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

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 ?

Absolutely brilliant post by Masurenguy elsewhere explaining why, with a 7.4m m/cap at 19.5p, yet with cash and cash equivalents of 57p per share, GNG remains incredibly undervalued.

The share price has fallen due to a number of factors, and partly due to the company's inept shareholder relations strategy as much as anything else, but this post lucidly explains why there is so much upside here:

"A week has now passed since the results were published and some tranquillity appears to have returned over the past few days. Having spoken to the company and the broker it is now probably an appropriate moment to review the current situation in order to determine a more rational perspective on the company, its future prospects and its current valuation.

1. Actual Results and Value Metrics

The results that were announced just over a week ago on Sept 30th were virtually inline with the year end trading update that was issued on May 20th.

*Turnover 11.3m (2010: 12.5m) - slightly ahead of Y/E TS

*Gross margin up to 53% (2010: 46%) - slightly ahead of Y/E TS

*SaaS revenue 2.9m (2010: 1.7m), representing 25% of the total revenues (2010: 14%) - very slightly below Y/E TS

*Profit before tax 2.6m (2010: 2.3m) - not projected in the Y/E TS

*Net cash 5.3mn (2010: 6.4m)- slightly higher than the Y/E TS

*Order book 15m (2010: 14m) - as per Y/E TS

*Accrued income 11.4m (2010: 8.4m) - 6% higher than Y/E TS estimate of 10.8m

*Trade receivables 4.8m (2010: 4.7m) - as approx Y/E TS figure

These results put the company on an historical PER of just 3.3 and an EVR of just 0.75 after deducting net cash ! When these results were flagged in the Y/E trading update last May the share price was 41p. After these results have been fully audited and published, with very minor variances just over 4 months later, the share price is 55% lower at 18.25p !

2. Trading History

In the 5 fiscal years since their June 2006 listing on AIM, Geong has consistently increased proprietary sales, profit and eps every year.

Prop Sales TP Sales PAT EPS Y/E Cash OP/CF

2007 4.3 - 0.8 3.1p 0.50 0.3
2008 5.5 2.1 1.1 3.5p 2.00 (1.5)
2009 10.3 4.3 1.4 4.3p 3.60 1.0
2010 11.2 1.3 1.8 5.2p 6.40 0.6
2011 11.3 - 2.1 5.5p 5.30 (0.4)

* Since listing on AIM in June 2006 the company has raised circa 5.5m (net) in 3 placings (06/06, 06/07 & 09/09). Their closing cash balance on 31/3/11 was 5.3m. Therefore, despite the escalating level of accruals and receivables over this 5 year period, the negative operating cash flow (OP/CF) has been a comparatively marginal factor in relation to their cash position (Y/E Cash) and working capital requirements.

* Over the past 3 years the company has increased gross margins from 40.5% to 53.1% and has reduced annual operating expenses by 750K from 4.3m to 3.55m.

* Forward order book (FOB) is 15m including recurring revenue of circa 6m. At 53%, the gross margin on the recurring revenue alone is 3.2m, which represents 89% of last years operating costs of 3.55m. Circa 10.5m, or 70% of the FOB, is projected to be recorded as revenue in the current financial year before adding any new business gained during this year.

NB: Since the year end, the company has raised a further unsecured convertible loan of 2.5m in May (convertible within 3 years at 50p). This loan, together with Y/E cash of 5.3m plus the 5m EFF facility set up last year at 7.5%, furnishes them with over 12.5m to potentially fund the Adbeyond acquisition and provides sufficient working capital to expand their existing core IaaS & Saas business.

