Software Circle Share Discussion Threads

[philjeans] 29/4/2008 09:51

Nice buy there for 50k.

Any more and we'll see another tick up - creeping but progress now seems assured.

[muxdapanza] 29/4/2008 09:42

Have you allowed for FX.
SFT reports in US $, convert to pounds and then see what you get.

[siwel100] 29/4/2008 08:50

£9 million in cash, p/e 4 , 3% maiden dividend, confirmation that the business is nicely on track with organic and aquisition growth targets. Diversified income from both Public and commercial sectors.
It may not have been a spectacular days trading for results yesterday but this one should be a nice slow burner. Even modest ambitions of a p/e 8 would put it back on 17p. As the rollout and income advances and gathers speed I would like to see it back through the 20p's by year end. Not being greedy, just realistic with an undervalued stock.

[igoe104] 28/4/2008 15:36

NICE to see the company on the acquistion hunt as well, lots of bargains in china for a company with cash in the bank.

(we have started to identify and evaluate potential acquisition
targets.)

[philjeans] 28/4/2008 13:10

Ticks all the boxes and a good appraisal in the mags this week seems very likely.

Lots of buys coming through and the MMs will mark it up again this afternoon.

[arthurly] 28/4/2008 12:30

Probably been a bit of stock left from Polars sales a few months back. Must nearly be gone now though.

[big fat mama] 28/4/2008 12:28

MOVEMENT !!

Okay baby ... here we go !!

[philjeans] 28/4/2008 12:12

Wondered why they were holding the price back - L2 anyone?

[igoe104] 28/4/2008 12:08

YES always good to see a director buy.
hopefully the company will kick on from now.

[arthurly] 28/4/2008 11:58

Mark Greaves (non exec) has purchased 150k today at 10.5p each.

[charlie] 28/4/2008 11:31

$3.7m is the comparable for $4.8m, not $1.35m

[siwel100] 28/4/2008 10:24

Arthurly....Horses for courses I think is the expression. Over the long term I prefer the legs on SFT, purely for the Government work. Although GNG has the potential to grow explosively on commercial work alone.

[philjeans] 28/4/2008 10:21

In fact, SFT would make a rather good fit with Geong, wouldn't it?

Going back to Rivaldo's point about Investment gains this year, I was reading the fifth line of the Financial Highlights section, right at the top of the results, where it clearly states "* Profit for the year up 29.4% to US$4.8M of which US$1.35M relates to profit on investment (2006: US$3.7M)".

Words and figures differ!

[arthurly] 28/4/2008 10:07

siwel - I think riv is used to a rather faster pace of growth than here - GNG will probably have gone from around 340 employees to close on 1,000 within two years !

[siwel100] 28/4/2008 09:42

rivaldo...Yep, but then again the share price was 23p last year as against 11p plus a Divi now. The company warned that the delay to rollout would affect income (although I must admit it was marginal to what I expected), they also now state in the results today that they have identified cause, addressed it and will be moving on to two new provinces. So going by the quality of their reporting, we should be seeing a profit jump at interims.
Increase in body count is one thing I dont mind with this one. The cost per head is minimal but it gives them critical mass and the ability to maintain current workload, develop new products and tender for ever larger contract work. In fact the sums work opposite to those in the West where body cost is so high. I would love to see them up at the 1,000 employees in 5 years time.

[rivaldo] 28/4/2008 09:26

Thx drewz.

Philjeans, you're wrong. Look at Note 3 - the "Gain on disposal of quoted securities" was $1.35m compared to only $228k in 2006.

Not only that, but "Government grants and rebates" of $354k were taken straight to profits, compared to Nil in 2006.

So 2007's trading performance was actually even worse. There were an extra $1.48m of one-offs in 2007 over 2006, so net profits without one-offs declined from $3.7m in 2006 to $3.3m in 2007.

I won't keep posting here, but the facts are as they stand above.

EDIT - the better comparison is probably that "Profit from operations" declined from $3.3m in 2006 to $3m in 2007 before one-offs - although in fairness R&D costs increased enormously.

