Ft Cesg Discussion Threads

[don muang] 24/7/2009 13:32

... and I'm still holding .... would be nice to see the bid price in double figures again before too long ....

[0rb1t] 24/7/2009 13:04

Hi pec, it doesn't look like it;) But there has been someone buying in 20,000 lots recently which has pushed the price up.

[pec2004] 24/7/2009 12:57

Very quiet on here, I take it there are not many holders on Advfn.

[0rb1t] 26/6/2009 08:19

Highlights from the Perlims:

"...opportunities and business environment in our IT outsourcing sectors have been improved substantially in the last three months comparing to the first half of this year. We anticipate the business to perform better than last financial year. The management team are committed and have full confidence in the long term future prospects of the Group."

"Acquisition of a Japanese company since the end of the financial year with expertise in developing the 'All in one card business' for the group". First we have heard of this. Shows that they are entering the Japanese market where margins should be greater.

The results are obviously disappointing but at least the Sinopec contract has kept the business ticking over. This means they are in a good position when the economy does pick up.

Sinopec are expanding so this might lead to more work:

Addax deal to take Sinopec into Iraq

[longsight] 12/6/2009 18:18

I am a long term follower of CESG & really find the TU very disappointing though expected. Given the apparently glowing prospects for the business, can't really fathom why it has performed so poorly & the absence of profit. That of course is before one even considers the ghastly cash flow.

There is real quality in CESG's business in terms of the specialist software services they provide as well as the sectors they operate in - so very disappointing that they shd fail to perform. I know I warned about the cash flow & also the intelligence of some of their acquisitions - which had even worse cash flow - but to be honest I did not anticipate such a poor outcome. I hope CESG get their act together - they really shd. I haven't given up hope on them & wd buy if they showed that business was on track & fulfilling the promise at the time of flotation.

[0rb1t] 12/6/2009 13:00

Trading update released. Effectively a small loss then. I guess it now depends on the current trading and outlook statement (not long to wait).

Looks like the Finance Director actually got pushed then.

[0rb1t] 06/6/2009 10:11

Up-to-date indepth presentation giving the status of the Chinese Software industry:


New Steps of China's Software Industry.
October 28, 2008 – IPA Forum, Tokyo

How this relates to China Eastsea:

Ningbo (CESG main location - 4 offices) - Ningbo has just been established (2007) as the newest National Science & Technology Industrial Park (STIP)in China (54th).
Beijing/Hangzhou - These offices are located in one of the 11 State Software Industry Bases
Zhengzhou – China is planning to build 10 Base Cities of Service
Outsourcing within 3-5 years (including Zhengzhou, there are currently 16 cities)

[0rb1t] 06/6/2009 10:07

Guidelines of the Eleventh Five-Year Plan for National Economic and Social Development (Full Text)

［ Date:2007-4-18

3、MOC launched the "10+100+1000 Project"
The Ministry of Commercial will contribute to improve policies and regulations concerning service trade, to implement a brand strategy and to foster leading service trade enterprises. It will also take a positive attitude in developing outsourcing service.
To promote the development of China's outsourcing services the Ministry of Commerce has launched the "10+100+1000 Project". During, the 11th Five-year Plan period, China will select 10 cities to become internationally competitive outsourcing bases. It aims to attract 100 world-renowned multinational companies to outsource various services to China, handled by 1,000 outsourcing service enterprises. With the value of services increasing, China aims to quadruple its outsourcing services exports in 2010 based on 2005 levels.
6、Chinese government will invest 100 million yuan (US$12.5 million) annually to support outsource service firms
BEIJING, June 28 -- The government will invest 100 million yuan (US$12.5 million) annually in the next three to five years to support outsource service firms, the Ministry of Commerce said yesterday on its Website.
The Ministry of Commerce will launch a project with an annual budget of at least 100 million yuan (US$12.5 million), to set up 10 bases for service outsourcing over the coming three to five years.

[0rb1t] 06/6/2009 10:05

Good article showing trend of Japanese outsourcing to China:

China becomes Japan's biggest software outsourcing base

DALIAN, April 12 (2007?)-- China's growing software outsourcing trade with Japan is expected to rise even faster after Premier Wen Jiabao's "ice-melting" visit to Japan.

