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

fair play, riv, I know who you are talking about now.
good luck to you with GNG

Let's bring this thread up to date, since the share price has continued to increase and is now 48p.

Two weeks ago we had ridiculously good news - last year's total revenues were 14m, and here at a stroke GNG have secured what are annualised revenues of 4.8m....and Q1 is normally a quiet quarter.

And in case anyone missed it, the last paragraph amounts to what is a very strong trading statement.

GNG is STILL trading at barely above its 12m tangible net asset value (including 3.6m net cash) at the current 15m m/cap - despite making 2m PBT and 5.3p EPS last year.

For the record, here's the RNS:

http://www.investegate.co.uk/Article.aspx?id=20090722070100PC935

"GEONG International Limited (AIM: GNG), the AIM listed China based provider of enterprise content management (ECM) software and solutions, is pleased to announce that it has signed a contract extension with a leading international telecom solutions provider.

The agreement sees GEONG extend its high-level management consultancy contract with the client for a period of one year, from 1 April 2009 to 31 March 2010.

The agreement generated revenues of USD1.9 million (1.2 million) during the three month period from 1 April 2009 to 30 June 2009, compared with USD4.5 million (2.8 million) for the twelve months to 31 March 2009.

The contract forms part of GEONG's `import' strategy, in which the Company works with its Chinese clients to help them build their overseas operations. As a result of this, revenues for the contract are chiefly derived in US dollars and are therefore reported as such.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted to have signed this contract extension with one of our key clients and remain confident of continuing our long-standing relationship with this major global player. This clearly demonstrates our considerable success in helping our clients accelerate their expansion into overseas markets.

GEONG has continued to successfully secure new business, both with new and existing clients, during the first quarter of 2009, and we are confident of this trend continuing throughout the remainder of the year.""

Another contract win RNS at the end of last week - and more than 200 tier two Chinese banks to go for. With an AGM trading statement likely in the next two to three weeks there should be more good news to come imho:

http://www.investegate.co.uk/Article.aspx?id=20090810070000PA5D3

"Contract Wins within Tier-Two Banking Sector

GEONG International Limited (AIM: GNG), the AIM listed China based provider of enterprise content management (ECM) software and solutions, is pleased to announce that it has recently signed a number of new contracts with tier-two Chinese banks worth a total value of RMB 7.1 million.

GEONG has signed four contracts that will see it leverage existing PortalAge solutions, already used by tier-one banks, to help clients build their internet banking facilities and employee portals. These contracts have been signed with the Rural Bank of Dongguan, the Bank of Qilu, the Guangdong Development Bank and the Bank of Dezhou and are worth a total of RMB 2.9 million.

The Company has also been developing a number of new PortalAge solutions during the past six months, specifically tailored to meet the core banking and CRM needs of tier-two banks. The solutions have been developed in swift reaction to an emerging and fast growing demand from tier-two banks for more efficient IT systems and are priced and positioned appropriate to the sub-sector.

These new solutions are already proving popular with two recent contract
signings, including a RMB 3.2 million contract with the Rural Bank of Shangdong and a RMB 1.0 million contract with the Bank of Dalian.

In addition, an advantage of these contracts is that tier-two banks in China typically offer more favourable payment terms and GEONG expects the full impact of this to be realised in the 2nd and 3rd quarters of the next financial year.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted with these contract signings which demonstrate the versatility of our PortalAge solutions and represent a significant breakthrough for GEONG within the fast growing tier-two banking sector. There are over 200 tier-two banks within China, most of which are just beginning to build their IT systems, presenting considerable opportunities that we feel we are well positioned to benefit from.""

More huge contract wins - and 3.9m represents over 25% of last years total sales!

At 43.5p and a 13.8m m/cap GNG still trades at barely above tangible NAV, with a 3.6m cash pile, and on a current year P/E of only 7, though probably less since imo forecasts of 6.1p EPS will be well beaten:

04 September 2009
GEONG International Limited

Contract Extensions

GEONG International Limited, is pleased to announce two contract extensions worth
a total value of 3.9m.

