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

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..........

Perfectly good H1 trading statement - note the in line with "management" expectations, which are often better than market expectations.

I'm particularly excited about the move into Vietnam - and leveraging off the back of IBM as well.

Oracle too are deepening their alliance with GNG via contract wins and new SaaS products.

Remember that GNG are still a mere 13m m/cap company...but management have now confirmed that they're in line with expectations for a 2.1m adjusted PAT.

And that GNG had 6.4m net cash at the last results (which in H1 will have dropped to fund key contracts before peaking in H2 again).

And that the m/cap is still far less than net tangible assets!

GNG has the enviable combination of being low-risk given the net tangible assets, 6.4m net cash, high recurring income, core customer base - yet with high growth potential now in not just China but Vietnam too.

Broker downgrade to HOLD (which normally means its a sell)........

Geong (GNG, 35p, 13.24m) In its AGM statement Geong has highlighted the launch of a number of new products, including those on its SaaS platform. It has also reminded investors H1 is traditionally the weaker and it has maintained tight cost controls while focussing on its working capital. We drop the recommendation to a HOLD till the interim results are released to ensure the group has sufficient working capital as it does consume cash on growth. (Julian Tolley)

The interim trading statement is out in early November, so not long to wait.

Per the AGM conference call the initial Vietnam contract is worth $900,000! More substantial than I thought...and the promise of more to come given IBM's involvement.

Plus GNG are riding on IBM's back into Indonesia too. Another 250m people to go for.

And GNG mentioned "other South-Eastern countries" too.

The SaaS component of turnover is continuing to increase, particularly via the partnership with Oracle.

GNG had 6.4m net cash at the year end against a 13m m/cap. I somehow suspect they have sufficient working capital :o))

Absolutely superb post about GNG meeting all the criteria for a Jim Slater Zulu stock from ADVFN which I hope buetowa won't mind me copying here:

buetowa - 4 Nov'10 - 20:31 - 15826 of 15834

I posted this a couple of days ago on Liarspoker excellent thread - 2010 Zulu Thread = ZULU. The investing criteria follows that which was developed by Jim Slater.

GEONG - AIM listed China based provider of online business solutions utilizing Enterprise Content Management (ECM)technology.

I propose GNG which I know is a much unloved Chinese software stock at the moment but has the potential of being a ZULU stock for the following reasons:

MANDATORY

1. Five Year Record (5 years positive earnings growth)

Data taken from ADFVN financial section for GNG as at 2.11.10:
Turnover GBP (07) 4.30 (08) 7.61 (09) 14.67 (10) 12.51
2010 turnover down as a result a strategic decision to exit low margin SME market.
Pre-Tax Profit GBP (07) 0.89 (08) 1.14 (09) 1.69 (10) 2.27
EPS-Diluted GBP (07) 3.11 (08) 3.53 (09) 4.16 (10) 5.13

Comments from Rivaldos thread GEONG New IPO going for a song. 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

2. Low PEG Factor (PEG below 1 - ie 10% eps growth on a PE of 10 or less)
- PEG factor as at 2 Nov 2010 0.33

3. Optimistic Chairman's Statement

Trading Statement 1.11.10
- Trading in the first half of the year is in line with expectations.
- Margins increased during the first half as the SaaS business continued to grow.
- Company's continued emphasis on working capital management, the Directors believe that the Company is well placed to meet market expectations for the year as a whole.

AGM Statement 27.09.10
- We commenced our overseas expansion into Vietnam.
- The first 5 months of the current financial year, has continued to perform in line with management expectations