"China accounted for more than 60 percent of Japan's outsourced software trade in 2006 and has become the country's biggest software outsourcing base," said Mine Shentaro, of the Japan External Trade Organization based in Dalian, northeast China's Liaoning Province.

Dalian Hi-Think Computer Technologies (DHC) Co. Ltd is one of China's leading software outsourcing firms. Manager Liu Jun is proud of its big-name customers, including technology giants Hitachi, Sony, Mitsubishi and NEC.

"DHC started outsourcing computer software from Japan in 1996, a time when Sino-Japanese relations were at low ebb. Political hindrances have not impeded our business," said Liu.

DHC's business with Japan has grown 30 percent annually since 1996 and now employs 2,000 people. Last year, the company exported software worth 50 million U.S. dollars to Japan.

"More than 60 percent of China's software trade is Japan-oriented," said Jin Guowei, deputy director of Dalian Information Technology Bureau.

Dalian, a Japanese colony for 40 years before the end of World War II, became the outsourcing center of information technology to Japan due to its geographical proximity and its skilled labor force.

The city's software industry sales last year set a new record at 10 billion yuan (1.23 billion U.S. dollars), maintaining a 60 percent annual rise in the past six years.

Of the sales, processing outsourced software contributed 3.7 billion yuan (456 million U.S. dollars), of which at least 80 percent was for Japanese companies.

The city has 20,000 people working in the software-outsourcing sector and 70 percent of them speak Japanese.

According to a government plan for the development of software and information services, China aims to generate 168 billion U.S. dollars from the software sector and export 12.5 billion U.S. dollars worth of software services in 2010.

Jin is confident in the future. "With the improvement of bilateral ties, I believe the industry will become more prosperous."

"The friendship between China and Japan is an irreversible trend. Premier Wen Jiabao's visit to Japan is good for the two countries. I hope after the visit more Japanese can put away misgivings and start cooperating with Chinese firms in the software industry. It will be a win-win solution." said Jin.

"While European and American companies are choosing India as an outsourcing base, Japanese firms prefer China because we are close neighbors and have similar cultural backgrounds." said Noshiro Yasuo, president of Fujitsu System Engineeering Co., Ltd in northwest China's Xi'an.

"Premier Wen's visit to Japan will give us more confidence to expand our business in China," he added.

[0rb1t] 04/6/2009 23:03

Hi GHF,

I was also disappointed that David Tsui had left the company. He was helpful in providing information about the company. But maybe it was more a cost cutting exercise. The company needed his Western experience to transfer their listing to the AIM market.

The directors tookup over 5,000,000 options at the end of December for an average price of about 11p. So the directors must be reasonably confident in the future of the company.

There has been plenty of news stories on the Chinese website but unfortunately some of these didn't appear on the english version or as RNSs.

I am not expecting that good results this year as they have had several factors impacting the business (earthquake, olympics, high oil price and then credit crisis). But they are expected to make 0.9p EPS and there has been no TU to the contary. The company also has half it's market cap in cash and the current assets are equivalent to the whole market cap.

The problem if you sell any is that it is difficult to buy back in again because of the poor liquidity.

The company's plan to move into Japanese Outsourcing seems a good strategic move. This should be a lot more lucrative then providing outsourcing services on the mainland.

[glasshalfull] 04/6/2009 20:39

Yep, shareprice cheap but there are alarm bells ringing on this one for me. I have no evidence, just a hunch, and hope I'm proved wrong when the company do eventually communicate with investors. Certainly the recent contract announcements do suggest things may be turning.

I had been in contact with David Tsui who was CFO & FD with the company. He even went to the trouble of contacting me when the company visited the UK last year and we had a productive half hour chat. He discussed the business in depth but although I cannot remember the specific questioning (I may have posted further information on the thread at the time) he could not confirm certain contracts that I anticipated and was attempting to establish size/timing, etc. It resulted me selling half of my holding at the time...at a loss but thankfully did so prior to the profit warning.
Of course I took an even bigger hit on the remainder as I exited completely.

So, on my watchlist and as I say I had continued to communicate with David prior to his resignation. Indeed, I wished him all the best and asked what his plans were following the surprising news. His response concerned me though as he basically indicated that he could not divulge why he had left the company and through further communication got a bad feeling. Entirely my own opinion, I have no evidence and certainly not suggesting any impropriety.