GEONG, in conjunction with one of its major partners, has extended a contract
to provide specialist services and products to a major global Chinese bank and
telecommunications infrastructure providers from 29 July 2009 to 1 July 2010.
GEONG will coordinate and manage the services of consultants for a number of
the client's projects across China and the contract is expected to be worth not
less than 1.5m.

In addition, a further contract extension, worth 2.4m to GEONG, has
been signed with a global Chinese telecommunications provider for another year,
from April 1 2010 to March 31 2011. The extension will see GEONG assist the
client in building its overseas operations.

Weidong Wang, Chief Executive of GEONG, commented: "We are delighted to
announce the signing of these two contract extensions which, in addition to
generating significant revenue, demonstrate our ability to secure prestigious
partnerships and foster long-term client relationships. We are also becoming
increasingly confident in our future ability to secure further long-term
contracts of this nature."

Looks like Geong might be in some trouble and needing a cash injection, a Friday late RNS out about a placing with no clear reason as to why they need the money. Burying an RNS late on a Friday raises big question marks about it imv.

Its a dilution for all present holders naturally, its at a large discount to the present buy price and there is no clear reason stated why they need it. All points to issues with the business imo, are they getting stretched on cash again ? are they pumping up the sales orders by offering deferred payment schedules and ramping up debtor days again ?

Not a holder but I would guess this news has raised lots of questions for shareholders as to what is going on. This company has issued in the past a veiled profit warning, a profit warning and are not exactly top of the league in terms of investor confidence in their statements imo.

A small placing is fine by me - not too dilutive as only 19% more shares, and at only a small discount to the current share price. Could have been a lot worse a few months ago.

The funds are presumably meant:

- to finance GNG's growth, which is obviously continuing judging by the CEO's comments
- and/or to finance the long-flagged earnings-enhancing acquisition(s)

The order book was, what, 10.6m at the last count? It's now 13.6m.....

Must ask at the AGM if Huawei are additional to the telco customers already known about.

Every reason to continue to be confident. Who knows, the share price might get a boost on Monday from what is effectively a confident trading statement:

"Weidong Wang, Chief Executive of GEONG, commented: "GEONG's growth prospects continue to be extremely good, building on the 48% profit growth achieved last year. We have recently signed a long term contract with Huawei and we are confident of our ability to win and deliver similar contracts in the future.
Our order book has risen by more than 25 per cent. since 31 March 2009 and
currently stands at 13.6 million. With no debt and a fortified balance sheet, the new funds will enable the Group to service large and long term contracts, enhancing our future prospects. We therefore welcome our new investors and look to the future with confidence.""

It'll also be interesting to see if we get any RNS's about new institutional shareholders.

Incidentally, for anyone who isn't aware already, a comment about Prosolenes from another poster on i.i.i:

"Pro_S2009 is just the latest alias of Papalpower/Proselenes and he has been deramping Geong for years and yes he does spend his time deramping certain shares, particularly Chinese stocks, where he is not a holder

As usual, no facts, just pure innuendo. He conveniently fails to mention that their order book is up by around 40% to since their March year end. The Geong AGM is next Friday and no doubt the reason for the placing will be revealed then."

After hours Friday RNS..........that says it all. Its generally where the bad news is always dumped.

Most highly illiquid small caps with a big spread will place at or above their current buy in price if there story is good. This one is a large discount to the current buy in price.

Do not forget, look at the chart, one veiled profit warning and one profit warning and lots of, imo, poor communications about what the business is doing. It would seem there is another cash problem and thats why they need to raise money at a significant discount.

Excellent news re the positive trading statement and the small placing.