3. Accruals and Receivables

The level of accruals and receivables are an intrinsic factor of the Chinese payment culture and very specifically pronounced within the banking and financial services sector. There is one other Chinese company listed on AIM, Bluestar SecuTech (BSST), who service the same financial sector as Geong and they are affected by exactly the same trading conditions. In their July 20th results announcement for the year ending 31/3/2011, they made the following comment. "Our rise in accrued income is directly related to the Group working with banks and government security agencies projects and contracts which results in a lengthened working capital cycle. In addition, customers in the banking sector have been slow payers historically, and as such, it normally takes the Company several months to collect the receivables."

http://www.advfn.com/p.php?pid=nmona&article=48503738&symbol=BSST

BSST, whose accruals/receivables are equivalent to their annual revenues, are predominantly a hardware supplier (CCTV Systems) so they will have shorter contract installation and accrual timeframes than a software company like Geong has with all of the development, installation and testing phases that is applicable to each IaaS contract.

Geong have always been completely transparent about this situation too:

The Group's successful strategy of targeting and winning large long-term contracts has led to extended payment terms with clients resulting in an unusually high level of debtor days. Results RNS 23/6/09

Strong underlying trading, particularly in the IaaS business unit, saw a substantial increase in accrued income by 28% to 8.3m (2009:6.5m) and trade receivables to 4.7m (2008: 4.3m). Our rise in accrued income is directly related to the Group working with IBM and our long-term clients and having taken on larger and longer contracts which results in a lengthened working capital cycle. Results RNS 01/07/10

The Company commenced a number of new projects during the year, and there is therefore a greater proportion of amounts due from customers relating to work that has been done but not yet invoiced, and a greater amount of accrued income, than previously. Since the year end approximately 2.7m of the trade receivables has been received and 1.5m of the accrued income has been invoiced to customers. Results RNS 30/09/11

Nevertheless, it must be recognised and acknowledged that the very high level and continuing escalation of accruals and receivables gives natural rise to both cash flow concern and perceived bad debt risk among predominantly western shareholders who are used to a totally different set of credit risk and payment parameters in their more established developed economies. IaaS sales almost doubled from 5.5m to 10.3m between 2008 and 2009 and, in that year, accruals and receivables collectively doubled from 5.35m to 10.8m. Over the past 2 years the collective CAGR of accruals and receivables has been 22% from 10.8m in 2009 to 16.15m in 2011. In this context Geong are a victim of their own success since this is consequential to the growth in IaaS business and the average 18 month contractual timeframe.

The growth of the SaaS component will start to have a significant impact upon accruals and receivables particularly when it reaches circa 45% of sales as the company have previously stated on several occasions. Last year it increased by 68% to represent 25% of total sales. It should be noted that the current growth in SaaS business is mainly a derivative of IaaS business already undertaken with existing customers.

jonals - 2 Oct'11 - 18429: I was at the mello event earlier in the year and my notes have Amit saying accrued income would not start coming down until SaaS reached 45%-50% of sales. The results and announcements this year have been generally consistent with this

However, the fact remains that these accruals and receivables have been thoroughly audited and no bad debts have been booked or provisions made. This audit process was previously confirmed by Geong at the Mello event earlier this year and was reconfirmed once again to me when I spoke to them last week.

jonals - 3 Oct'11 - 18444: FD said at mello meeting in march that all milestones are signed off in triplicate - auditors, client, and geong.

The quality of the accruals/receivables reflect the blue chip Geong customer base and their global partners who also account for a significant proportion of the outstanding debt.

4. RNS Announcements and the impact on the Share Price

The closing share price on May 20th, following the publication of the year end trading update, was 41p. The share price then remained in a 40p 43p range for the next 7 weeks until the first announcement of a delay in issuing the results was made on July 8th postponing them from July 12th to mid August as a consequence of having reached advanced negotiations with an unidentified acquisition target. The closing share price on that day was 43p.

The share price remained above 40p and closed at 41p on July 18th the day before the more detailed announcement about the acquisition was made and the target company identified. While there was generally a positive reaction to the proposed acquisition there was clearly considerable concern and incredulity over a proposed further convertible CLS funding option for 5m.

