Waiting for Longtop Financial earning

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(Update 2) Just listened to its CC, CEO Mr. Lian said fiscal 2009 (Apr 1 2008 to March 31 2009) revenue forecast is 80 m. Note they said fiscal 2008 revenue would be 58 m. I felt they are being conservative on the numbers here. The CEO was very bullish on the IT spending of Chinese banks, insurance companies and financial subsidiary of large companies. FENet will contribute 10 m revenue in fiscal 2009. Not too bad.

Just a little book keeping: CFO Derek said the fiscal 2008 earning will be 68 cents; outstanding shares will be 53 m by March 31 2008.

(Update) Just as I was writing, it reported its quarter. The number of this quarter looked OK. But the outlook for next quarter and the year were so so (45.7% YoY revenue growth).

I would be very interested to hear what CEO Mr. Lian has to say.

(Original) LFT is going to report momentarily. I still have all the shares bought since its late Oct. IPO (yes, under water now), and here are my impressions from reading its prospectus last night.

1) The revenue growth will be OK. They forecast a low 40s growth YoY.

2) Profit margin will not be pretty and will likely stay that way for a while. The main reason is their new standard software is still under development. Right now they make money by customized software/solutions, which has a lower margin (understandable).

3) Earning: share based compensation will eat a large chunk from medium-size pie. I think stock incentive can cut into both ways in many cases. Hopefully the guys got stock options will work more harder 🙂

Bright spot:
1) Business intelligence software grow very fast in Chinese banks these days. Longtop just bought FENet, the largest (domestic) BI software company in China.

2) Banks need to upgrade their systems and ATMs, refer to this article from Wang Jianshuo if interested, he is talking about the news that the Chinese central bank will ease the transfer of money between different banks.

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