So the market cap of Geong is £11m at these levels. The GBP is crashing against most currencies putting foreign currency earning companies into the spotlight. GNG is no exception... with 6.5p forecast eps for 2008-2009 without the latest falls in the pound taken into account Geong was already getting cheap, but now we could be looking at a 15% kicker to earnings just from currency translation effects.
Geong is not as cheap as some Asian AIM listed companies, but it has an extremely strong blue chip client base (Air China, Sony, Hitachi, Adidas, Lenovo, Volkswagen, Shanghai Telecom, Dell amongst others) and a large proportion (40-50%) recurring revenues.
There are 2 main products in the business... the bespoke 'Portal Age' CMS software used by most the biggest banks and securities firms in China, and the SmartBox CMS range for small and mid sized companies providing an out of the box solution. This is seen as a major growth driver currently being marketed to several hundred thousand small and medium sized enterprises (SMEs) in the Shanghai area alone, although the recent pre-interim statement indicated that SmartBox sales are slowing due to the general business downturn. International sales are also being pursued with editions in English.
There are some significant contracts being won with their larger clients with Lenovo especially, and it looks a very durable business model, with many small cap investors hushing the tones of ' another Sage' perhaps rather dreamily.
But Geong certainly remains a high quality company, starting from a very small base... Elephants don't gallop, and GNG is beginning to compound it's sales growth rather impressively. The directors have been buying significant chunks of shares lately, and the results are to be inline with expectations for the 6 months to September.
I thought i'd start a space for us to discuss GNG's prospects... contributions are welcome from all.