This CLS option, if invoked and subsequently repaid rather than converted into shares at a price of 50p after 2 years, would qualify for a guaranteed premium of 17.5% interest per annum in addition to the 7.5% normal rate of interest. Consequently, this would providing the funder with a total return of 25% per annum, or 50%, over 2 years if they chose not to convert the loan into shares. Furthermore it was revealed that the prospective loan provider was an existing major customer. This immediately led some people to speculate that there was some sinister factor behind this proposal, such as some kind of offset agreement against a potential bad debt or billing dispute, despite the fact that it was made perfectly clear at that time that there was: no certainty that the CLS will be issued. If CLS were to be issued, it will be conditional upon receipt of the Shareholders' approval because, as described above, the Directors do not have sufficient share authority. In addition, having regard to the Group's strong cash position, it is also the Company's intention to have CLS conditional upon completion of the Acquisition.

Following the acquisition RNS announcement with the controversial CLS proposal, the share price fell by 21% over the next 4 weeks to August 18th, from 41p to 32.25p. The price then dropped by a further 10% on August 26th when a further announcement was made that the results would be delayed again until the end of September. Over the next 6 weeks the price slowly drifted down by a further 14% to 25p as the uncertainty of what might be contained within those results developed, despite the fact that the company had reiterated on 8/7, 19/7 and 26/8 that: the Board remains confident of reporting a net profit
after tax (subject to audit), ahead of market expectations in the full year results.

During the last week of September there were a couple of false starts from the broker indicating that results would be released by Thursday at the latest and then before the market opened on Friday. When this did not materialize fear and uncertainty clearly reached a peak. Understandably, concerns were being raised that the company would be in breach of AIM rules and likely to be suspended if results were not published that day. When the actual results were finally issued 10 minutes after the market opened, the shares fell sharply to close down by a further 26% at 18.5p with a trading volume of circa 750,000, or just under 2% of the shares in issue. This fall was inspite of the fact that the results largely reflected the year end trading statement issued over 4 months earlier on May 20th and reiterated on at least three subsequent occasions since then.

5. The Perfect Storm

The share price has collapsed by 57% since July 8th when the first results delay was announced. However, the audited results that were subsequently published on September 30th validated the figures contained in the year end trading update on May 20th. Nothing has basically changed in relation to the fundamentals or the various metrics reported by the company over that 4 month period. So why was there such a major negative impact on the share price over that period.

5.1. Without doubt, the most significant reason were the two delays in publishing the results that were originally scheduled on July 12th, then deferred to mid August and then, some 10 days after the expected publication, delayed once more on August 26th until the end of September. Even then, the actual publication did not take place until after the markets were already open on the very last day that they could be published without breaching AIM rules and risking suspension. This was a totally absurd and avoidable situation.

5.2. The second significant factor that spooked the market was the very controversial CLS funding option that was revealed in the detail of the proposed terms of the Adbeyond acquisition announced on July 19th. The backstop premium interest rate guarantee on non conversion made no obvious commercial sense. The fact that a major customer was the potential source of the CLS funds also immediately led some people to draw the conclusion that there was some sinister quid pro quo issue to resolve a potential financial dispute or impending bad debt. The size of the outstanding accruals provided the potential ammunition to sustain this totally speculative allegation.

5.3. The volatile global market conditions that saw the FTSE drop 17% and the AIM index by 20% over August and September, which impacted most stocks.

5.4. The story on the alleged Chaoda fraud, impacting AIM listed Asian Citrus, and the breaking Bloomberg story on September 30th about the US Justice Department considering launching a fraud investigation into accounting irregularities that had emerged with a number of Chinese companies whose shares were traded in the US. A couple of posters sought to tar Geong with the same brush by implication although the wider market was already probably spooked by this news anyway

5.5. It is also very clear that a number of people do not understand the business model, the Chinese financial sector payment culture or the reason for the high level of accruals/receivables, and they immediately jumped upon this as some indication that the companys survival was at risk as a result of major cash flow problems and/or bad debt liabilities. The reality is that the accrual/receivables situation was only marginally different from what was originally reported in the May trading update and the margin, pre-tax profits and net cash were actually marginally ahead of the original estimates. The overwhelming reaction to the May trading update, both on and off this board was very positive, apart from a few niggles relating to the slight delay in releasing it (sounds familiar), and the fundamentals have hardly changed since then. While there is some 16m tied up in accruals/receivables, the company does not have a cash flow problem (as illustrated above) and has a solid balance sheet with net cash of over 7m.