[drewz] 28/4/2008 09:15

Good points made by both the above posts. Thank you, rivaldo and siwel.

[philjeans] 28/4/2008 09:12

Riv; profits from investment were far less than the previous year, in fact, and so the rise in underlying profits was real, not illusory!

Lots of buys this morning and I think it'll turn blue soon.

[siwel100] 28/4/2008 08:39

Drewz...It depends how you view it. The dividend now pays for the hold, while growth is funding the expansion. They are up to 170 people in the R&D development teams and getting to the point where they will be a fairly major government contractor as well as growing in the commercial sector both mainland and outside China.
The company itself has been trading now for 10 years so has good established credentials and contacts.
Personally I see SFT as a medium term strong growth stock so the Dividend is a real bonus. Its not often you are paid to hold such stocks.

rivaldo.....I take your point but once you subtract the cash pile its trading on a very meagre single digit p/e. As to accelerating the growth, well they are a very upfront company when it comes to explaining trading and I think they have been equally frustrated by the roll out, although they do indicate they now have it firmly under control. Yep all stocks are gambles on future results but its starting from a pretty paltry price and a long history of delivering profits. The gamble is actually on how fast they can ramp up profit growth from the fast expanding development teams. In todays uncertain markets, thats the kind of low risk gamble I can accept..:)

On a seperate note, the cost of employing talented Chinese programmers is startlingly cheap, will be interesting to see how the Indian software sector competes as companies like SFT start to pick up business Internationally. Its their stated intention and the drop to the bottom line would be very substantial.

[rivaldo] 28/4/2008 08:37

A few observations from a lurker if I may :o))

Clearly SFT is good value overall based on the Balance Sheet and being highly profitable to date, but no-one here's mentioned that without the one-off profit on sale of the investment, net profits were actually down on the year from $3.7m to $3.45m.

Will the share price sit/stagnate at these levels for a while yet until the company proves itself and /or the SAT project starts to come through? Or will it get tipped somewhere or the overall value get recognised by investors willing to gamble that the core profits reduction is a one-off and the profit uptrend will be resumed?

That's the gamble!

I like the company, but am willing to miss out on a rise as there remains a bit of risk here of money being tied up/a little further downside imho. Good luck to holders - the Balance Sheet is so strong that it seems to me it's probably just a matter of time and improved results/news flow.

[drewz] 28/4/2008 08:21

Rather disappointed that revenue growth has been so slow though. They clearly devoted a lot of time last year to work on SAT which hasn't yet been paid for (further R&D and programme modifications etc).

Let's hope the pace of sales penetration picks up sharply this year and next.

The small divi is a welcome gesture of confidence in the way revenues and profits should be going in months ahead, but a 0.3p payout isn't going to reel in any new investors on its own merits.

Solid progress but disappointingly slow on the SAT front, is my view.

[philjeans] 28/4/2008 08:13

Agreed MV; a little surprised they didn't make more of this.

Just so pleased there was no further delay to the SAT project - two more provinces coming on stream very soon and these should go more smoothly.

Cash rich; pays a dividend ; high margins; growing product lines and customers, and profits set to explode.

What a BUY for a share with an share price less than a third of this time last year1

[mathisvale] 28/4/2008 08:07

The dividend payout is to be $1m or about 3% yield on the current share price Not bad for starters.

[philjeans] 28/4/2008 07:45

SMASHING RESULTS!

All the numbers growing well - including cash, dividend and new provinces for the SAT roll-out!

Should go down well in EC3.

[siwel100] 28/4/2008 07:31

A nice upfront set of results. No weasel words just good solid growth and a nice statement of intent for further organic expansion and aquisition.
Major expansion of development capability which is essential in such a hot market, all self funded from profit growth and a nice maiden divi to top it all of.
I particularly like the twin threads of Government and Commercial contracts with this one. It provides income security as well as the growth potential.
A good long term chinese play.