware of this issue and that they will make every effort to ensure that this does not happen again in the future. There are enough hurdles to jump within the marketplace without handicapping yourself with unnecessary self-inflicted wounds too. However, aside from this, the company has a consistent record of transparency and congruity in their figures and trading updates and there has never been any reason so far to question their integrity.

9. Conclusion

So there you have it. Unless you believe that there is some major unrealised problem with the outstanding accruals/receivables and if so I would be interested to know what evidence any sceptic has to support such a view then this must currently now be one of the most undervalued stocks on AIM today. "

GNG doing very badly... 14p now

Looks very very fishy to me.

RCG ring any bells ?

http://www.etencatnagar.com/discussion/2011/12/13/chinas-accounting-issues-increase-indias-opportunity/

China’s accounting issues increase India’s opportunity

Financial Reporting, Dec 2011

A problem for Chinese companies is turning out to be an opportunity for Indian ones. The recent controversy over accounting standards of Chinese firms listed in the US is forcing investor pools which traditionally invested in these, to capitalise on their high growth, to look at similar investment opportunities in India.

The Securities and Exchange Commission, the market regulator in America, is conducting a review of accounting problems in dozens of China-based companies after they began disclosing auditor resignations or book-keeping irregularities.

For example, one of the ‘Big Four’ accounting firms resigned as auditor of a Chinese software company in May, saying it had found falsified financial records and bank balance confirmations. Investment banks based in Singapore and the US, which had helped the Chinese companies list on Western exchanges, have begun to set up shop in India. “We have received at least six queries in the last couple of weeks from our investor base about good Indian stories,” said Jeffrey O Friedland, managing director, Friedland Global Capital.

The US-based investment bank had primarily operated in China, helping at least nine companies list on the US and Canadian exchanges in recent years.
Friedland said there is a huge India interest in his investor base, which comprises family groups, family offices and high net worth investors. The typical ticket size ranges between $500,000 and $2.5 million. These investors are looking at high growth in emerging market opportunities that are better than the near-zero interest rates back home and, at the same time, without governance issues. “China is out for them for at least 18 months now,” he added.

Indian merchant bankers which concentrate on mid-sized companies in tier-II and tier-III centres are keen to tap this. These companies are usually neglected by the bulge-bracket investment bankers. Bankers say in such a situation, a foreign listing, which can raise up to $10-15 mn, will be a godsend for these companies. It also opens the possibility of future fund raising at higher valuations.

India has been trying to get its own small companies market, the SME Exchange, up and running for several years but with little success. Many foreign stock exchanges are keen to fill this vacuum.

In another first, the Frankfurt Stock Exchange recently held a road show in Mumbai to woo Indian companies to list on it.

The exchange positioned itself as a prospective destination for Indian engineering firms.Friedland said exchanges such as Frankfurt, Toronto and the NYSE were the most likely destinations for Indian firms

Companies have to follow the holding company route, since direct listings in foreign bourses are not allowed under Indian laws. More than a dozen Indian companies, many in the energy segment, are already listed on the London Stock Exchange’s Alternative Investment Market.

India is also a hot destination for investment bankers looking at mid-size merger deals. Last month, around 250 of them, from 40 countries, were in Mumbai at a first-of-its kind speed networking conference. Bankers and advisors from a number of European countries such as Germany, Spain and Britain met entrepreneurs and promoters of mid-sized Indian companies.

i have warned consistently about dealing with chinese stocks and have been derided and criticised quite heavily for so doing, yet time after time my warnings have proved justified ...... here is yet another and frankly, i have no sympathy at all for any mugs who have been caught up

http://boards.fool.co.uk/geong-international-big-cash-trouble-in-little-12489505.aspx

.

Profits down badly... 5p on the cards.


GEONG expects to report significantly reduced profitability for the financial year ended 31 March 2012.

The company, as in previous years, had originally anticipated strong trading during the fourth quarter based on an expectation of receiving high margin performance fee revenues (where the operating costs have already been absorbed against the quarterly fixed revenues) on certain SaaS contracts.

Unfortunately these performance fees have been at a lower level than anticipated as the impact of the slowing economic growth in China has caused many of the key performance indicators set by the company's clients proving to be too optimistic with the result that the level of performance fees is greatly reduced.

In addition a long standing global delivery agreement with a major partner was anticipated to deliver significant revenues in the final quarter of the financial year. In the event, only a third of these anticipated IaaS contracts were delivered. This has been reviewed and it is believed to be a direct result of the uncertain global economic environment rather than the quality and appeal of the offering.

As a result of these factors, the directors now expect to report revenue materially below that recorded last year. In addition, since a proportion of the revenue shortfall related to performance fees, which achieve a higher margin, the operating profitability will be significantly reduced from last year's level.

GEONG will also incur a non-recurring charge to profits of approximately £350,000 from the aborted acquisition during the financial year. Despite the significant revenue shortfall in the final quarter, the company had cash of £5.3m at 31 March 2012.

Notwithstanding the reduced profitability the Board remains confident of its business model and its potential. The company is still getting new IaaS clients in its core markets and new industries with two strategic partners, and has not lost any IaaS clients during the quarter.

Its business partner has not moved any business to the company's competitors and the SaaS business gained two new clients during the final quarter of the financial year. A total of 16 SaaS clients were gained during the year and negotiations are taking place with another five potential SaaS clients.

post 373 to all you mugs!

Shares in GEONG International (GNG) crashed by 2p to 5.75p after the firm warned that a number of its top 10 clients may be adversely affected by the economic slowdown in China. The business software developer, noted plans of moving the latest version of its SaaS service onto a cloud computing platform, with its main goal for the year being to maintain revenues at 2011 levels, while improving the sales mix. The firm added that it had net cash of 2.2 million pounds as at 31st August 2012.

GEONG International Limited

("GEONG" or "the Company")

£2.5 million convertible unsecured loan stock ("CULS")

The Company announces that payment of the interest amount due on 31 December
2012 under the CULS was late as a result of unexpected delays in the granting
of approval by the State Administration Of Foreign Exchange of China ("SAFE")
for the transfer of funds. Payment, which was still being processed on the due
date, was made on 15 January 2013.

As a result of the late payment which represents a default under the terms of
the CULS, the holders, Hanafin Investments Limited ("Hanafin"), have requested
immediate repayment of the CULS. Whilst the Company has adequate resources to
make the repayment it will not be able to secure the necessary approvals from
SAFE to do so in the short term. Accordingly, the Company is seeking to reach
an understanding with Hanafin as to an acceptable and achievable timetable for
the repayment.

The Company retained £3.9 million in cash at 31 December 2012.

not another crooked chinese company - well i never! .... post 373 (jan 2012) says it all

Very crooked indeed. Now 1.5p.

Rare to see a post from you these days hlyeo! I seem to remember you were keen to short stocks.....hope you have followed this one down? Now might be the time to close! ;o)

Hi Harry, yeah I closed this at 3.5p - too early but I was afraid it was going bust.