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

turnover well up, profit well up but not as high as anticipated, trading excellent despite difficult times for patient investors plus cash in the bank increasing---- I'd call this a good investment. I'm not in at the moment but may well buy back soon.

The current share price is 20p, with a 6.3m m/cap.

Seymour Pierce's new forecasts are:

Y/E 31 March'09 - 4.9p EPS, 1.6m PBT
Y/E 31 March'10 - 6.1p EPS, 2.1m PBT

So the 6.3m m/cap at 20p now plays a likely historic PAT of 1.5m - and maybe a fair amount more - for a historic P/E of 4, plus 3m cash and 10m or more tangible net assets.

I posted this summary on T.M.F for reference a few days ago which sets out the issues raised in the recent trading statement:

http://boards.fool.co.uk/Message.asp?mid=11506384

Assuming GNG confirm in their upcoming results:

- a stated minimum historic PBT of 1.6m
- the stated 3m net cash pile
- 10m+ net tangible assets
- a stable outlook
- an order book comprising x plus say 5m+ annual recurring income
- further contract wins

then the current price will look even sillier than it does currently at a 6.3m m/cap.

The chart says it all for Geong.

Nope, it only shows what you've chosen it to say since the startpoint you chose :o)) It doesn't show that I'm still in profit by 10% and that this thread is only in relatively small loss since it started - which is excellent by most AIM companies' standards.

It also fails to recognise the current situation, which is that imo GNG is extremely undervalued.

To reiterate - and lets have some comments on the actual business for a change...

The current share price is 20p, with a 6.3m m/cap.

Seymour Pierce's new forecasts are:

Y/E 31 March'09 - 4.9p EPS, 1.6m PBT
Y/E 31 March'10 - 6.1p EPS, 2.1m PBT

So the 6.3m m/cap at 20p now plays a likely historic PAT of 1.5m - and maybe a fair amount more - for a historic P/E of 4, plus 3m cash and 10m or more tangible net assets.

I posted this summary on T.M.F for reference a few days ago which sets out the issues raised in the recent trading statement:

http://boards.fool.co.uk/Message.asp?mid=11506384

Assuming GNG confirm in their upcoming results:

- a stated minimum historic PBT of 1.6m
- the stated 3m net cash pile
- 10m+ net tangible assets
- a stable outlook
- an order book comprising x plus say 5m+ annual recurring income
- further contract wins

then the current price will look even sillier than it does currently at a 6.3m m/cap.

It's also now been established that the order book figure given in the last RNS was before 5m of additional annual recurring income. It's therefore likely that GNG already have over 11m of turnover in the bag (per posters on ADVFN) for this year, against the 14m for the whole of last year. Not bad for a 6m m/cap company.

Nice - up 30% or 6.5p on the day to 28.5p now.

GNG are now on a minimum historic P/E of just 5.5 based on 4.9p EPS, with 6.1p EPS forecast for this year. With 35% of the m/cap covered by 3m cash.

Other points worth noting:

- its Balance Sheet strength (3m cash, tangible NAV greater than m/cap)
- its high recurring income and 10m order book
- its top tier client list
- the potential upside given a mere 9m m/cap relative to a minimum historic 1.6m PBT and GNG's market-leading position in China

It's always better to invest at the bottom rather than at the top.

depends on if going long or short....

Based on the above - very definitely long :o))

Legal & General disclosed last week that they'd doubled their stake in GNG, buying another 1.6m shares to go to 3.2m in total, i.e 10.16% of GNG:

http://www.investegate.co.uk/Article.aspx?id=200905191634135241S

Quite a vote of confidence.

Not only that, but it just so happens that the particular fund involved, L&G's Alpha Trust, is "the number one fund in the UK All Companies sector over three years to 31 March 2009." That's THE best performing fund out of more than 300.....

http://www.easier.com/view/Finance/Investments/Trusts/article-246633.html

"Legal & General UK Alpha Trust tops the pile
23 April 2009

Legal & General's UK Alpha Trust, managed by Richard Penny, was ranked the number one fund in the UK All Companies sector over three years to 31 March 2009.