One of the most respected posters on ADVFN, eacn, has posted as follows re the placing: "FWIW, I took part in the placing. The company needs working capital to cope with extended payment terms on larger contracts. The trading statement is bullish and the fund raising is a prudent move. "

It's also fine by me - not too dilutive as only 19% more shares. Could have been a lot worse a few months ago. The funds are presumably meant:

- to finance GNG's growth, which is obviously continuing judging by the CEO's comments
- and/or to finance the long-flagged earnings-enhancing acquisition(s)

The order book was, what, 10.6m at the last count? It's now 13.6m..... Must ask at the AGM if Huawei are additional to the telco customers already known about. Every reason to continue to be confident. Who knows, the share price might get a boost from what is effectively a confident trading statement:

http://www.investegate.co.uk/Article.aspx?id=20090918164828PD51C

"Weidong Wang, Chief Executive of GEONG, commented: "GEONG's growth prospects continue to be extremely good, building on the 48% profit growth achieved last year. We have recently signed a long term contract with Huawei and we are confident of our ability to win and deliver similar contracts in the future.

Our order book has risen by more than 25 per cent. since 31 March 2009 and
currently stands at 13.6 million. With no debt and a fortified balance sheet, the new funds will enable the Group to service large and long term contracts, enhancing our future prospects. We therefore welcome our new investors and look to the future with confidence.""

All these companies with poor operating cash flows are making placings. RCG today, GNG recently, CHNS next ?

The market is being rough on them, and so it should really, its to be expected really and any posters attempting to "hype and ramp" them up on revenues is misleading people I think.

A good solid trading update with no surprises:

http://www.investegate.co.uk/Article.aspx?id=20091026060000PD307

The increase in the order book to 13.8m from 10.6m since the year end 6 months ago tells the full story imo.

The cash pile is certainly affected by seasonality - 1.2m consumed in H1. But GNG still had 2.4m prior to the recent small fundraising and now have 4.5m net cash. More than enough to finance the promised expansion.

To clarify re GNG saying they'll meet "market expectations", Seymour Pierce's current forecast on Hemscott etc is re basic EPS, not the true adjusted EPS before amortisation and share-based expenses.

Hemscott shows 2m PBT and 5.4p EPS this year, but let's adjust out 0.2m amortisation and 0.1 share-based expenses as per last year to get a 2.3m PBT, take a 15% tax charge on the 2m as per SP, and use a weighted average of 34.5m shares for the year.

That's 5.8p EPS for this year, against a 45p share price.

Normally I would say a P/E of 7.75 is maybe only a little undervalued for a Chinese company in the current market which has as good a record of growth as GNG has, with such excellent potential.

But for:

- the Chinese market leader in its sector
- a company with such high recurring income
- with a blue chip client base to die for
- a company growing its order book and revenues at such speed
- with such huge potential across sectors and countries
- a company with such a strong Balance Sheet, including 4.5m net cash against a 17m m/cap
- and with an excellent chance of producing a "substantially ahead of expectations" trading statement later in the year

I'd say that the current price is undercooked by some way.

See the price fell on that update. Not surprising.

Er, no, the bid stayed the same, it only fell on the offer. And the price is up 0.5p today :o))

this is another special chinese take-away ..... 43/47 and not a single trade all day

LOL - its a company that specialises in dealing people with "profit warnings" and "veiled profit warnings" based on past experience.

Many people would say "one to avoid", especially as L&G now have a large holding. A big holding in an illiquid stock means the price could collapse if they ever need to offload any, increases the risk for many.

Up another 1p to 46p today on 29k shares traded (including PLUS). The gain since the start of this thread is now 77% (155% for me personally).

L&G have steadily increased their holding over time to the present around 10% of GNG. They're obviously intending to be around for some time and wouldn't have the slightest expectation of disposing except in exceptional circumstances.

The m/cap is now up to 17m. In another two or three years' time the m/cap could be anything from 50m-100m given the Chinese market leadership and expansion into new sectors and geographies, plus expansion into second tier banks etc.

This year could see 7p+ EPS given the cost savings already made clear plus the hugely increased order book.

Plus GNG has 4.5m net cash against the 17m m/cap.

It's nice to be backing a share which is both cheap and has such terrific growth potential.

