Geong released a trading update today... What is worrying are these phrases....
China's SME market, which is the prime target market of our SmartBox products ... did not see the continuation of rapid growth that was witnessedearlier in the financial year .....Finally, large corporations, with whom we work closely, began to demonstrate recessionary measures shortly after the Chinese New Year Holiday in mid February 2009.
This is pretty worrying for other vendors that target SMEs & larger companies with tech solutions such as RCG...
While I'm convinced that RCG will show growth for 2009, I think the impact is only just being felt by companies on the ground... i.e. the global recession has taken longer to reach China - but the impact may be only just now becoming apparent on the ground.
The market has generally discounted this macro reality though, and the stock market discounts the future - RCG shows good relative strength - it could be we've turned the corner... but seeing as GNG has had a 30% markdown this morning - failure is being punished severely.
At least Chu has never ramped guidance as high as Geong... and that is to shareholders benefit in the case of a shortfall.