Final Results (Financial Highlights) 1.07.10
- Turnover down 15% to GBP12.5 million (2009: GBP14.7 million)
- Gross margin up 500 basis points to 46% (2009: 40%)
- Profit before tax up 34% to GBP2.3 million (2009: GBP1.7 million)
- Underlying profit before tax* up 30% to GBP2.6million (2009:
GBP2.0 million)
- Basic earnings per share up 21% to 5.2 pence (2009: 4.3 pence)
- Adjusted fully diluted earnings per share* up 17% to 6.2 pence (2009: 5.3
pence)
- Cash up 78% to GBP6.4 million (2009: GBP 3.6 million)
- Trade receivables of GBP4.7 million (2009: GBP4.3 million)
- Trade receivables, including accrued income of GBP13.1million (2009: GBP10.8million)
- Cash and Trade Receivables form 88% (2009: 84%) of total assets and 120% (2009: 115%) of net assets
- Order book of GBP14 million (2009: GBP10.6 million) including GBP5.6 million of recurring revenue (2009: GBP5 million)
(*excluding amortisation and share based expenses)

4. Strong Financial Position
- Cash up 78% to GBP6.4 million (2009: GBP 3.6 million)

5. Competitive Advantage
- Dominant position as the ECM provider for the Financial Services sector within China.
- Strategic alliances with IBM, Oracle and Microsoft


IMPORTANT

6. Something New

18 months ago (June 09) Appointment of CFO.

Within the last year - Deployed their SaaS model which brings forward cash flow which is an issue in the Chinese market where payment of invoice may only occur annually with very large organisations.

Within the last 6 months winning contracts outside China (Vietnam).

Within the last month 29.10.10 L&G was a significant shareholder that has been reducing their % holding in the company. This overhang has been a drag on the share price but it is now coming to the end. Now less than 5% as per recent announcement.

7. Small Market Capitalisation (a small cap stock - anything in the FTSE250 or above is out)

Market Cap as at 2 Nov 2010 - 13.72m

8. Relative Strength (as in the share price movement compared to the FTSE All Share Index)

Strong upward price movement over the past few days which could signal that L&G are close to exiting.


DESIREABLE

9. Dividend Yield (None)

10. Reasonable Asset Position (Yes )

11. Management Shareholding (Yes - http://www.geong.com/Channel/361668)

Number of Shares in issue - Total number of shares in issue of the Company is 37,834,622 shares at 15 October 2009. The Company does not hold any shares in treasury.

Percentage of shares not in public hands - The Directors' and their beneficial interests (including family interests) in the shares of the Company at 15 October 2009 were as follows.

Directors
Henry Hak-Yan Tse: 3,703,673 = 11.7%
Weidong Wang: 5,061,671 = 13.4%
Amit Thakar 17,500 = 0.1%
Minren Guan = 1,027,413 = 2.7%

Even after today's 3p rise, at 34.5p GNG remains on an ex-cash P/E of just 2.7.

This is based on a 13m m/cap, 7.3m forecast cash and last year's 2.14m profit after tax.

Last week's H1 results were good - much better than I thought given the expected reversion to the usual H1/H2 split after last year's exceptional H1 (H2 is always much, much stronger than H1).

- PBT up to 0.7m despite that exceptional H1 last year
- adjusted EPS was 1.6p, so we can likely expect a minimum 5.5p EPS this year
- 4.1m cash is higher than I predicted at H1 given the usual H1 dip
- expansion with IBM into Indonesia as well as Vietnam
- PLUS a 2 year framework agreement with Oracle re Japan and the USA!
- reiterating the positive outlook for the year ahead with an increased order book of 14.8m including 6.9m of recurring revenue

and margins are fast-improving now given the move to SaaS and deliberately reduced 3rd party sales.

Evolution issued a brief post-results note. To summarise:

- results have "comfortably beaten our 1H'11 forecasts"

- reiterate 50p valuation and Buy recommendation

- net cash to exceed 7m at year end - against the current 13m m/cap, and with over 2.1m adjusted profits after tax!

- pending a conference call with the company, forecasts put on hold due to the "much higher than anticipated gross margin"

GNG held a conference call post-results last week.

My own quick summary:

- increasing SaaS revenues mean both reduced overall costs (less need for servicing) and improved margins
- Haier are a new customer from two months ago, and as Mas pointed out are the world's fourth largest white goods manufacturer, a Fortune 500 company and one of China's top 100 IT companies with annual sales of around 10bn
- the IBM Global Services partnership should not only provide big sales numbers in the next year, but will improve cash flows since the customers are international and will pay on IBM's rather than local Chinese payment terms
- trade debtors/cash flows will continue to improve, with the year to come showing the biggest improvement

1.6p adjusted EPS in H1 with the seasonally much better H2 to come implies probably 6p+ EPS for the year imo against a 34p share price, and possibly a lot more, given the increased order books and recurring income.

