LFT

[BigSully1]

Longtop Financial Technologies Limited
15th Floor Block A Chuangxin Building
Software Park
Xiamen,  361005
China - Map
Phone: 86 59 2239 6888
Web Site: http://www.longtop.com

DETAILS  
Index Membership: N/A
Sector: Technology
Industry: Business Software & Services
Full Time Employees: 1,094


BUSINESS SUMMARY  
Longtop Financial Technologies Limited, together with its subsidiaries, develops software and provides information technology (IT) services to financial services industry in the People's Republic of China. It engages in the development, licensing, and support of software solutions; provision of maintenance, support, and other services; and provision of system integration services related to the procurement and sale of third party hardware and software. The company offers software solutions in the various categories, including channel-related solutions, business-related solutions, management-related solutions, and other value-added solutions. Its channel-related solutions enable banks to interact with their customers through various channels, such as automated teller machines (ATM), bank tellers, call centers, and online banking. The company's business-related solutions are directed at executing banking transactions, including international trade finance, payments and settlements, and credit card operations. Its management-related solutions support a financial institution's internal operations and management, such as business intelligence, enterprise resource management, work-flow management, and credit and risk management. The company's other value-added solutions address its banking and non-banking clients' IT needs, such as payroll management for public sector employees. It also offers other services to address banking needs unrelated to software development, including ATM maintenance services, system integration services, and other value-added consulting services regarding configuration and system change management, security management, crisis management, and information technology asset management. Longtop Financial Technologies Limited also provides various consulting and supplementary technology-related services. The company was founded in 1996 and is headquartered in Xiamen, the People's Republic of China.
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Watch for earnings report after the close monday on this very recent IPO. I just bought a little on the dip this morn to risk through the ER, and eager to hopefully add afterwards.

[BigSully1]

Longtop Financial Technologies Limited Announces Unaudited Financial Results for the Quarter Ended September 30, 2007
Monday November 19, 5:00 pm ET 
Total Revenues Reach US$20.2 million, Up 80.3% Year-on-Year over Adjusted Revenues Due to Continued Diversification of Customer Base


XIAMEN, China, Nov. 19 /Xinhua-PRNewswire/ -- Longtop Financial Technologies Limited ("Longtop") (NYSE: "LFT"), a leading software developer and solutions provider targeting the financial services industry in China, announced today unaudited financial results for the quarter ended September 30, 2007, which is the second quarter of its fiscal year ending March 31, 2008.

    FINANCIAL HIGHLIGHTS FOR THE SEPTEMBER 30, 2007 QUARTER:

     -- Total revenue was US$20.2 million, an increase of 80.3% year-on-year
        ("YoY") compared to Adjusted Revenues for the quarter ended September
        30, 2006.
     -- Software development revenues amounted to US$18.2 million, up 115.6%
        YoY compared to 2006 Adjusted Software Development Revenues for the
        quarter ended September 30,, 2006.
     -- Adjusted Income from Operations was US$13.6 million, an increase of
        88.2% YoY.
     -- Adjusted Net Income was US$11.6 million, or US$0.28 per fully diluted
        share.

Explanation of the Company's Adjusted (ie non-GAAP) financial measures and the related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Disclosure" and the "Consolidated Adjusted Statements of Operations."

Commenting on the results, Weizhou Lian, CEO of Longtop, remarked:

"During this past quarter we demonstrated significant revenue and profit growth by leveraging our leading portfolio of software and services to leading financial services companies in China. We also successfully diversified our revenue base by generating strong growth within national and city commercial banks, as well as insurance companies. We are well positioned to benefit from the rapid development and evolution of China's financial services industry."


    RECENT OPERATIONAL HIGHLIGHTS:

     -- On October 24, 2007 Longtop successfully completed its IPO on the New
        York Stock Exchange of 9,000,000 American Depositary Shares ("ADSs"),
        which generated net proceeds of approximately US$143 million for
        Longtop. Each ADS represents one ordinary share.
     -- Demonstrated successful customer diversification as revenues from the
        Company's two largest customers, which increased year-on-year,
        accounted for 31.6% of software development revenues in the September
        30, 2007 quarter, compared to 61.5% for the same period of 2006.
     -- In October 2007, Longtop closed the acquisition of FEnet, a leading
        provider of business intelligence solutions to the financial and
        insurance industry in China. FEnet added 261 employees to Longtop's
        1,094 existing employees as of September 30, 2007.