Out of more than 300 funds, UK Alpha sat top of the pile over three years' cumulative performance. The fund, which identifies companies which have potential to return high alpha over an eighteen month or 2 year time-frame, has benefited from investments in diagnostics and healthcare stocks such as Tepnel Life Sciences Plc and Immuno Diagnostic Systems Holdings, as well as mining firms such as Allied Gold Limited through to online gaming software companies such as Playtech Ltd.

etc"

GNG is:

- on a current year P/E of 5 at 32p
- probably still trading at below tangible NAV
- has 3m cash against a 10m m/cap
- has a 10.6m order book and high recurring income
- has a market-leading position
- and has high barriers to entry and locked-in blue chip clients

GNG has a history of profit warnings.

GNG is not in good shape in terms of their business outlook.

Their sales and admin costs are going through the roof as their outlook is going not so good means that profits and cash are going to come under pressure.

Working cap needs and the needs to provide good and services up front free in order to win business is going to mean going forward more cash is going to get sucked out. They have already had the swing one way, as business slows existing working cap comes back to cash, but now it should swing the other way in the coming couple of sets of results.

Legal and General, that in itself means nothing, they all make mistakes, and they are now into a "lobster pot" scenario.......they have too much that they could never sell to get out of it.

Just my view but to buy a larger number of an illiquid small cap business with a history of profit warnings and with a poor outlook........well, say no more, someone is now trapped in. They likely felt the only way to support the price and hide any error was to buy more and pray things turn around, or if cash becomes an issue they can use their weight to get a discount price in a placing.

Likely means they will be looking at providing cash at a very big discount in order to average down in future. Placing alert ?


Too many far better shares out there, like WCC, CHNS or RCG.

GNG is, IMO, a real "avoid".

Sadly, PapalPower/Prosolenes' posting rationale is totally discredited as a joke.

For two or three years he posted negatively about RCG on a dozen bulletin boards as often as he could. But as soon as the share price reached a level he was happy with he turned ultra-bull and was ramping it everywhere!

And during that time he did the same about China Shoto (CHNS)....until quick as a flash he turned position and became an ultra bull.

And then re West China Cement (WCC)...guess what? The same again!! he's now an ultra bull.

I've no doubt that if GNG ever goes low enough he will be the first to start buying before pronouncing what a wonderful stock it is.

Despicable.

Good news in another holdings RNS today:

http://www.investegate.co.uk/Article.aspx?id=200905261714498411S

Legal & General have increased their holding yet again.

They now have a total holding of 3,312,000 shares, having added another 105,000 shares to their holding. This gives them 10.5% of GNG.

It's a fantastic vote of confidence for a 10m m/cap company like GNG.

And judging by today's trades the buyers are continuing to accumulate shares.

Interesting results today. I say this not from the point of what they say, but what they fail to say.

Results here :

http://www.investegate.co.uk/Article.aspx?id=20090623070000P...



BUT, ignoring the attempts of hype and promotion there are some very worrying underlying things not said.


Firstly, they have

2009 Revenues of 14.666m and Profits (after tax) of 1.359 so quick ratio is 9.26% for 2009
2008 Revenues of 7.612m and Profits (after tax) of 1.077 so quick ratio is 14.1% for 2008

What happened to margins, seem to have been smacked down on top of tax increases.



More worrying is the lack of reporting of the exchange rate. This is an RMB business but reporting in Sterling. Fine, but in the period of then to now the RMB has strengthened against sterling by near 40%. This means revenues, profits and earnings should have risen 40% at least. Anything less than 40% shows contraction.

So looking at

Profits in 2009 were 1.359 and in 2008 were 1.077 so growth is less than 30% BUT this is after 40% changes in currency. So actually profits in RMB terms have fallen.

Earnings in 2009 were 4.31p and in 2008 were 3.53p so growth is less than 30% BUT this is after 40% changes in currency conversion rates. So actually earnings in RMB terms have fallen.



Quite amazing that when profits have reduced and earnings reduced in RMB terms, the company highlights growth while quoting pounds sterling figures.


What does that tell you ?