6. The Reason why the 2011 Results were Delayed

The preliminary results were originally scheduled for July 12th. Geong usually publish their prelims between mid June and mid July. On July 8th the results were rescheduled to mid August and then again on August 26th to end September. The delays were caused by two factors.

First, many financial staff were redeployed onto DD activity with Adbeyond. Secondly, as a result of the proposed acquisition and further possible funding requirements related to it, the company was put through the most thorough and comprehensive audit that had been undertaken since their original IPO in 2006, which also involved a considerable amount of extra work for their comparatively small finance department. The company came through this comprehensive audit, which included thorough client checks and validations of accruals and receivables, with flying colours and it is worth noting that no bad debts were booked nor were any provisions made. The quality of the blue chip customer base has always been a key factor in their business model and around 40% of the outstanding accruals/receivables relate to one of their global partners where they are effectively operating as a sub-contractor to the end user. Consequently a set of audited accounts was published on Sept 30th as opposed to preliminary accounts some 11 weeks earlier.

The decision to defer the publication of preliminary accounts in July was a big mistake and management now both accept and acknowledge this to be the case. Despite the fact that they reiterated the same metrics from the May trading update on three subsequent separate occasions (and then delivered them on Sept 30th) the delays, in conjunction with the other factors listed under 'The Perfect Storm' above, created a climate of fear and uncertainty and provided fertile ground for the growth of all sorts of speculative theories and even malicious allegations.

If prelims had been released in July then there is no reason to believe that there would have been any negative impact on the share price since the general response to the May year end update had been very positive. Of course the subsequent CLS controversy and other macro economic factors may have affected the share price over the past couple of months but it is extremely unlikely that it would have then plumbed the current depths where it stands at the moment.

7. The Terms of the Acquisition

This is ongoing as stated in the Sept 30th results announcement. Acquisition of Adbeyond (Group) Limited ("AdBeyond"), for a consideration of up to HK$120m (9.6m), is in the process of completion

The final terms have yet to be clarified by the company. In their July 19th acquisition announcement they made the following comment. If CLS were to be issued, it will be conditional upon receipt of the Shareholders' approval because the Directors do not have sufficient share authority

One might therefore assume that if the CLS, under the terms described in that announcement, was no longer to feature as part of the acquisition funding, there would be no need to obtain shareholders approval in relation to this particular issue. Obviously the company will make the appropriate announcements in this context when they are ready to do so.

8. Current Valuation

The outstanding order book at 31/3/11 was 15m. This increased to 18.5m by the end of June as a result of RMB36m (3.5m) of contracts won up to June 2011.

Recurring revenue on the forward order book continues to be circa 40%. That means it currently represents circa 7.4m and, at last years GP of 53%, that would yield a gross profit of circa 3.9m. Therefore the recurring revenue within the existing forward order book already more than offsets last years total operating expenses and overheads of 3.55m. Clearly expenses are likely to increase in the current year but it is certainly a very strong position to be in when the GP on recurring revenues already exceeds the operating costs for the prior year.

The companys technology and service levels have been endorsed over the years not only by their own blue chip customer base but also through the ongoing partnerships that they have with major global players such as IBM, Oracle and SAP. This clearly helps to reinforce the barriers to entry for other Chinese competitors.

