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

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.""