As was stated in the conference call, the CEO only has to walk out the door and he makes a profit.

Not only that, but cash flows are improving and should give well over 7m net cash against an 12.9m m/cap.

The current share price is absurd imho. It's merely a question of waiting for when the L&G overhang ends, no more, no less. And we were told that EVO will be working on that front....

Masurenguy on ADVFN gave an excellent and much more detailed summary:

"An upbeat conference call with Wade and Amit from Geong this morning.

The anticipated H1 sales deficit was due to a combination of two factors - further planned reduction in low margin TPS plus last years H1 figure incuded a one-off 1.6m consultacy contract with Huawei. On the flip side of this, gross margins increased to offset the lower sales figure with SaaS rapidly increasing its share of the overall sales mix and this is expected to grow by 150% this year which would represent 20% of overall sales. They naturally would not forecast H2 sales but expect a pre-2010 ratio to reassert itself this year (without the H1 Huawei distortion) so on a more conventional 40/60 or 35/65 ratio I would be looking for an annual sales figure in the 12m - 13.5m range this year.

The margins on SaaS business are almost double the established licensed IaaS model (78% v 41%) which last year accounted for circa 85% of total sales. Consequently margin improvement will be a continuing factor as SaaS increases its share of the sales mix. This will also have a knock-on effect in further cost savings too since it it is far less expensive to service and support online SaaS than it is to support offline midware IaaS business.

The forward order book of 14.8m includes 6.9m of recurring sales (47%). The proportion of recurring sales has continued to increase year on year and they expect this to exceed 50% of annual sales in due course. This is highly significant in my view since it constitutes captive income that costs little to service in comparison to the cost of winning new business and will further enhance future profitability.

New partnerships with IBM covering Japan and the USA, plus Vietnam and Indonesia, together with their SaaS parnership projects with Oracle in other SE Asian markets, will feed through into topline sales during the latter part of H2 and throughout the whole of next year with gross margins in a similar range to their conventional business model. Also further developments are already advanced in the creation of CRM social networking applications for direct B2C business and growing mobile internet usage. These are all being incorporated into Geong Online 2.0 which will provide advanced standard & customised services which will also interface with both Oracle and IBM.

They have alspo picked up an interesting new client, via IBM, in Haier (no I'd never heard of them before either) but they are the world fourth largest white goods manufacturer and one of Chinas top 100 IT companies with annual sales of around 10bn. Haier are in partnership with Argos in the UK and Geong will provide them with vertical online B2C application amongst a number of other services.

http://www.haier.com/abouthaier/corporateprofile/facts.asp

This kind of deal really should be RNS'd in my view rather than just 'discovered' at a reporting stage.

The increased debtor levels at H1 have become predictable and, whilst this might be naturally a concern to many, it is worth reiterating that their customers are virtually all blue chip. The banks tend to pay annually in December and the year end always reverses this situation. This scenario is largely a product of large sales accruals which account for around two-thirds of the outstanding total and the timeline on any receivable only commences when the final invoice has been issued. This situation is just a characteristic of this business and will gradually improve as SaaS increases within the sales mix at the expense of the existing core of IaaS offline midware sales. The company has cash in the bank so there are no financing costs incurred and it does not create any cashflow problems for them either.

This is a transistional year for the company with the introduction of Geong Online 2.0, the new framework and strategic partnerships with IBM and Oracle and the move into foreign markets and the growing proportion of higher margin, lower servicing cost SaaS business within the overall mix. I would expect the year end figures to start to reflect the benefits of some of these trends."

Excellent new article on Proactive Investors noting that GNG is a "bargain basement" buy:

http://www.proactiveinvestors.co.uk/companies/news/27654/geong-a-hidden-gem-of-the-technology-sector-27654.html

"GEONG: A hidden gem of the technology sector
Wed 11:24 am by Ian Lyall

GEONG International (LON:GNG) is one of AIMs hidden gems. The expanding China-focused internet software company has a 200-strong blue-chip clients, and in IBM and Oracle, two top-notch industry partners.

