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

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.