Weizhou Lian continued:

"On October 24th we successfully listed on the New York Stock Exchange, and I would like to thank our customers and employees, and our investors Cathay and Tiger Global, for their dedication and support. As China's financial institutions seek to modernize and become increasingly competitive, I believe that Longtop is entering a new and exciting era of opportunity in which our unique understanding of China's financial services sector combined with our comprehensive product offering puts us in an excellent position to grow in this dynamic business environment."



    SEPTEMBER 30, 2007 QUARTER DETAILED FINANCIAL RESULTS
    Adjusted Revenues
                              Three months ended   Six months ended
  Adjusted      September  September  % Change  September  September  % Change
   revenue       30, 2006   30, 2007 (Decrease)  30, 2006   30, 2007 (Decrease)
  Software
   Development     8,465     18,249    115.6%    14,316     26,489     85.0%
  Other Services   2,739      1,951    (28.8%)    6,126      5,241    (14.4%)
  Total Adjusted
   Revenue        11,204     20,200     80.3%    20,442     31,730     55.2%


Total revenues for our second fiscal quarter were US$20.2 million, compared to Adjusted Revenues of US$11.2 million for the quarter ended September 30, 2006. Software development revenues of US$18.2 million contributed 90.3% of total revenues, and increased 115.6% YoY compared to Adjusted Software Development Revenues for the corresponding period in the previous fiscal year. Software development revenue growth was primarily driven by new customers and to a lesser extent by increased sales to existing customers.

Total revenues for the six months ended September 30, 2007 were US$31.7 million, compared to Adjusted Revenues of US$20.4 million for the six months ended September 30, 2006, a YoY increase of 55.2%. Software development revenues, which were 83.5% of total revenues for the six months ended September 30, 2007, amounted to US$26.5 million, up 85.0% YoY compared to Adjusted Software Development Revenues in the corresponding period a year ago.



    Adjusted software development revenue customer concentration analysis

  % of adjusted
   software            Three months ended             Six months ended
   development   September  September  Change  September  September  Change
   revenue from   30,2006    30,2007 (Decrease) 30,2006    30,2007 (Decrease)
  Two largest
   bank customers   61.5%      31.6%   (29.9%)    69.3%      43.7%   (25.6%)
  Other banks and
   non-financial    36.0%      60.1%    24.1%     28.5%      49.1%    20.6%
  Insurance          2.5%       8.3%     5.8%      2.2%       7.2%     5.0%
  Total            100.0%     100.0%     0.0%    100.0%     100.0%     0.0%


For our second fiscal quarter, Adjusted Software Development Sales to our two largest customers, which are two of the Big Four banks in China, increased year-on-year but declined as a percentage of total Adjusted Software Development Revenue from 61.5% in the three months ended September 30, 2006 to 31.6% in this quarter. Software development sales to other banks and non- financial customers, which includes one of the Big 4 banks as well as national and city banks, increased significantly from the corresponding period in the previous year. These banks and non-financial customers accounted for 60.1% of software development revenues as compared to 36.0% of our Adjusted Software Development Revenues in the quarter ended September 30, 2006. Insurance customers accounted for 8.3% of software development revenue in the quarter ended September 30, 2007, up from 2.5% of Adjusted Software Development Revenue in 2006, resulting in a 626.0% YoY increase.



    Software Development revenue by solution type as a percentage of
     total adjusted software development  revenue

                        Three months ended             Six months ended
                  September  September  Change  September  September  Change
                   30,2006    30,2007 (Decrease) 30,2006    30,2007 (Decrease)
  Customised        51.9%      48.3%    (3.6%)    57.4%      51.4%    (6.0%)
  Standardised      39.4%      49.2%     9.8%     33.8%      44.6%    10.8%
  Maintenance        8.7%       2.5%    (6.2%)     8.8%       4.0%    (4.8%)
  Total            100.0%     100.0%     0.0%    100.0%     100.0%     0.0%


The percentage of software development revenues in the second quarter from customized solutions was 48.3%, largely unchanged from 51.9% in the corresponding period a year ago. Standardized solutions increased to 49.2% of revenue from 39.4% in 2006 due to demand from new customers, including national and city commercial banks and insurance companies.