It is also profitable and holds the equivalent of half its market cap in cash. The shares, meanwhile, trade at around a third of the average value of equivalent companies in its sector.

GEONG provides social network, mobile internet, B2B and B2C sites for customers including China Construction Bank, Guangdong Development Bank and Haier Group.

"We are not just providing a software solution, says chief executive Weidong Wade Wang. We help our customer operate and integrate the website.

And where there is the opportunity, GEONG also works on a shared-revenue basis, which means it can enjoy some of the upside it has created.

It deploys its expertise in two ways - Information as a Service, or IaaS and Software as a Service (SaaS).

Its IaaS offering means GEONG acts as the consultant, covering the design, development, implementation and maintenance of the project.

These contracts are long-term, account for 75 per cent of the companys revenues and produce a profit margin of 45 percent.

SaaS contracts, by contrast, provide steady and long-term revenue streams built on licence sales that are billed quarterly and monthly with variable volume charges added.

GEONGs SaaS offering is called Social Networking 2.0, contributes around 25 per cent of the companys revenue and produces margins of 50-60 per cent, with a higher cash conversion ratio that IaaS.

"SaaS contracts are very much meant to be pay as you go for the clients, so that they can pick and choose within GEONGs toolbox what they need, when they need it, and how much of it they need, says Philippe Geronimi, an analyst at Evolution Securities, in recent note.

"The SaaS model, towards which GEONG is increasingly migrating, usually generates gross margins of 50-60 per cent.

In July Social Networking 2.0 will be rolled out as a cloud computing solution with five applications. The idea is to create higher barriers of entry to competitors.

GEONGs past strategy was to focused on bidding for large accounts to generate as much growth as possible. However this weighed on its balance sheet, due to increasing working capital requirements.

As a result the chief executive and his team have begun prioritise cash generation over growth.

Integral to this is GEONGs move to the software as a service model where it bills monthly and quarterly, rather than waiting up to a year to receive payment for some projects.

Recurring revenues should also improve significantly with a move to SaaS, Wade adds.

He says its products and services allow companies to work smarter, which on the face of it is one of those awful marketing phrases that means not a great deal.

For GEONG it is actually pretty specific. It is about maximising the clients online offering by making sure the content management and/or the marketing and commerce are sharper and more focused.

A small illustration of this is the work it carried out for China Construction Bank on its social networking site.

That online presence made for a far more efficient interaction between CCB and the owners of small and medium sized business (SMEs) who used its services.

It improved communication between the company and its customers, who previously were looked after by a harried account manager with three or four hundred more clients.

And crucially there were tangible financial benefits to the company. There was an increase in trading volumes and the service to the SMEs improved, Wade says.

The companys sums up its expansion strategy in four words: go deep and broad.

Going deep means signing up second-tier clients, while moving existing customers from the information as a service solution to the newly instigated SaaS model.

Going broad means widening the companys reach from the four main industries it has targeted and coupling this with overseas expansion into key countries in the Asia-Pacific region.

Organic growth may also be augmented by acquisitions, according to Evolutions Geronimi.

The focus is the penetration of new industries, which would add to GEONGs market share in the financial services, telecom and auto sectors, he adds.

Management has disclosed that it would particularly like to acquire a company with a good presence in the healthcare sector, which it believes will continue to sustain good growth rates in the medium to long term.

The focus on cash generation in the short term, which will lead to a strengthening of GEONGs balance sheet, should facilitate the implementation of this strategy.

GEONG is also looking to diversify its product offer and is considering acquisitions that could help it accelerate its development in the fields of social networks, mobile internet and customer experience management.

Evolution, which is the companys broker, expects GEONG to post EBIT of 2.4 million this year on sales of 12.6 million, rising to 3.4 million in 2013 on revenues of 17.3 million.

That means the shares trade on a forward multiple of only six times forward earnings, which is cheap in anyones book.

