Enterprise software provider set to grow
Keep an eye on enterprise software provider Geong (GNG), whose shares have unjustifiably languished, compared to some of its peers over the last year:
The company, which provides Infrastructure as a Service (IaaS) and Software as a Service (SaaS) primarily in South East Asia and China, issued a strong trading statement at the end of February.
It stated that it has made a satisfactory 'outturn' for the full year to 31 March 2011 and believes it has increased its cash balance from £4 million to £5 million.
The SaaS business has been developing very well while its relationships with Oracle and IBM has helped the company secure RMB 35 (£3.3 million) worth of new contracts in the last two months.
The other positive aspect towards a shift towards SaaS is that it allows for shorter payment terms with its clients, which in turn will help with Geong's cash flow.
The company only has a market cap of £12.9 million. If you strip out the cash and apply the earnings it made last year, it trades on a price to earnings ratio of just four.
If you take into account that Geong has consistently increased its earnings by double-digits year-on-year over the last six years, then I believe it is just a question of time before a medium sized company that wants a greater presence in China snaps them up.
Geong is scheduled to provide a pre-close trading update on 18 May.
Update
GTL Resources (GTL) – suggested to buy at 88.5p, the stock closed at 86.5p yesterday. Keep holding as we await further developments.
Avanti (AVN) – suggested to buy at 454p, the stock closed at 439p. Continue to hold for now.
Globo (GBO) – suggested as a buy at 17.25p, the stock closed yesterday at 23.875p. Continue to hold as we await results on 19 April.
Optare (OPE) – tipped as a buy at 3p, the stock closed yesterday at 2.75p: hold for now, especially after winning another contract last week worth £1.6 million.
Rheochem (RHEP) - tipped as a buy at 15.13p the stock closed at 14.75p. Keep holding for now.
Evolution Group (EVG) – tipped as a buy at 78.5p the stock closed yesterday at 76.5p. Keep the stop based on a close below 70p.
OMG (OMG) – tipped as a buy at 43.75p, the stock closed yesterday at 39.5p. On Monday it revealed it is launching a new service-as-a-software for its highways division Yotta, which should hopefully attract more users to its service. The company is likely to release a trading statement around 27 April.
ZincOx (ZOX) – tipped as a buy at 60p, the stock closed at 50.5p. Continue to hold as the company trades at the same level of cash it has in the bank and attributes no value towards its flagship South Korean project.
Pendragon (PDG) - tipped as a buy at 23p - it closed at 22.5p. Continue to hold and keep the stop based on a close below 20p.
Cyan Holdings (CYAN) – suggested to buy at 1.325p, the stock closed at 1p. The company announced two new deals on Monday relating to lighting controls. Continue to hold but if it closes below 0.8p, cut the position.
GB Group (GBG) – suggested to buy at 36.75p, the stock closed yesterday at 35.75p.The stock seems to finding a base: in the meantime watch out for a trading statement circa 18 April. Keep the stop based on a close below 32p
SocialGo (SGO) – suggested to buy at 3.55p, the shares closed yesterday at 2.175p. Nothing more to report apart from the disappointing share price performance. We have been buying at these levels recently. Otherwise sit tight for now.
EMED (EMED) – suggested to buy at 12.25p, the stock closed yesterday at 16.625p. Continue to hold as we await mining permits and the company to reinvigorate its copper concentrator before production starts.
Active Energy (AEG) – suggested to buy at 6.13p, the stock closed yesterday at 2.5p. The stock has been the worst performance to date. Although appalled by the performance, at £2.8 million the company looks over-sold but still I am disappointed by the lack of accountability from the company for the fall in its price.
Edenville (EDL) – mentioned as a buy at 1.195p, the stock closed yesterday at 1.51p. Having already suggested to sell one's investment stake out at 2.51p, the shares should at some stage start finding traction given the appeal for investing in coal now that uranium as a commodity is firmly out of favour. Continue to hold.
Weatherly International (WTI) – suggested to buy at 8.1p, the shares closed yesterday at 13.375p. Continue to hold and buy on any significant weakness.
Toumaz Holdings (TMZ) – tipped as a buy at 8.625p, the stock closed at 7.25p. Continue to hold as the company addresses some time and cost saving technology as well as making life much easier for patients with wireless nodules contained in the plasters it provides.
Renewable Holdings (REH)– tipped as a buy idea at 16.25p, it closed yesterday at 15.25p. The stock may ultimately benefit from the recent detractions of nuclear energy while its discount to its Net Asset Value will appeal to investors looking for a safer haven. Hold for now
Bowleven (BLVN) – tipped as a buy at 177.25p, the stock closed at 346.5p yesterday after already suggesting to sell half the investment after it doubled several months back.
Tissue Regenix (TRX) – suggested as a buy at 16p, the stock has picked up from its lows and is now trading at 11.375p. Sit tight for now.
The material for this report comes from Sharescope. The writer does not hold any shares or derivatives in the above mentioned companies except EMED, Globo, SocialGo and Weatherly International. Some clients of Optiva Securities may hold shares in the above named mentioned companies.
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