    Adjusted Gross Margins

  Adjusted gross margin percentage
                        Three months ended            Six months ended
                  September  September  Change  September  September  Change
                   30,2006    30,2007 (Decrease) 30,2006    30,2007 (Decrease)
  Software
   Development
   Gross Margin     88.6%      85.8%     (2.8%)   88.0%      81.6%    (6.4%)
  Other Services
   Gross Margin     78.4%      62.7%    (15.7%)   80.0%      73.2%    (6.8%)
  Total Gross
   Margin %         84.9%      82.7%     (2.2%)   84.3%      79.3%    (5.0%)


Adjusted Gross Margin of 82.7% in the second quarter and 79.3% for the six months ended September 30, 2007 declined from 84.9% and 84.3% in the respective corresponding periods of the previous year. The reduction in Adjusted Gross Margin was due to lower gross margins in both software development and other services. Adjusted Software Development Gross Margins of 85.8% in the second quarter and 81.6% for the six months ended September 30, 2007 declined from 88.6% and 88.0% in the respective periods of the prior year as the Company continued to invest aggressively in software delivery headcount. As of September 30, 2007 we had 634 employees working on software development delivery as compared to 499 as of June 30, 2007 and 317 as of September 30, 2006.

Adjusted Operating Expenses

For the quarter ended September 30, 2007, Longtop's Adjusted Operating Expenses totaled US$3.1 million, an increase of 40.0% YoY, primarily due to additional headcount related expenses, a $366,000 provision for software purchased for internal use and professional fees. Adjusted Operating Expenses as a percentage of revenue for the six months ended September 30, 2007 were 19.0%, up slightly from 17.3% as a percentage of Adjusted Revenues for the comparative year ago period.

Profitability

Adjusted Operating Income margin was 67.3% for the quarter ended September 30, 2007 and 60.3% for the six months ended September 30, 2007, as compared to 65.1% and 66.9% for the corresponding periods in 2006.

Adjusted Net Income for our second quarter was US$11.6 million or US$0.28 per fully diluted share. Adjusted Net Income for the six months ended September 30, 2007 was US$17.1 million or US$0.42 per fully diluted share.

Commenting on the results, Derek Palaschuk, CFO of Longtop, said:

"The strong revenue and income growth we reported is a result of our increasingly diversified customer base, as we continued to monetize new client relationships through our expanded range of higher margin services and solutions. Although we experienced a slight decline in gross margin due to our reinvestment in headcount, making these expenditures is important as we look to ensure our future expansion."


    BUSINESS OUTLOOK

    Longtop anticipates for the quarter ended December 31, 2007:

      i) Total revenues, excluding revenues from FEnet which closed in October
         2007, of US$15.5 million, an increase of 33.6% from Adjusted Revenues
         of $11.6 million in the corresponding year ago period. Although we
         expect that there will be a sequential quarterly revenue decline from
         the September 30, 2007 quarter due to the typical seasonality of the
         business, this outlook indicates our expectation that there will be
         healthy growth from the year ago period.
     ii) Software development revenues to be $13.5 million, an increase of
         39.7% from Adjusted Software Development Revenue in the corresponding
         period a year ago.
    iii) Adjusted Net Income, excluding a US$1.1 million refund of the
         previous year's income taxes which was received in October 2007 and
         will be included in Adjusted Net Income for the quarter ended
         December 31, 2007, to be US$8.5 million as compared to US$5.3 million
         in the comparable period a year ago.
     iv) Fully diluted Adjusted Earnings per Share, excluding the US$1.1
         million income tax refund, to be US$0.17, based on 51 million
         weighted average fully diluted shares outstanding.

    Longtop anticipates for its fiscal year ended March 31, 2008:

      i) Total revenues, excluding revenues from FEnet which closed in October
         2007, of US$58.0 million, an increase of 45.7% from Adjusted Revenues
         of $39.8 million in the corresponding year ago period.
     ii) Software development revenues of $49.0 million, an increase of 64.4%
         from Adjusted Software Development Revenue in the corresponding
         period a year ago.
    iii) Adjusted income from operations of $33.0 million an increase of 42.6%
         from the previous fiscal year.
     iv) Adjusted Net Income, excluding a US$1.1 million refund of the
         previous year's income taxes which was received in October 2007 to be
         US$30 million.
      v) Fully diluted Adjusted Earnings Per Share, excluding the US$1.1
         million income tax refund, to be US$0.60.

