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

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. "