QualityStocks would like to highlight Pansoft Company Ltd. (NASDAQ: PSOF). Pansoft is a leading enterprise resource planning ("ERP") software and professional services provider for the oil and gas industry in China. Its ERP software offers comprehensive solutions in various business operations including centralized accounting and fund management, order processing, delivery, invoicing, and assets management.
In the company’s news yesterday,
Pansoft Company announced a further expansion move with the signing of a definitive agreement to acquire Hefei Langji Technology Co., Ltd. (including wholly-owned subsidiary Shanghai Zhongrui) for a reported $1.69M (RMB10.8M).
Chairman of PSOF, Hugh Wang, called the Langji move a milestone for the Company, as it follows the ITLamp Technology and HongAo Power acquisitions of 2010, cementing PSOF in the heart of China’s roaring hydrocarbon sector.
Langji has risen from its start eight years ago to become the Chinese coal-mining industry’s top HR solutions provider. The big, state-owned coal mining groups which make up much of the industry in China have come to rely on the sophisticated HR management solutions Langji is known for. With a staff of some 40 people, Langji pulled down audited revenue of $1M in 2010 ($0.26M net income) and did brisk business through its Shanghai subsidiary, Zhongrui (which will be maintained to focus on small, to mid-sized companies in parallel industries).
Wang noted the solid footprint Langji has in the coal sector and spoke of the respect its HR solutions have won across the spectrum of clients, touting the significance of the acquisition for boosting PSOF’s already commanding penetration into the Chinese hydrocarbon industry as a whole. Wang asserted that the ability to leverage Langji’s customer base, in order to expand the Company’s footprint in the coal mining sector, in conjunction with the core proprietary technologies acquired (like HR solutions engineered specifically for the coal mining industry), would also accelerate the expansion process.
The service/solution platform thus realized certainly will be second-to-none and Pansoft will be able to exploit the Zhongrui Shanghai office to fully target the abundance of this heavily industrial region. It really looks like Pansoft is making all the right moves in order to dominate significant territory in the Chinese hydrocarbon area.
Terms of the deal call for four installments, the first of which (35% of the total) is to be paid in combined cash and PSOF common stock, with the remaining installments paid annually over three years via the same combination of cash and stock (all payments subject to the achievement of revenue targets by the acquired entities). Part of the consideration for the deal will be paid via Pansoft’s share repurchasing activities on the open market (157k shares purchased as of Sept. 15, 2011), as approved by the Company’s board (in accordance with Rule 10b5-18).
Wang emphasized that this important strategic move by the Company would offer an ideal position for long-term growth in the next logical area, coal mining. Calling Langji an excellent fit for the Company’s existing competencies/structure, and pledged an expedient integration into the overall company architecture.
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