CONFERENCE CALL AND WEBCAST

Longtop's management team will host a conference call today at 7:00 P.M. ET, November 19, 2007 (or 4:00 PM U.S. Pacific Time on November 19, 2007 and 8:00 AM, November 20, 2007 Beijing/Hong Kong time). A live audio webcast of the conference call will be available on Longtop's website at http://www.longtop.com/en. To listen to the conference call, please use the dial in numbers below:

USA Toll Number: +1-800-860-2442

International: +1-412-858-4600

A replay of the call will be available for two weeks following the call and can be accessed on the Company website or by dialing the numbers below:


     USA Replay Number: 877-344-7529
     International:     +1-412-317-0088
     Passcode:          413057

    SHARE-BASED COMPENSATION

In the quarter ended December 31, 2007, excluding any new equity grants made subsequent to this earnings release, Longtop will record share-based compensation expenses of approximately $25.8 million, which includes:


     1) $24.0 million related to ordinary shares that prior to the IPO were
        given by one of our Founders to Longtop's employees. This is a one
        time expense and will not increase or change the total shares
        outstanding. It will have no dilutive impact on earnings per share,
        nor any impact on cash flow or the net assets of the Company.
     2) $0.6 million for shares granted in March 2007 for which share-based
        compensation was deferred pending the initial public offering and will
        be recorded in the quarter ended December 2007 commensurate with the
        IPO.
     3) $1.2 million in recurring share-based compensation expenses for equity
        we have previously issued to our employees.

NON-GAAP DISCLOSURE ("ADJUSTED")

To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Longtop's management reports and uses non-GAAP ("Adjusted") measures of revenues, cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP. Management believes these non-GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future and, additionally, uses these non-GAAP financial measures for the general purpose of analyzing and managing the Company's business. Specifically, we believe the non-GAAP financial measures provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures contained in this release and which we discuss below. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.

Definitions of Non-GAAP Measures

Adjusted Revenue is defined as revenue excluding, if applicable: software development revenue deferred on standardized contracts from previous years to financial periods ending on or prior to December 31,2006 because Longtop did not have Vendor Specific Objective Evidence ("VSOE") or evidence that costs of Post Contract Service ("PCS") had been immaterial. Subsequent to January 1,2007, Longtop had evidence that PCS for standardized contracts was immaterial and Adjusted adjustments were not required after this date.

Adjusted Cost of Revenue is defined as cost of revenue excluding, if applicable: (1) non-cash compensation expense and (2) amortization of acquired intangibles.

Adjusted Gross Margin is defined as Adjusted Revenue less Adjusted Cost of Revenue.

Adjusted Operating Expenses is defined as operating expenses excluding, if applicable: (1) non-cash compensation expense,(2) amortization of acquired intangibles and goodwill impairment, and (3) one-time items.

Adjusted Operating Income is defined as Adjusted Gross Margin less Adjusted Operating Expenses.

Adjusted Net Income is defined as Adjusted Operating Income plus/minus other income/(expenses), less income taxes, excluding: (1) one time items and (2) discontinued operations.

Adjusted EPS is defined as Adjusted Net Income divided by diluted shares.

One-Time Items, if applicable, are excluded from Adjusted Operating Income and Adjusted Net Income. These items are one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years. GAAP results include one-time items.

Non-Cash Expenses That Are Excluded From Our Non-GAAP Measures

Non-cash compensation expense consists principally of expense associated with the grants, including unvested grants assumed in acquisitions, of restricted stock, restricted stock units and stock options. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding, which, for restricted stock units and stock options, are included on a treasury method basis. Longtop's management believes excluding the share-based compensation expense from its non-GAAP financial measure is useful for itself and investors. Further, the amount of share-based compensation expense cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which have been the basis for information Longtop provides to analysts and investors as guidance for future operating performance. As share-based compensation expense does not involve any upfront or subsequent cash outflow, Longtop does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, the monthly financial results for internal reporting and any performance measure for commission and bonus are based on non-GAAP financial measures that exclude share-based compensation expense.

