Pansoft Company Ltd. (PSOF) Creates Joint Venture to Handle Sharp’s Software Testing

QualityStocks would like to highlight Pansoft (NASDAQ: PSOF), a leading enterprise resource planning ("ERP") software and professional services provider for the oil and gas industry in China. Pansoft offers full spectrum accounting, delivery, inventory control, invoicing, and order processing solutions.

In the company’s news today,

Pansoft disclosed details of the signing of a joint venture (JV) with Information Center Co., Ltd., and Seven Colors Corporation.

Both of the JV partners are Japanese firms and constitute excellent supplementary functionalities. The JV, to be named Pansoft (Japan) Company Limited, will fuse together all related segments within the JV in order to engage Sharp Corporation operating unit, Sharp Business Software Development Center (SBC), in a contractual obligation for mobile-phone software testing.

The agreement calls for a reported RMB$18M ($2.7M) investment from PSOF for an 80% stake in the JV which will be structured with two subsidiaries, one in Osaka comprised of two departments from the JV partners and the other in Jinan, China.

The Jinan location will handle software development/testing and will begin receiving orders from Sharp as soon as the Osaka office – which will handle the sourcing of business orders and SBC relations – is ready to go. The segments which will make up the Osaka office reported revenue of JPY450M ($5.2M) in 2009 from ongoing operations with SBC.

Director of Sharp Computer Business Software Development Center’s Software Evaluation Department, Sugriyama Akira, hailed the partnership as an ideal opportunity for all those involved, and expressed his confidence in PSOF’s ability to fulfill software testing requirements.

The mobile phone market and China’s outsourcing market ($2.4B in 2009) are both growing rapidly, making the strategic market position of both PSOF and the JV ideally situated at the crossroads to capitalize on the massive amount of mobile phone software demand.

Global sales of software for mobiles is projected to rise from $4.6B (6.6B downloads) in 2009 to $15B (16.2B downloads) in 2013, or CAGR of 34% revenues/25% downloads (FutureSource).

Sugriyama cited the reduction of software development costs, and noted the mobile-phone services pole position this venture enables for SBC as the Company continues to push the R&D envelope.

Chairman of PSOF, Hugh Wang, called the JV a great initial foothold in the lucrative Japanese outsourcing market, expressing great optimism for the potential upside due to market demand for overseas software outsourcing services.

Wang projected that the JV would grow to a whopping JPY1B annual revenue within the first two years as the JV combines powerful front-end marketing capability with low-cost development, clearly proud to be working with a globally recognized leader like Sharp.

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