Amazing if you take the 2008 figures and times by 14RMB to 1 pound, and take the 2009 figures and times by 10RMB to 1 pound, and then compare 2009 RMB figures to 2008 RMB figures. Worth doing.

Excellent results today. A very positive statement, and EPS and cash are ahead of expectations.

The true adjusted EPS was 5.3p compared to 4.9p as forecast, and cash is 3.6m as opposed to 3m.

- the outlook is very bullish
- the order book has improved from 10.6m since the year end (they don't say by how much)
- and there's 600,000 of savings to come through this year in reduced SmartBox costs, i.e almost 20% of total admin and selling costs

The beating of forecasts was also achieved despite a 20% tax rate, higher than forecast, so this is even more praiseworthy.

SmartBox sales were miniscule at 200k - but this appears to be being turned around by going for the reseller market.

Tangible net assets are 12m compared to the 10.5m m/cap - 3.6m of which is represented by cash, with a further 10.8m of blue chip debtors.

Everything is on track and no surprises. The overriding point is that at the current 34p GNG is trading at less than TNAV and is on a historic P/E of only 6.4, which probably reduces to 4.5 or so if you strip out the cash pile.

Incidentally, I agree with Prosolenes that GNG should show their results in RMB, but he shows a failure of understanding of accounting - the results are translated at average exchange rates during the year, not year end rates. Exchange rates only benefited GNG by around 20% during the year, since the average RMB rate only improved from 14.95 in 2007/8 to 11.83 in 2008/9.

That compares with:

- Turnover up 93% to 14.7 million (2008: 7.6 million)
- Profit before tax up 48% to 1.7 million (2008: 1.1 million)
- Underlying profit before tax* up 55% to 2.0 million (2008: 1.3 million)
- Basic earnings per share 4.3 pence (2008: 3.5 pence)
- Adjusted basic earnings per share* 5.3 pence (2008: 4.0 pence)
- Net cash up 78% to 3.6 million (2008: 2 million)
- Order book of 10.6 million (of which 5 million recurring revenue)

And GNG will continue to benefit slightly from improved exchange rates this year since rates have settled slightly to around 11 to 11.3 now.

SmartBox sales are almost a free blue sky option now in the valuation since they won't cost much to sell any more (of course SmartBox is the reason margins fell from 47% to 40% - the core PortalAge business is thriving).

The rise in debtors was predictable in these times, but the debts are with the bluest of blue chips and so will all be paid, if slowly in line with the local payment culture.

The bear points are SmartBox and debtor days, but neither of these in itself is enough imo to take away the fact that GNG's current valuation is cheap on both asset and P/E calculations.

Not to mention GNG's strong defensive qualities with high recurring income of 5.6 at the year end.

Nice attempt to talk it up but I think everyone knows you have historically been the most rose tinted poster ever on the stock GNG.


RMB chart here.

http://uk.finance.yahoo.com/q/bc?s=GBPCNY=X&t=5y&l=on&z=m&q=l&c=


I used 14 and 10 and 40% as its easy to use and year end values, and not far off reality. Its probably more like 15.x average for 07/08 and 11.x for 08/09, but 40% is very close and good enough for me and simple to use. Perhaps its 35% but it still poinds out that profits and earnings in RMB have fallen and margins have fallen.

A clear "avoid" to most people who will not get sucked in to the "hype" of the sterling figures covering PPP..........thats P... Poor Performance (in RMB).

Prosolenes, you have posted the same incorrect info on a number off bb's. There is no need to "talk things up". I am merely putting GNG's results in the context of its current valuation and using the correct method of exchange rate translation, whereas you are not.

I repeat - your understanding of accounting is incorrect. The P&L results are translated at average exchange rates during the year, not year end rates To use year end rates because they are "easy to use" is misleading and (simply put) wrong.

