Yucheng Technologies Limited (YTEC)

undervalued.

traffic picking up no real loss of growth in asia

Playing an exaggerated post-earnings dip here. This company is probably a bit overrated at the moment but is a pretty solid buy near $7.50 or below.

Low relative PE, good star ranking, PEG & 09 PE still below normal - bottom fishing 8/10.

Motley 5 star movers

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.

This company recently revised its 2008 estimates upwards to about $100 million. That puts it ahead of its major competitor, Longtop (LFT). The Point of Sale segment only generates about 3% of revenue, but they are quite successful with their consulting and software. They work with all sizes of banks. Their ASP project (application software provider--they provide the software which runs on, in this case, a third party's server) has five clients, and this is quite scalable. They're getting out of the hardware business, which increases sales but doesn't have high margins.

Their own estimates of growth are about 30% for next year. They have a good position and an apparently good reputation in China. I believe China's banking industry will spend heavily on beefing up their internal systems. If that spending starts to swing to e-banking and call centers, where YTEC is the leading provider, this stock could benefit substantially.

Like SDTH, I'm going long on this one. While it's not trading anywhere close to its 52-week low, low debt and increasing profits in a hot sector (IT solutions for the Chinese banking industry) make this a good pick as long as it can maintain this growth. The big question remains whether the Chinese financial system can sustain growth amidst a global (and now domestic) economic downturn.

P/E 17% Going forward 15%

Sales growth 50%

Income growth 70%

Net profit 15%

Low debt.

Excellent pick. You can go long here.

Real earnings
Building out a Visa/ Mastercard type business plan
No credit risk

Ride the Wave....

I see growth to cont to be profitable under all market conditions for YTEC's IT development and POS growth. They may miss upcoming earnings due to POS growth (which will take ~2yrs to see a ROI) in which case hopefully the stock plummets and I can bet the farm on a profitable turnaround. I will start buying on 50C dips below $10 with an aim for adding 20% of my total invested at each dip.

China's banking infrastructure is being built up from square one, and YTEC is poised to capture the lucrative point of sale (POS) market, allowing Chinese customers to use credit or debit cards at stores. YTEC is building a nice moat for itself and has very little debt and a PE ratio that would be moderate for a middle-of-the-road American company, let alone a Chinese company with terrific growth prospects. I'm leary of the often overheated, overhyped Chinese stocks, but this one and Gushan (GU) seem like overlooked giants in the making.

Company is well positioned to expand in domestic market.

Coming off a trend and market has growth.

Just read about this. Big ups on the emerging credit tech in China. Grab the wave and ride it.

The 21st century is finally arriving for 20% of the world's population & they are hungry to embrace it! This will require growth & expansion of the banking & financial services which in turn requires the technology & services that YTEC provides. Look for strong growth for the next decade at least.

Forecast is for 28-percent EPS growth on 20-percent revenue growth.

Betting on growth and expansion of middle class in China. Government can screw this up but I'll hope for pragmatism. Lots of room for expansion.