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

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.