Exchange rates only benefited GNG by around 20% during the year, since the average RMB rate only improved from 14.95 in 2007/8 to 11.83 in 2008/9:

http://www.oanda.com/convert/fxaverage_result

That compares with:

- Turnover up 93% to 14.7 million (2008: 7.6 million)
- Profit before tax up 48% to 1.7 million (2008: 1.1 million)
- Underlying profit before tax* up 55% to 2.0 million (2008: 1.3 million)
- Basic earnings per share 4.3 pence (2008: 3.5 pence)
- Adjusted basic earnings per share* 5.3 pence (2008: 4.0 pence)
- Net cash up 78% to 3.6 million (2008: 2 million)
- Order book of 10.6 million (of which 5 million recurring revenue)

GNG will continue to benefit slightly from improved exchange rates this year since rates have settled to around 11 to 11.3.

Keep on ramping it riv, try your best.

Impale more on that awful spread that see's short term buyers nearly always selling at a loss as they cannot make it past the spread of the bid/offer prices.

The overriding point is that at the current 32.5p GNG is on a historic P/E of only 6.1, and a likely current year P/E of 5 which probably reduces to 3.5 or so if you strip out the 3.6m cash pile.

The true adjusted EPS was 5.3p compared to 4.9p as forecast, and year end cash was 3.6m as opposed to 3m forecast.

There's also 600,000 of savings to come through this year in reduced SmartBox costs, i.e almost 20% of total admin and selling costs

Tangible net assets are 12m compared to the 10.2m m/cap - 3.6m of which is represented by cash, with a further 10.8m of blue chip debtors.

The presentation GNG made to analysts this week is now available for all to view at:

http://www.buisseret.com/gng/GEONG%20FY09%20Final%20Result.pdf

It's extremely impressive, and there are a number of points to note:

- most importantly : "Order Book has seen strong growth since year end", so from 10.6m it could now be say 12m, including say 6m annual recurring income
- Significant new contracts post year end
FSI: ABC (Portal and UxD Consulting), Guangfa Securites (Investment Banking
Management), Bank of Guangfa (UxD Consulting), Bank of Dongguan (UxD
Consulting) and CCB (Portal MA)
Auto: SGM (Dealer Management System MA)
Telecom: China Mobile (Portal)
Other: Giant Gaming (Enterprise Search)

- Microsoft anyone? "Extend partnership with Microsoft: working together to sign new contracts, including ABC and Giant Gaming"

- "Long-term agreements, adding to FY10 recurring revenue
Renewed the Core Service Supplier Agreement with IBM Global Business Service
Signed new yearly CSP Agreement with IBM Global Technology Service
Renewed yearly Freelancer Management Agreement with Huawei"

- the number of PortalAge clients has increased again, to 180 - this compares to 170 from memory only a couple of months ago

- this is a rather tasty quote : "GEONG is the only vendor in China who can provide end-to-end ECM consulting, software solutions and services ( including SaaS) for business transformation and information management to clients"

- there's a case study of GNG's client CCB (China Construction Bank) - the world's second largest bank! The "Opportunities for 2009" indicate no let-up in the stream of work:

"Opportunities in 2009
New internet banking portal for Credit Card transactions, marketing and branding
Online CRM services portal
Customer Experience Management for internet banking feedback
Phase II of project enhancing functionality of online sales & marketing and client servicing"

- 21 new clients signed during the year including Rural Bank of
Shandong, Rural Bank of Dongguan and Huawei

- "Outstanding orders have completed in Q1"

- Clients include 4 of the top 10 banks in the world in terms of market cap
World No. 1: Industrial and Commercial Bank of China
World No. 2: China Construction Bank
World No. 4: Bank of China
World No. 6: Bank of Communications

- there are 195 second tier banks in total, and GNG currently has 15 second tier banking clients. Many opportunities here since GNG is far and away the market leader.

Incidentally, the true spread is only 2p as sellers are currently getting a good premium to the bid at 31.9p, whilst buyers are having to pay the full 34p offer.

why the f*** would anyone want to get excited about this stock? ..... for goodness sake, there were only 39k shares traded today, which tells you plenty

Cynic, that's because it's a 10m small cap. If you can't see the low rating and equate it to the historic growth, defensive qualities, blue chip client list and future potential then perhaps others will.

I'm 75% up already on GNG. Another 75% to 56p in the next few months would still only see the P/E on a current year P/E of 9.1 based on 6.1p EPS. That's more than exciting enough for me.

no one else seems to wear your rose-tinted specs either