That puts it on a major discount to larger players in the sector such as China Digital, Kingdee and ChinaSoft.

And while they are not directly comparable companies, it does highlight GEONGs anomalously low valuation.

Evolution reckons GEONG, at 33 pence, is undervalued and has set a 50 pence price target on the shares, which is still 35 per cent below the companys historic PE ratio of 13.2 times since its 2006 IPO.

All we are waiting for now is the market to recognise GEONGs bargain-basement rating."

This is a very boring company... I remember a couple of years ago it was about 50-60p... now 34p.

Which is why it's such a bargain - the market hasn't rediscovered it yet (it initially went up to 80p or so and wasn't quite so boring!).

As the article says, "All we are waiting for now is the market to recognise GEONGs bargain-basement rating."

On top of the likely historic P/E of 5 based on 6p+ EPS, there's the 6m+ cash pile representing almost half the m/cap.

And there's the 6.9m of annual recurring revenues which mean GNG make a profit even before they begin to make any new sales.

The year end trading update in the week of 16th May is only 3 weeks away now - given the excellent news flow recently I cannot believe it will be pretty decent/in line at worst and perhaps a lot better than that.

With all the above factors, and an incredible blue chip client list, GNG should be trading at at least 75p imo rather than the current 34p imo.

Once cash flows are seen to be improving via the transition to SaaS and increased overseas sales, then GNG has every right to be trading at 100p and above.

Thursday's trading indicates that the longstanding overhang from L&G is now over. If so this could be the start of a welcome re-rating.

EVO's latest research shows forecasts of 5.7p historic EPS, 7p EPS this year and 7.8p EPS next year:

http://www.buisseret.com/gng/Evolution%2010_3_11.pdf

The true adjusted EPS (adjusted for amortisation and share plan expenses) is therefore around 6.2p EPS, 7.5p EPS and 8.3p EPS respectively.

On a 35.5p share price this in itself is ridiculously low.

Then consider the 6m or so cash pile, i.e 45% of the m/cap. Plus the net tangible assets still way above the current m/cap.

Plus the ridiculously good blue chip client list and the large annual recurring income.

And the transition to SaaS and the overseas sales which should transform cash flows for the better.

Any re-rating here after the end of the overhang could see 100% upside or more from here imho, with limited downside given the cash pile, recurring income etc. And potentially the re-rating could happen in a VERY quick timeframe given the recent trading statements and the forthcoming results.

Up 11% today, and another 550,000 shares traded makes around 1.2m in the last 2 days (out of a total 37.5m)....no wonder stock is getting scarce.

Online is very encouraging. Earlier this afternoon you could only buy 7,500 shares maximum at 39p, whilst you could sell 25,000 at a nice premium to the offer price at 38.31p.

GNG's current 14.3m m/cap is still well below tangible NAV, and it's still on a very low historic P/E of 6, let alone allowing for any premium for its customer list, its 6m or so cash pile and its recurring income (the latter positives could have been contra'd in the past by poor cash flows in terms of investor sentiment, but these are hopefully about to be transformed for the better).

Plus we know from presentation slides on China Construction Bank and Haier that forecast sales to these two clients alone are expected to be as follows:

to 31/3/11 : 2.0m, including 0.6m SaaS sales
to 31/3/12 : 4.2m, including 2.2m SaaS sales
to 31/3/13 : 7.6m, including 4.6m SaaS sales

Total forecast group sales for the whole 2010/11 year are 12.6m, including the 6.9m recurring income, so this represents excellent potential growth from just two sources.

An excellent trading statement RNS today.

Expectations for the year just gone from EVO were 5.7p basic EPS, or around 6.2p adjusted EPS, against a current 42p share price.

I assume today's RNS means that GNG are on track for at least 6.5p adjusted EPS.

But note that the outlook for the current year is EXTREMELY promising, with a 17m order book, new contracts etc.

EVO were forecasting 7p basic EPS, i.e around 7.5p adjusted EPS.

Perhaps we may see a further upgrade. Though on a current year P/E of 5.6 at 42p GNG hardly needs one to be considered cheap.