Interesting article :

http://www.fool.co.uk/news/investing/investing-strategy/2009/11/03/china-and-the-bigger-fool-theory.aspx

.

GNG announced terrific results today:

http://www.investegate.co.uk/Article.aspx?id=201007010700145951O

M/cap at 36p : 13.5m
Adjusted EPS to 31/3/10 : 6.2p
Historic P/E of 5.8

Historic adjusted profit before tax to 31/3/10 : 2.6m
Historic adjusted profit after tax to 31/3/10 : 2.14m

Net cash : 6.4m, i.e 47% of the m/cap

Tangible NAV of 16.7m, including the 6.4m net cash and and 4.7m trade blue chip (i.e fully recoverable) debtors

Order book : 14m (2009 : 10.6m), including 5.6m annual recurring income (historic turnover of 12.5m)

Historic adjusted profit after tax record:

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 - 1.22m, or 4.0p EPS
Y/E 31/3/09 - 1.66m, or 5.3p EPS
Y/E 31/3/10 - 2.14m, or 6.2p EPS

The usual cash flow concerns with Chinese companies appear to be improving further for GNG with fast-increasing client SaaS usage and a major banking customer turning to quarterly rather than annual payments. Last year saw 0.6m positive cash flow from operations.

Other pieces of good news:

(1) EVO, a much more heavyweight organisation, have replaced the ineffective Seymour Pierce as GNG's brokers and NOMAD
(2) GNG have arranged a 5m equity financing facility to allow for potential acquisitions. I would hope for action on this front sooner rather than later.

From the results:

"Operational Highlights:

SaaS business increased by 819% to 1.7 million with 10 new clients added (2009: 0.2million)
24 new client wins in our core market including in the Banking, Automotive and Telecommunications sectors
New partnership with Oracle and a breakthrough in the insurance industry winning five new clients
Launched new versions of products, along with innovative solutions in IaaS (PortalAge) and SaaS (PortalAge & SmartBox)"

GNG note that "the Group's trading conditions since the year end have been in line with management expectations", so things appear to be continuing to go well.

As a footnote, it's worth noting that GNG's client list is unbeatable for such a small company, including ICBC (the world's largest ever IPO), China Mobile, Air China, Sony, Hitachi, Adidas, Huawei-3COM, Motorola China, Bank of Communications, Shanghai General Motors, Lenovo, Volkswagen, Shanghai Telecom, Dell.

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, plus 2 of the top 3 telecoms companies and a number of the top insurance and auto sector companies.

GNG also has partnerships with IBM, Oracle and Microsoft.

Lots of negatives in there.

Price action (down lots) tells you what the market thinks.

At 29p GNG's m/cap is just 10.9m - yet at 31st March 2010 GNG had:

- 6.4m net cash, with forecast 7.3m net cash next March
- net tangible assets of 16.7m
- achieved historic adjusted 2.14m profit after tax to March 2010

GNG's consistent adjusted profit after tax (PAT) record in sterling is (using $2:1 for 2004):

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 - 1.22m, or 4.0p EPS
Y/E 31/3/09 - 1.66m, or 5.3p EPS
Y/E 31/3/10 - 2.14m, or 6.2p EPS

The historic P/E is down to just 4.7, and the ex-cash P/E is ridiculous at just 2.1.

Given 5.6m per annum recurring revenues, a 14m order book (including recurring income) and a blue chip client list the fundamentals are pretty telling.

GNG is the domestic market leader in its field in China with almost 20% of the ECM market there.

L&G have sold a part of their holding for whatever reason (could merely be rebalancing their portfolio), but at some point fundamentals and value will reassert themselves here.

Talking about "Management Expectations" is a key phrase used to avoid mentioning anything about performance as against market expectations. Smoke and mirrors using that comment.

Talking about "cost controls and cash" is simply padding the statement out, one would expect all companies to do this and its nothing out of the ordinary, perhaps the statement is there to try soften the "quiet 1st half" comment which looks like an excuse for the coming interims being poor ?

I can see perhaps why L&G have been selling down their holding..........