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  • unleashinggenius unleashinggenius Apr 19, 2011 10:32 PM Flag

    SAP partner NTWK will explode upward on 5/11

    Six months ago the stock was at the same price as today - $1.69. What's happened since then:

    1. Huge new contracts with Mercedes, BYD and SANY, that promise to take NetSol globally as they expand. Also, branching out to a multiyear, multimillion dollar contract for TCS, announced two weeks ago.

    2. Strong and reaffirmed guidance throughout FY 2011 for Revenue of $40-44m and EPS of .15-.20. Through the first half of FY2011 the company has produced the highest revenue for the first 6 months in its history. In statements from the CEO they have confirmed the second half of the year will be stronger, hinting that numbers will be "very impressive."

    -Along with strong and growing revenue have come the annuities of the software business. NetSol sells 5 year maintenance contract with every NFS license and it continues to provide services to all licenses. The CEO recently said those recurring revenues are greater than 25% of revenue.

    -Margins have steadily improved and the CEO recently stated they will hit 70% gross margins in the coming quarters.

    -Cash from operations continues to grow rapidly and last quarter were 50% of revenues!

    3. Product innovation:

    -The follow-on the their flagship product NFS, NFS NextGen is being installed in China with GMAC. The full product will be available for marketing in calendar year 2011.
    -NetSol has developed SmartOCI, an SAP procurement search engine, that is being beta tested in a number of Fortune 100/SAP customers. Sales will be forthcoming shortly.
    -NetSol has developed a cloud version of NFS, LeasePak SaaS, for mid to large customers based on a subscription fee.
    -NetSol announced this week a multi-year, multi-million dollar contract with TCS, one of the world's largest delivery systems, to develop a customized operations management IT solutions.
    -NetSol has started numerous pilot projects with the government of Pakistan for Land Records management and Motor Transportation that should become material shortly.
    -The company recently stated that the Hospital Management IT solution is being installed in a Pakistani Armed Forces hospital.
    -The company invested a partnership to form Atheeb NetSol in Saudi Arabia which is 51% owned by the company and seeks to become the major IT partner for Saudi Arabia and the Gulf States. On April 13th the NTWK posted 13 new positions in Saudi Arabia. CEO says he only hires when he has the work. Expect a big Saudi contract in the next three weeks.

    4. Confidence in the company by insiders is healthy, with the three Ghauri brothers who run the company purchasing more than 1.5 million shares in the past year. The CEO bought 100,000 shares on Feb 16 at a price of $1.97 on the open market.

    5. NetSol's expansion in China and Southeast Asia has led it to develop hubs in both Bejing and Bangkok to support its growing Fortune 100 base of global customers. The company can now support operations from multiple locations in the world, including the US. Further, it has incorporated its high quality, CMMI Level 5, ISO 9000, 20000, and 27001 competencies across the company and in its world class core competencies development center in Lahore.

    6. Most importantly, the company is delivering on all it's commitments. This will show up dramatically in the next few weeks as the company adds to the already impressive revenues this year. Expectations are that the company will have revenue in excess of $11.5m, a company record for any quarter, ever and EPS of around 5 cents, which would bring the company to a range of easily being able to meet and exceed full year guidance in the fiscal fourth quarter that began on April 1.

    So expect to see NTWK, the stock, and NetSol Technologies, the company, more in line with each other in the coming weeks and months as this strong growth story by this software & cloud application developer continues.

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