Amortization of acquired intangibles is a non-cash expense relating to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as backlog, customer relationships, and intellectual property are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we believe that since intangibles represent costs incurred by the acquired company to build value prior to acquisition, they were part of transaction costs.

OTHER INFORMATION

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

It is currently expected that the Business Outlook will not be updated until the release of Longtop's next quarterly earnings announcement; however, Longtop reserves the right to update its Business Outlook at any time for any reason.

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include the effectiveness, profitability, and marketability of the Company's solutions; the Company's limited operating history; its reliance on a limited number of customers that continue to account for a high percentage of the Company's revenues; risk of payment failure by any of its large customers, which could significantly harm the Company's cash flows and profitability; the ability of the Company to operate effectively as a public company; the period of time for which its current cash will enable the Company to fund its operations; future shortage or availability of the supply of employees; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Our actual results of operations for the quarter ended September 30, 2007 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change.

About Longtop Financial Technologies Limited

Longtop is a leading software development and solutions provider targeting the financial services industry in China. Longtop develops and delivers a comprehensive range of software applications and solutions with a focus on meeting the rapidly growing IT needs of the financial services institutions in China. Longtop has five solution delivery centers, three research centers and thirty-four service centers located in 20 provinces throughout China. Longtop was founded in 1996 by Jia Xiaogong, our Chairman and Lian Weizhou, our CEO, as a system integration Company focusing on the financial services industry in China and made the transition to a software and solutions provider in 2001. For more information, please visit: http://www.longtop.com.



                           CONSOLIDATED BALANCE SHEETS


                                                  March 31,     September 30,
                                                      2007              2007

                                                   Audited         Unaudited
                                             (In U.S. dollar thousands, except
                                              share and per share data)
    Assets
    Current assets:
          Cash, bank deposits and cash
           equivalents                             $69,920           $87,301
          Restricted cash                            3,395               247
          Accounts receivable, net                  19,495            19,131
          Inventories                                1,081             2,526
          Amounts due from related
           parties                                      --                54
          Deferred tax assets                          644               173
          Other current assets                       3,231             9,609

          Total current assets                      97,766           119,041

    Fixed assets, net                                4,835             4,779
    Intangible assets, net                           8,040             1,831
    Goodwill                                         9,112             9,988
    Investment in an associate                          --                --
    Deferred tax assets                                 33               142
    Other assets                                       646               577

          Total assets                            $120,432          $136,358

    Liabilities, mezzanine equity and
     shareholders' equity
    Current liabilities:
          Short-term borrowings                     $8,669           $21,126
          Accounts payable                           4,581             1,773
          Deferred revenue                           4,725             5,755
          Amounts due to related parties                --                --
          Deferred tax liabilities                      --                --
          Accrued and other current
           liabilities                               9,714            13,875

          Total current liabilities                 27,689            42,529

    Long-term liabilities:
          Obligations under capital
           leases, net of current portion              219               142
          Deferred tax liabilities                     617               263
          Other non-current liabilities                 --               520

          Total liabilities                         28,525            43,454


    Mezzanine equity:
     Series A convertible redeemable
      preferred shares: $0.01 par value
      (6,360,001 and 6,360,001 shares
      authorized, issued and outstanding
      as of March 31, 2007 and September
      30, 2007, respectively, liquidation
      value $23,416)                               $23,214           $23,214
     Series B convertible redeemable
      preferred shares: $0.01 par value
      (3,858,005 and 3,953,861 shares
      authorized, issued, and outstanding
      as of March 31, 2007 and September
      30, 2007, respectively, liquidation
      value $24,826)                                24,673            24,673

          Total mezzanine equity                    47,887            47,887

    Shareholders' equity:
    Ordinary shares $0.01 par value
     (68,640,000 shares  authorized,
     29,705,267 and 30,434,240 shares
     issued and outstanding as of March
     31, 2007 and September 30, 2007)                 $297              $304
    Additional paid-in capital                      19,120            28,102
    Subscription receivable                             --                --
    Retained earnings                               22,320            12,215
    Accumulated other comprehensive
     income                                          2,283             4,396

          Total shareholders' equity                44,020            45,017

          Total liabilities, mezzanine
           equity and shareholders'
           equity                                 $120,432          $136,358



