$8.00
0.03 (+0.38%)
Yucheng Technologies Limited (YTEC)
CAPS Rating:
The Company provides Intellectual Technology solutions and services to the banking industry in China.
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Yucheng Technologies isn't as Yuck'ie as the name implies! It's a small cap technology company, primarily servicing banks. Banks in China are on a growth spurt as the Chinese populace starts to receive reasonable wages for their hard work. The rising GDP is helping to form a middle class and the banks are seeing an increase in all phases of computer needs from software, networking, internet banking to database management. It has also been gaining ground at smaller rural banks. Founded in 1999 it services many of the state run banks that are adding branches at a rapid rate. Though small, with it's 12% margins, P/B of 2, and positive cash flow, it stands to gain market share in a growing industry in China. Revenue has doubled year over year the last two years.
Why do you feel then the insiders n institutions sold out?Your evaluation seems very intelligent , could you take a look at chnr for me and tell me what u think as well because that one is rated one star and id personally call it to out perform.Maybe im missing something.thanks!!
China has been a give and take market this past year. I believe investors are looking for "instant" or large percentage growth. In the banking industry there is also a sense that the "state" is in control.While that is true in larger banks, it is not as true in the smaller and midsize banks where Yucheng operates, Although the STATE does control lending and other services, they aren't going to be concerned with which software a bank uses. Concerning the growth rate, Yucheng is at a "difficult" point. Its incremental revenue is being used to grow the company and the sales. AS such, while it's Year over year revenue grew 42%, it's EPS per share only grew 0.01. They were also not cash flow positive last year. I think investors are going to treat Chinese, (or other foreign companies) with a what did you do for me today mentality. Yucheng should be fine long term. I typically find that when I make an UP call on caps that if I go negative for awhile then it might be time to reevalate and consider real money. The Chinese companies won't continue growing this fast much longer and investors will circle back around to the companies that have a longer term perspective. (I hope!).
CHNR's cost of revenue is the same as it's total revenue leaving it ZERO profit no matter how fast it grows it's revenue. IN other words, unlike Yucheng it has negative margins, is burning through cash, and has survived the last two years by issuing stock. Two of it's projects are still under develpment, (the coal mine and exploratory metal mines). Unless it gets it's iron/zinc/smeltering cash postive it will need to issue more stock to bring any of it's other operations to production. Companies that involve exploratory mining, are cash negative, but have business operations in progress are hard to value. It comes down to whether management has a good business plan, funding, and can deliver. Anytime there will be a need to raise additional capital to be successful you will find that investor (caps or otherwise) interest is limited to those who are willing to invest at higher risk. This is a quick read. One should look at the quarterly reports, annual reports and do extensive research before investing in a company with this type of business mode. Good luck.