Ft Cesg Discussion Threads

[longsight] 24/11/2008 08:55

Regrettable that the results are disappointing. They still have a healthy cash pile though but obviously cash flow & turnover / net profits have come in lower than hoped for. I think CESG is a hi quality business though I was slightly concerned by the acquisitions - unclear whether they have made worthwhile contributions or otherwise [apologies - yet to read Results fully]. Clearly, the Chinese gov's interference in the oil marketr has distorting impacts on CESG's main source of work & I am a bit unclear about how the declining oil price impacts on Sinopec etc. Long term, I think CESG's hi end skills shd ensure great growth potential. Sinopec & the oil industry shd recover strongly when the world's economy recovers. Interested in all your views on this [I keep them on my watchlist & will endeavour to read the Results more carefully asap]

[arthurly] 24/11/2008 08:26

GHF - hopefully most will come into H2 ? I think it's due to provide around £5m Revenue a year when fully up to speed.

[glasshalfull] 24/11/2008 07:54

Not the case Art. £1.5m for the current year.

Following response from David Tsui in reply to several queries;

"Due to the adverse economic factors, many individual projects have been deferred. But the total revenue be generated from this big project be around 1.5M GBP for this fiscal year."

Regards,
GHF

[arthurly] 24/11/2008 07:43

Looks like the big contract with Sinopec has been postponed by a year too.

[proselenes] 24/11/2008 04:23

Where has the Chinese ramper "GlassHalfFull" gone ?

[allstar117] 23/11/2008 11:12

Yes, worth buying now but we can fill our boots at 5p if we are lucky enough to get there :) This presently looks better value than Geong and I didn't think i'd find myself saying that.

[arthurly] 23/11/2008 10:35

I think that if they have the same amount of cash now as at the end of February, it translates to around £5.7m ! ie similar to the market cap.

[philjeans] 23/11/2008 09:21

and the cash - don't forget the cash!

£4M at the last report!

Bargain or superb once in a lifetime bargain?

[allstar117] 23/11/2008 00:12

Not sure the price will stay this low for long, ive started buying at these levels for the first time and will top up if we go lower as that would be ridiculous given a market cap of £5.76m with pre tax profits of £3.02m to Feb '08....laughable considering China will be out of the recession long before the UK and less affected by it. Happy days at 8p a share without needing a return for years ahead.

People who refer to posts such as Arthurly's as ramps tend to be so poor through their previous LEAD bomb investments that they are unable to invest for the long term and are therefore filtered ;)

[arthurly] 21/11/2008 11:25

Providing information (largely to current shareholders who may not have been on their website recently)is not the same as 'ramping'. If someone buys or doesn't buy a few shares in current market conditions it matters not a jot. I quite expect the share price to be languishing for a very long time to come.

[proselenes] 21/11/2008 11:01

My word, still some people trying to ramp this ?

[arthurly] 21/11/2008 10:58

On their website - Schneider Electric has £11 billion sales worldwide and 110,000 employees + in 150 countries. Could be considerable outsourcing work in Asia-Pacific region for CESG ?


11 November 2008



IT Outsourcing agreement with Schneider Electric

Beijing Huashen Huizheng System Engineering Technology Ltd. has undertaken many E-Workflow technology service projects for Schneider Electric China Investment Ltd. in recent years. We have provided efficient and timely technology service and that guaranteed the stable running of its system. The Company has made intensive discussion with Schneider Electric recently on how we can improve the service in its information construction in order to implement technology resources sharing, increase efficiency of technology service and provide better and sustained service to its operation department. The Company entered into an IT service outsourcing agreement finally. According to the agreement, BHH was engaged by Schneider Electric as the technology service provider for all of its management software, excluding SAP and desktop support, to provide system requirement analysis and technology services including development, support, and running maintenance.


The cooperation is an intensive technology service cooperation between BHH and foreign invested enterprise based on own software products. It has implemented the new model of "Self software products + outsourcing technology service". It will help BHH to become to the technology service cooperation partner of Schneider Electric in its Asia Pacific area and global, and also will be a prestige reference and experience for BHH in developing further business of foreign enterprise management software.

[proselenes] 13/11/2008 07:43

Impact of financial crisis on China 'worse than expected': Wen

2 hrs 47 mins ago AFP/File –

Chinese Premier Wen Jiabao at a press conference in Beijing. Wen Jiabao has said the effect of the global ... BEIJING (AFP) –

China's Premier Wen Jiabao said the effect of the global financial meltdown on the country was "worse than expected," state media said Thursday, in a sign of growing concern at the impact of the crisis.

Wen was quoted as making the assessment by the director of the National Bureau of Statistics Ma Jiantang when he briefed his staff on Tuesday, according to the website of the bureau's newspaper China Information News.

"The impact of the global financial crisis on the Chinese economy is much worse than many had expected," Ma said according to the website, passing on remarks made by Wen.

China initially said the global financial crisis would not cause too much harm to its economy, but in recent days the signals from Beijing have changed markedly.

Wen's comment comes after the Chinese government unveiled a four trillion yuan (586 billion dollars) economic stimulus plan on Sunday aimed at boosting domestic consumer demand in the face of flagging exports.

[masurenguy] 11/11/2008 18:30

"Arthurly - 1 Nov'08 - 13:30 - 471 of 472: There may be a bit of a lull in y/e 28 Feb 09 but following that I just cannot see how they can fail to earn £3m + a year even if China went into a severe recession (which it won't). And as you say, valued at less than net current assets now."

Looks as though they may have bottomed out at around 9p. With 72m shares in issue that gives them a market cap of circa £6.5m and a current PE of less than 3. Been on my Watchlist for awhile now and it is begining to look like a tempting opportunity in the new year if it does not fall any further.

