Software Circle Share Discussion Threads

[siwel100] 20/8/2008 16:21

There are a number of positives with this one.
The first is the obvious fact that SFT is extremely under rated on fundamentals. Exclude the cash and this is on a silly p/e 2. Even given the state of the market it should be an easy p/e 6 which means a valuation of 15p to start. Put it on a modest p/e 10 and its back towards 20p.
The recession we are facing in the uk means continued devaluation against the Yuan is a racing certainty over the next 18months+. That means an exchange rate windfall increase in the £9 million cash and of course earnings. It makes all non uk earners a tremendous hedge against the £ and will attract premium ratings which should make a p/e 10 look under rated.
Lastly its the sheer growth potential of the company. Its not a new risky start up but has been trading for 10 years will an extremely strong profit history. The company has excellent govenment contacts both regionally and centrally which will assist it with driving the government contract business. They are also making huge strides in the commercial sector and with the very large bank balance are exceptionally well placed to fund both organic and aquisition driven growth. Delivery of that potential and you see software houses running up on p/e's 20, 50, 80....Its the nature of the business with their extremely high margins where growth drops in huge chunks to the bottom line.
Personally at the current prices I see it as one of the best "investment" opportunities amongst the China stocks and given the struggle uk earners are facing over the coming years, its one of the best investments on AIM, not many Divi payers like SFT in this category . The share price may have fell to silly levels, I dont think it will be down here for very long.
imo

[explorer88] 20/8/2008 11:11

good morning bardfield - i would agree with your analysis re. Ms Xin if this were a non-Chinese company. however there are other factors to consider in this instance which leads me to a different analysis.

i agree with philjeans and yourself that a re-rating is entirely justified on fundamentals.

[bardfield1] 20/8/2008 10:58

Xin Yinmei the CEO and founder effectively controls 60% of the shares, and there is no way she is going to sell her baby to anyone IMHO

I agree with philjeans that re-rating is entirely justified on the fundamentals.

[philjeans] 20/8/2008 08:27

I doubt there'll be any bid; but this is definitely mispriced for a highly profitable, cash rich, rapidly expanding, niche operator in the fastest growing region in the world!

It should be on a premium rating; it's on a "gonna go bust" rating!

Listed in Beijing or HK , it would actually be ten times the price here.

Lots of headroom here now for normal re-rating based on fundamentals rather than take over rumours; particularly so since it is beginning to attract some followers.

[butch9850] 20/8/2008 08:25

Fair value is 15p at least

[butch9850] 20/8/2008 08:24

We're on the up again, must be good news

[jailbird] 20/8/2008 07:31

maybe good news on the way

[explorer88] 19/8/2008 17:35

delayed buy of 188,975 shares at 10p

[igoe104] 19/8/2008 13:35

I can see where your going phil, but as we all know when they start rolling out the SAT roll-out in more provinces it will account for alot more than the 18%, it will eventually account for more than 50% of future revenues. thats why we are looking for positive news on the matter.

Don,t want this company to be taken over, because when they get rolling out their SAT tax software, this will go above the 50p.

[explorer88] 19/8/2008 11:15

delayed buy. 77,802 at 9p

[explorer88] 19/8/2008 10:31

fatfish - yes, you may even make a decent profit...:-)

[fatfish] 19/8/2008 10:26

has news leaked somewhere ?? ile be at break even if this carries on:)

[explorer88] 19/8/2008 09:02

morning pj

i'm expecting a little consolidation shortly. i don't expect that, even with CP pressure, Ms Xin will sell SFT for less than 18-20p

[philjeans] 18/8/2008 16:53

I hold and add when I can; too much was made of the delay in the SAT programmes in my opinion - they only contribute 18% revenues and they can grow very successfully even with out that part of the business, if all else fails.

As it is, I fully expect the next RNS to confirm that they are working away at new provinces now and we are in for ANOTHER BUMPER YEAR!

[siwel100] 18/8/2008 16:22

I very much doubt there is any bid for SFT, its simply extremely cheap with a high margin profitable business priced at thrupence over cash. Add in the growth potential and nice divi and perhaps not suprising to see it start to attract attention.
Certainly the Olympic games are doing no harm. Its a very tangible expression of a hugely succesful, well organised and increasing rich country turning itself into a superpower. It just highlights the immense potential for cash rich and profitable Chinese companies like SFT.
imo

[explorer88] 18/8/2008 16:21

100,000 purchased at 7.5p

[jailbird] 18/8/2008 16:04

cesg,...just got it.

[explorer88] 18/8/2008 16:03

cesg thread

[jailbird] 18/8/2008 16:02

elsewhere, so where it that?

[explorer88] 18/8/2008 16:01

jailbird. fwiw, we're talking elsewhere about an agreed bid for SFT (by CESG)

[jailbird] 18/8/2008 15:59

i think results or maybe an update must be due very soon.

[jailbird] 18/8/2008 15:58

about time...

i see chinese stocks are being tipped to do well even post olympics.

GNG,RCG and SFT should do well if that is the case.

[explorer88] 18/8/2008 15:44

Art - yes, i think SFT is the bid target.

i've no idea what Ms Xin will sell for though. any thoughts?

(edit: personally, i can't see it being less than the placing price of 19p; especially bearing in mind that SFT's current net assets - mostly cash - are in excess of current market cap).

[fatfish] 14/8/2008 16:50

you certainly are a "a" before the m
lol

[jailbird] 14/8/2008 14:26

arthurly,

am i correct in thinking they had approx £9M/$18M is cash as at 30dec2007.

ridiculous price at the moment.

cash rich and profitable...m i missing someting?