                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                 Three Months Ended       Six Months Ended
                               September   September   September   September
                                 30,2006     30,2007     30,2006     30,2007
                               Unaudited   Unaudited   Unaudited   Unaudited
                             (In U.S. dollar thousands, except share and per
                                               share data)
    Revenues:
          Software
           development           $10,608     $18,249     $18,162     $26,489
          Other services           2,739       1,951       6,126       5,241
          Total revenues          13,347      20,200      24,288      31,730
           Less business
            taxes                   (137)       (187)       (262)       (304)

          Net revenues            13,210      20,013      24,026      31,426
    Cost of revenues:
          Software
           development               971       2,591       1,724       4,876
          Other services             814         972       1,523       1,886
          Total cost of
           revenues                1,785       3,563       3,247       6,762
    Gross profit                  11,425      16,450      20,779      24,664

    Operating expenses:
          Research and
           development               384         453         701         890
          Sales and marketing        618         716         625       1,628
          General and
           administrative          2,363       2,107       3,903       3,921
          Total operating
           expenses                3,365       3,276       5,229       6,439
    Income from operations         8,060      13,174      15,550      18,225

    Other income (expenses):
          Interest income             58         198         127         473
          Interest expense          (162)       (269)       (330)       (438)
          Other (expenses)
           income, net                14          32          25          66

          Total other income
           (expenses)                (90)        (39)       (178)        101

    Income before income tax
     expense                       7,970      13,135      15,372      18,326
          Income tax expense      (2,423)     (1,991)     (4,673)     (2,185)

    Income from continuing
     operations                    5,547      11,144      10,699      16,141
          Loss from
           discontinued
           operations               (114)     (1,225)       (157)     (1,293)
    Net income                     5,433       9,919      10,542      14,848

    Net income per share:
            Continuing
             operations            $0.15       $0.28       $0.32       $0.40
            Discontinued
             operations           $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Basic ordinary
           share                   $0.15       $0.25       $0.32       $0.37
            Continuing
             operations            $0.15       $0.28       $0.32       $0.40
            Discontinued
             operations           $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Basic preferred
           share                   $0.15       $0.25       $0.32       $0.37
            Continuing
             operations            $0.14       $0.27       $0.28       $0.40
            Discontinued
             operations           $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Diluted                  $0.13       $0.24       $0.28       $0.36

    Shares used in
     computation of net
     income per share:
          Basic ordinary
           share              29,490,000  29,745,320  29,699,667  29,725,294
          Basic preferred
           share               6,360,000  10,244,339   3,427,334  10,231,172
          Diluted             40,831,880  41,192,580  38,064,537  40,844,608

    Adjusted net income per
     share (unaudited):
            Continuing
             operations            $0.15       $0.28       $0.32       $0.40
            Discontinued
             operations           $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Basic ordinary
           share                   $0.15       $0.25       $0.32       $0.37
            Continuing
             operations            $0.14       $0.27       $0.28       $0.40
            Discontinued
             operations           $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Diluted                  $0.13       $0.24       $0.28       $0.36

    Shares used in adjusted
     net income per share
     computation (unaudited):
          Basic ordinary
           share              35,850,000  39,989,659  33,127,001  39,956,466
          Diluted             40,831,880  41,192,580  38,064,537  40,844,608

    Includes share-based
     compensation related to:
    Cost of revenues software
     development                      $3          $3          $5          $6
    General and
     administrative expenses      $1,124        $166      $1,497        $414
    Sales and marketing
     expenses                        $12         $11         $24         $22
    Research and development
     expenses                        $--         $--         $--         $--



             UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS

                                 Three Months Ended      Six Months Ended
                                September   September   September   September
                                  30,2006     30,2007     30,2006     30,2007
                               (In U.S. dollar thousands, except share and per
                                                share data)
    Revenues:
          Software development     10,608      18,249     $18,162     $26,489
          Other services            2,739       1,951       6,126       5,241
          Total revenues           13,347      20,200      24,288      31,730
           Less business taxes       (137)       (187)       (262)       (304)
          Net revenues             13,210      20,013      24,026      31,426

    Software development
     revenue adjustments:
          Revenue deferred  to
           2006 because of
           lack of VSOE            (2,143)         --      (3,846)         --

    Adjusted revenues:
          Software development      8,465      18,249      14,316      26,489
          Other services            2,739       1,951       6,126       5,241
          Total revenues           11,204      20,200      20,442      31,730
           Less business taxes       (137)       (187)       (262)       (304)
          Net adjusted
           revenues                11,067      20,013      20,180      31,426