CESG Fundamentals
YEnding £Revenue £PT EPS
28-Feb-07 8.79 2.23 3.35p
29-Feb-08 10.81 3.02 4.93p

YEnding £Revenue £PT EPS P/E
28-Feb-09 9.30 2.40 3.40p 2.7
28-Feb-10 14.00 4.30 6.20p 1.5

[proselenes] 03/11/2008 07:36

Worth a read for background China info/opinon going forward :



.

[arthurly] 01/11/2008 13:30

Explorer - there are a lot of very undervalued companies on AIM but this appears to be idiotic imho. No-one seems to be taking into account the fact that they should soon be doing something like £5-£6m a year sales for the next 5 years with ZRCC/Sinopec re their new facility. Add another £1m maintenance say re ZRCC and Sinopec (there's a 25 year agreement in place) + £1m a year for the next 3 years re District Government of Ningbo City - and you've got as much as £7m guaranteed income before anything else. There may be a bit of a lull in y/e 28 Feb 09 but following that I just cannot see how they can fail to earn £3m + a year even if China went into a severe recession (which it won't).

And as you say, valued at less than net current assets now. There'll be others on AIM valued like that at the moment but very few (if any) with virtually guaranteed reasonable profits for years ahead. This is being valued as if it has lost the long term contracts with ZRCC/Sinopec.

[explorer88] 30/10/2008 09:46

re-invested in CESG today.

15,000 @ 9.8p

pe this year of about 2.5 (based on eps of 3.5p)

imo, looks excellent value for the medium/long term

when market conditions improve we should see CESG re-rated to at least pe of 10 which, with prospective eps next year of, say, 5p; and 7p the year after would see the share price re-rated to 50p, then 70p, on a one / two year time frame.

edit: CESG now have a m/c £2m below net current assets ...:-)

[proselenes] 28/10/2008 01:47

The following broker's report was posted by the team at FT Alphaville. If true, growth prospects in China are very much less than are assumed in most people's global economic forecasting models:


"Our resources analysts have recently been touring China and have been talking to a wide range of companies, consultants, users etc. They have returned with a very bleak picture of the Chinese economy, even gloomier than the bearish picture being painted at the moment in the market. The picture can be extended to other sectors of the Chinese economy and will have a regional impact, especially on Australia resource companies. Highlights are:

1. There is a very surprising negative rate of change in the economy being openly vocalised by corporates and other market participants. A significant number of factories are shutting down. These are shutting down due to a collapse in overseas demand as global consumers scale back spending.

2. Trade flow is locking up rapidly - letters of credit and 90-day commercial paper are no longer being accepted or transacted. Companies are resorting to 30 and 60 day paper putting further pressure on working capital. Letters of credit not being honoured beyond 3m will be a key hurdle for foreign traders who have 1-year contracts. Liquidity pressures are being seen in 60-day paper and this is expected to seize up soon.

3. There is a significant collapse in demand with end products not being able to be sold - domestic coastal coal shipments for example have declined by 30% in the past 3 months.

4. All copper smelters are losing money at current prices but demand from power companies remains stable for now. Further closures are expected at zinc smelters, with 85% of smelters thinking prices will continue to fall. A senior advisor to CISA has just said that the steel industry faces a "costs crisis" as material costs exceed falling prices.

5. The property market has significantly slowed, and companies are now pinning hopes on infrastructure projects. Property prices are down at least 20% in the past few weeks, with 30-40% falls in some areas. Demand for cement, aluminuim, copper, zinc, steel, iron ore and coal have already weakened.

6. For some companies, preservation of capital will be key. Our analysts believe that there are significant risks of survival in the commodities sector.

7. Consensus amongst Chinese corporates is that they are banking on a recovery in 2H09, but in the meantime they expect a significant contraction for the remainder of this year and the first half of next year. The single biggest risk they see is an extended OECD recession post 1H09 and incremental changes to China policies.

There are great hopes being pinned on the Chinese Government to help the economy. Preservation of capital is likely to be crucial over the next
18-24 months - we expect significantly more difficult conditions ahead.

Things are bad and rapidly getting worse - there is no sign that this market is about to form a base any time soon."

SOURCE:

[666_trader] 26/10/2008 11:03

poor arthurly, mug punter every chinese dog shares is a 100 bagger for him.

[stegrego] 20/10/2008 14:17

AIM lists this share as having 5 MMs - yet it currently only has 2, giving a ridiculous spread of 10.5-13 (currently sell 10.75 buy 12.99).

Where all the MMs go?

[arthurly] 14/10/2008 18:32

Thanks Orbit. I think that once that starts they should be back on track.

[0rb1t] 14/10/2008 18:29

Hi Arthurly, no I forgot to ask that but share price are predicting a doubling of profit for next year so maybe it has been delayed to possibly starting in H2 or next year. I would have thought that the majority of the work would be done in the first 3 years though.

[arthurly] 14/10/2008 13:38

Hi Orbit - I suppose they didn't say when the work re the Sinopec ethylene plant would start ? It was supposed to start this year and be around £5m turnover a year for 5 years I believe.

[0rb1t] 13/10/2008 11:57

Hi all, I spoke to the company last week. They were keen to reassure investors that they have not lost any of their key customers. There have been a lot of distractions for government and companies this year such as the earthquake and Olympics so it is not supprising that the first half was going to be weak. Also it looks like Seymour Pierce were given guidence by the company to ensure that they wont disappoint the market again.

The contract with ZRCC for another 17 years provides some visability of future earnings.

The number of sales as a result of the profit downgrade and current market has been quite small (only a few 10,000s of shares). It does show how illiquid this company is by the impact in the share price.

The long-term prospects for the company are still good and they are still looking at providing offshore outsourcing opportunities.