The broker note, issued after the results on 30/9/11, made the following comments: At 31 March 2011, Geongs backlog stood at 15m v 14m last year. Of this, circa 10.5m will be recorded as FY12 revenue, making it possible for Geong to reach our 15.8m FY 12 total revenue estimate. We believe these results confirm the soundness of Geongs current strategy. Moreover the plans to acquire Adbeyond remain on track which (once complete) should contribute substantially to Geongs net profit.

There are currently 37,835,000 shares in issue so the year end cash position represented 14p per share. Accruals and cash totalled 16,161,000 which represented 42.7p per share. Consequently cash and cash equivalents represented 56.7p per share or just under 21.5m. This compares to the current share price of 18.25p and a market cap of 6.9m. The current share price therefore represents a 67.8% discount to cash & cash equivalents and the actual business, with an historic PER of just 3.4 and a blue chip customer base, is valued at zero.

Management can justifiably be criticised for past laxity in meeting scheduled deadlines for publishing trading updates and actual results. Hopefully they have now truly understood the major credibility problem and negative sentiment that has dramatically resulted from this after viewing the share price trajectory over the past 3 months. Insiders hold over 30% of the shares so they are suffering the consequences too. My discussions with them indicate that they are very aware of this issue and that they will make every effort to ensure that this does not happen again in the future. There are enough hurdles to jump within the marketplace without handicapping yourself with unnecessary self-inflicted wounds too. However, aside from this, the company has a consistent record of transparency and congruity in their figures and trading updates and there has never been any reason so far to question their integrity.

9. Conclusion

So there you have it. Unless you believe that there is some major unrealised problem with the outstanding accruals/receivables and if so I would be interested to know what evidence any sceptic has to support such a view then this must currently now be one of the most undervalued stocks on AIM today. "

GNG doing very badly... 14p now

Looks very very fishy to me.

RCG ring any bells ?

http://www.etencatnagar.com/discussion/2011/12/13/chinas-accounting-issues-increase-indias-opportunity/

China’s accounting issues increase India’s opportunity

Financial Reporting, Dec 2011

A problem for Chinese companies is turning out to be an opportunity for Indian ones. The recent controversy over accounting standards of Chinese firms listed in the US is forcing investor pools which traditionally invested in these, to capitalise on their high growth, to look at similar investment opportunities in India.

The Securities and Exchange Commission, the market regulator in America, is conducting a review of accounting problems in dozens of China-based companies after they began disclosing auditor resignations or book-keeping irregularities.

For example, one of the ‘Big Four’ accounting firms resigned as auditor of a Chinese software company in May, saying it had found falsified financial records and bank balance confirmations. Investment banks based in Singapore and the US, which had helped the Chinese companies list on Western exchanges, have begun to set up shop in India. “We have received at least six queries in the last couple of weeks from our investor base about good Indian stories,” said Jeffrey O Friedland, managing director, Friedland Global Capital.

The US-based investment bank had primarily operated in China, helping at least nine companies list on the US and Canadian exchanges in recent years.
Friedland said there is a huge India interest in his investor base, which comprises family groups, family offices and high net worth investors. The typical ticket size ranges between $500,000 and $2.5 million. These investors are looking at high growth in emerging market opportunities that are better than the near-zero interest rates back home and, at the same time, without governance issues. “China is out for them for at least 18 months now,” he added.

Indian merchant bankers which concentrate on mid-sized companies in tier-II and tier-III centres are keen to tap this. These companies are usually neglected by the bulge-bracket investment bankers. Bankers say in such a situation, a foreign listing, which can raise up to $10-15 mn, will be a godsend for these companies. It also opens the possibility of future fund raising at higher valuations.

India has been trying to get its own small companies market, the SME Exchange, up and running for several years but with little success. Many foreign stock exchanges are keen to fill this vacuum.

In another first, the Frankfurt Stock Exchange recently held a road show in Mumbai to woo Indian companies to list on it.