And GNG have a 5.4m cash pile against a 15.8m m/cap.

Potential acquisition news too, following today's drawdown of a 2.5m convertible loan - note that this is only convertible at 50p per share. A 20% premium to the current share price shows some confidence :o))

EVO have produced a new broker note on GNG.

Their conclusion is that GNG's share price valuation is so low that it applies to "financially stressed companies" :o))

A value of 0.8 price to book value is jusr ridiculously low, as is the Enterprise Value to Capital Employed of 0.7.

With 7p EPS this year against a 41p share price the fundamentals will get even more compelling, whilst cash flow should be on the cusp of a major improvement.

Hopefully the news flow in the next couple of months - perhaps including an acquisition - will be enoough to drive a major re-rating from here. EVO's 50p valuation will I suspect be increased after GNG publish the full results.

To have around 700,000 shares traded on Friday and for the share price to still be up was terrific, a real platform to go forward with.

Here's the full EVO note:

"Comments

FY11 net profit expected to beat market estimates. According to the trading update, FY11 revenue will come in at c.GBP11m, down 12% yoy, and 13% below our estimate. However, a better product mix towards SaaS has resulted in a 50% FY11 gross margin, ahead of our 46% forecast, indicating that the companys strategy of converting its business towards higher margin products is progressing well. Overall, management expects FY11 net profit to beat market estimates and plans to announce preliminary FY11 results on 12 July 2011.
Healthy balance sheet maintained. GEONG ended FY11 with a net cash position of c.GBP5.4m, lower than our c.GBP6.8m forecast. We believe the difference can be attributed to higher-than-expected account receivables and capex.
Solid backlog, higher visibility. GEONGs long-term partnership with IBM and Oracle continues to bear fruit: as at 31 March 2011, the company reported an order book of GBP15.0m, from GBP14.8m in 1H11. This has since grown to c.GBP17.0m, with another GBP1.9m added during April. We believe this rising backlog gives the company better visibility, which could promote organic growth in the short-to-medium term.
GBP2.5m CULS to bode well for M&A. GEONG will issue GBP2.5m CULS via Evolution Securities, at an annual interest rate of 7.5%. The CULS will become convertible (at GBp50.0) over a 3-year period from 31 December 2011. Full conversion would result in 5m shares, and 13% dilution. We believe the CULS and GBP5.4m YE net cash put GEONG in a strong position to pursue M&A going forward.

Our view

GEONGs trading update confirms our belief that the company has solid fundamentals.

By securing the CULS, GEONG now has an opportunity to grow through M&A. The companys share price has rallied c.20% over the past two months, which in our view reflects the markets recognition of GEONGs new strategy. Despite this, current valuation remains undemanding: based on our historic estimates, GEONG now trades on 0.8x P/B11, and 0.7x EV/CE11, multiples that usually apply to financially stressed companies. We therefore reiterate our BUY recommendation and GBp50.0 target price."

Exciting RNS just out...

- results to be ahead of expectations
- in advanced stages of acquisition talks
- acquisition is substantial, profitable and cash-generative

No doubt GNG feel that they want to complete the acquisition, and can't come and promote the company properly to the City post-results and do the results justice, so are delaying the results announcement so they can sell the whole package properly.

Nice :o))

GNG remains ridiculously cheap imho at 43p with a 16m m/cap.

The forecast adjusted EPS to March'11 is 6.2p, so this is now likely to be at least 6.5p EPS.

That's a historic P/E of 6.6, and probably less.

The current year forecast is already 7p basic EPS and therefore 7.5p adjusted EPS.

That's a current year P/E of only 5.7 just on current forecasts, let alone if there are any upgrades due to either (1) 2010/11 performance or (2) the acquisition.

Plus GNG has:

Net cash of 5.4m
Tangible net asset value of 16m+
Large and increasing order books
High recurring income
Blue chip clients who always pay, i.e almost no bad debts
Improving cash flows going forward via increasing SaaS and international sales

You do the maths.

GNG fails to go higher... now 35p.

Classic double top pump and dump short term chart there.

Final throws of the DUMP stage now ?