    Cost of revenues:
          Software development        971       2,591       1,724       4,876
          Other services              814         972       1,523       1,886
          Total cost of
           revenues                 1,785       3,563       3,247       6,762

    Cost of revenue
     adjustments:
          Share-based
           compensation
           software
           development                 (3)         (3)         (5)         (6)
          Amortization of
           acquired intangible
           assets other
           services                  (222)       (244)       (295)       (482)

    Adjusted cost of revenues:
          Software development        968       2,588       1,719       4,870
          Other services              592         728       1,228       1,404
          Total adjusted cost
           of revenues              1,560       3,316       2,947       6,274

    Gross profit                   11,425      16,450      20,779      24,664

    Adjusted gross profit           9,507      16,697      17,233      25,152

    Operating expenses:
          Research and
           development                384         453         701         890
          Sales and marketing         618         716         625       1,628
          General and
           administrative           2,363       2,107       3,903       3,921
          Total operating
           expenses                 3,365       3,276       5,229       6,439

    Operating expense
     adjustments:
          Share-based
           compensation
           research and
           development                 --          --          --          --
          Share-based
           compensation sales
           and marketing              (12)        (11)        (24)        (22)
          Share-based
           compensation
           general and
           administrative          (1,124)       (166)     (1,497)       (414)
          Non-recurring costs
           general and
           administration             (15)         --        (160)         --
               Initial public
                offering
                expenses
                written off           (15)         --        (160)         --
               Provision for
                Deposits               --          --          --          --
               Dividend to
                Founders
                recorded as
                compensation           --          --          --          --

    Adjusted operating
     expenses:
          Research and
           development                384         453         701         890
          Sales and marketing         606         705         601       1,606
          General and
           administrative           1,224       1,941       2,246       3,507
          Total adjusted
           operating expenses       2,214       3,099       3,548       6,003

    Income from operations          8,060      13,174      15,550      18,225

    Adjusted income from
     operations                     7,293      13,598      13,685      19,149

    Other income (expenses):
          Interest income              58         198         127         473
          Interest expense           (162)       (269)       (330)       (438)
          Other (expenses)
           income, net                 14          32          25          66
          Total other income
           (expenses)                 (90)        (39)       (178)        101

    Income before income tax
     expense                        7,970      13,135      15,372      18,326

    Adjusted income before
     income tax expense             7,203      13,559      13,507      19,250

          Income tax expense       (2,423)     (1,991)     (4,673)     (2,185)

    Income from continuing
     operations                     5,547      11,144      10,699      16,141

    Adjusted net income             4,780      11,568       8,834      17,065

          Loss from
           discontinued
           operations                (114)     (1,225)       (157)     (1,293)

    Net income                      5,433       9,919      10,542      14,848


    Net income per share:
            Continuing
             operations             $0.15       $0.28       $0.32       $0.40
            Discontinued
             operations            $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Basic ordinary share      $0.15       $0.25       $0.32       $0.37
            Continuing
             operations             $0.15       $0.28       $0.32       $0.40
            Discontinued
             operations            $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Basic preferred
           share                    $0.15       $0.25       $0.32       $0.37
            Continuing
             operations             $0.14       $0.27       $0.28       $0.40
            Discontinued
             operations            $(0.00)     $(0.03)     $(0.00)     $(0.03)
          Diluted                   $0.13       $0.24       $0.28       $0.36

    Adjusted net income per
     share:
          Basic ordinary share      $0.13&

[SarfiSoy]

up 80% over last year, great financials. Market is slow to catch on.

[SeeingGreen]

China ipo huh, definite good growth! You would think the stock will test previous highs, maybe when the general markets turns so will this. I guess earnings before holidays, the street might of missed the news here.

I ll chart it for mon

[WallStreetnBio]

This is a great short canidate. EPS of .68 for 2008 with a 20 PE ratio is a $13.60 stock. This stock is good for a couple of dollars on the downside. 

How do you guys like these garbage stocks?

Buy CDS, EPS for 2008 will be $1.00 with a 20 PE ratio thats a $20 stock. Its trading under $9 right now. Thats value.

[BigSully1]

chart update