The exchange positioned itself as a prospective destination for Indian engineering firms.Friedland said exchanges such as Frankfurt, Toronto and the NYSE were the most likely destinations for Indian firms

Companies have to follow the holding company route, since direct listings in foreign bourses are not allowed under Indian laws. More than a dozen Indian companies, many in the energy segment, are already listed on the London Stock Exchange’s Alternative Investment Market.

India is also a hot destination for investment bankers looking at mid-size merger deals. Last month, around 250 of them, from 40 countries, were in Mumbai at a first-of-its kind speed networking conference. Bankers and advisors from a number of European countries such as Germany, Spain and Britain met entrepreneurs and promoters of mid-sized Indian companies.

i have warned consistently about dealing with chinese stocks and have been derided and criticised quite heavily for so doing, yet time after time my warnings have proved justified ...... here is yet another and frankly, i have no sympathy at all for any mugs who have been caught up

http://boards.fool.co.uk/geong-international-big-cash-trouble-in-little-12489505.aspx

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Profits down badly... 5p on the cards.


GEONG expects to report significantly reduced profitability for the financial year ended 31 March 2012.

The company, as in previous years, had originally anticipated strong trading during the fourth quarter based on an expectation of receiving high margin performance fee revenues (where the operating costs have already been absorbed against the quarterly fixed revenues) on certain SaaS contracts.

Unfortunately these performance fees have been at a lower level than anticipated as the impact of the slowing economic growth in China has caused many of the key performance indicators set by the company's clients proving to be too optimistic with the result that the level of performance fees is greatly reduced.

In addition a long standing global delivery agreement with a major partner was anticipated to deliver significant revenues in the final quarter of the financial year. In the event, only a third of these anticipated IaaS contracts were delivered. This has been reviewed and it is believed to be a direct result of the uncertain global economic environment rather than the quality and appeal of the offering.

As a result of these factors, the directors now expect to report revenue materially below that recorded last year. In addition, since a proportion of the revenue shortfall related to performance fees, which achieve a higher margin, the operating profitability will be significantly reduced from last year's level.

GEONG will also incur a non-recurring charge to profits of approximately £350,000 from the aborted acquisition during the financial year. Despite the significant revenue shortfall in the final quarter, the company had cash of £5.3m at 31 March 2012.

Notwithstanding the reduced profitability the Board remains confident of its business model and its potential. The company is still getting new IaaS clients in its core markets and new industries with two strategic partners, and has not lost any IaaS clients during the quarter.

Its business partner has not moved any business to the company's competitors and the SaaS business gained two new clients during the final quarter of the financial year. A total of 16 SaaS clients were gained during the year and negotiations are taking place with another five potential SaaS clients.

post 373 to all you mugs!

Shares in GEONG International (GNG) crashed by 2p to 5.75p after the firm warned that a number of its top 10 clients may be adversely affected by the economic slowdown in China. The business software developer, noted plans of moving the latest version of its SaaS service onto a cloud computing platform, with its main goal for the year being to maintain revenues at 2011 levels, while improving the sales mix. The firm added that it had net cash of 2.2 million pounds as at 31st August 2012.

GEONG International Limited

("GEONG" or "the Company")

£2.5 million convertible unsecured loan stock ("CULS")

The Company announces that payment of the interest amount due on 31 December
2012 under the CULS was late as a result of unexpected delays in the granting
of approval by the State Administration Of Foreign Exchange of China ("SAFE")
for the transfer of funds. Payment, which was still being processed on the due
date, was made on 15 January 2013.

As a result of the late payment which represents a default under the terms of
the CULS, the holders, Hanafin Investments Limited ("Hanafin"), have requested
immediate repayment of the CULS. Whilst the Company has adequate resources to
make the repayment it will not be able to secure the necessary approvals from
SAFE to do so in the short term. Accordingly, the Company is seeking to reach
an understanding with Hanafin as to an acceptable and achievable timetable for
the repayment.

The Company retained £3.9 million in cash at 31 December 2012.

not another crooked chinese company - well i never! .... post 373 (jan 2012) says it all