I am also surprised that the company have failed to communicate with the market for over 6 months now. Surely they owe it to investors to at least provide some sort of update.

Good luck those that stick with it or indeed invest at these levels. I'm certainly not bitter at making a loss on this one and do think it's fundamentals do indicate that it is extremely cheap but the Corporate Governance and lack of newsflow means that I would rather miss out, even if it does turn into a multi-bagger.

Have to say that longsight did post his concerns at the time and was vindicated. I certainly hope I'm barking up the wrong tree. Hope it works out well for you.

Kind regards,
GHF

[explorer88] 04/6/2009 14:42

bought a few CESG recently ahead of results

[0rb1t] 01/6/2009 08:32

Hi Arthurly, probably to save the 150GBP for each RNS ;) They are not winning much business from the West yet so they probably do not deem it that important.

The most recent story that holds the most potential is the fact that they have now opened a Sales Office in Tokjo. CESG have been involved in a training acadamy in Ningbo skilling IT staff with Japanese. Apparently the dialect in the Ningbo area is similar to Japanese. I would guess that the Japanese IT Outsourcing market is less mature and less competitive than in the West (where they would be competing against the likes of Wipro and TCS). I wouldn't be supprised if we get our first outsourcing contract from Japan soon.

[arthurly] 01/6/2009 07:54

I notice that CESG could have RNS'd 3 or 4 bits of news/contracts in the last 6 months or so, but haven't done so. Wonder why ?

[pakomacha] 30/5/2009 05:17

Should have their annual results by end July (maybe end June)

[rivaldo] 26/5/2009 08:45

News - CESG win a £1m contract, as announced today on their web site but not (yet?) on RNS:



"26 May 2009

Ningbo Eastsea Lanfan signed important project contract with Sinopec Subsidiary of East China

Ningbo Eastsea Lanfan Technology Ltd. won the bid for East China refined oil tube net control center WAN, exchange administration and dispatching telephone, meeting TV system procurement project and signed the project contract with Sinopec Sales Ltd East China Subsidiary on May 18th, 2009.

Ningbo Eastsea Lanfan will fully utilize its own experience and technology strength in information construction field of petrochemical industry and will successfully complete the work required by user such as hardware, software, accessories and tools, technology resources, delivery and installation, training, debugging and after-sale service. This project is an important one since Ningbo Eastsea Lanfan keeping long-term cooperation with Sinopec. The contract value is higher than RMB 10 million. Ningbo Eastsea Lanfan will certainly provide high quality services to Sinopec and make a contribution to higher level of information construction of Sinopec."

[0rb1t] 01/5/2009 12:37

It also looks like CESG have been providing the real-time control systems for the increase in China's strategic oil reserves (from their website).

[arthurly] 01/5/2009 11:37

I think the big question here is whether the big Sinopec contract is now up to full speed, riv. From memory it should be turning over about £6m per annum for about 4 years. If it is, (for 2009/2010), they should do well if they can also pick up a few more contracts as the Chinese economy comes back to life. I don't expect much from y/e 28/2/09 though.

[rivaldo] 01/5/2009 11:19

Crikey, even this is rebounding now.

Latest forecasts

2009 2010
Date Rec Pre-tax (£) EPS (p) Pre-tax (£) EPS (p)
Seymour Pierce
24-04-09 HOLD 0.70 0.90 2.10 2.60

It's a pretty recent forecast too, only a few days old. If 2.6p EPS to Feb'10 is achieved then the current price is pretty cheap. I've been buying just a few back, but only as a complete punt at this stage given the complete lack of forward visibility.

The backstop of course is the £3.3m net cash against the £7m m/cap, together with the £4.7m excess of debtors and the £11.8m of NAV in total.

I'm prepared for this punt to go wrong!

[longsight] 22/4/2009 12:38

Regrettable that this thread has died out. I still remain interested in CESG. I am disappointed that CESG gave no trading update prior to the end of FY i.e. 28 Feb 09. In any case, FY Results will be out soon & I am intruiged to see if the business is back on track. If so, there is a lot of quality in the business at a very lo share price

[allstar117] 23/1/2009 10:41

All quiet in here, no post for a week!