It’s not often that one comes across a developing company that is growing at a nice clip in these seemingly difficult times. In a general sense, this type of event points to the need for certain types of products and services whatever the economic conditions might be. Energy is such a commodity as is the need to manage its use and distribution. Finding such types of markets and products is a safe way to capitalize in difficult times. The big boy’s in the market are easy to spot in this regard, finding the new and growing ones, however, is where the real profit might be made.
Pansoft Inc., a developer and marketer of office efficiency software, works to offer solutions and software products directed primarily at the domestic Chinese oil and gas markets. The company currently offers a full range of products from warehouse management to finance and cost controls. Pansoft Inc. is based in China but incorporated in the British Virgin Islands.
Given the current energy model being used by the Chinese economy, servicing the oil and gas markets is a fairly solid place to be. The almost insatiable need for oil in China has led the country to import vast amounts of oil for distribution throughout the country. Managing this process is no small order given the sheer size and need of the country. From this perspective, Pansoft is well positioned and taking full advantage. The company has recently announced a contract for a finance and accounting solution for Siopac Inc., Fortune 500’s ninth largest company. The company has also found advantage with the opening of a new Hong Kong office where major sales have been generated.
The first quarter of 2009 was a solid indicator of where the company appears to be heading. Large scale integration projects have begun to be the largest contributor to overall sales, with ongoing projects adding a solid source of revenue. This can be very easily seen in Q1 2009 vs. Q1 2008 where there was a sales growth of over $1 million (net income increase of $600,000.) Although this increase in net income may seem to be a bit low in a relative sense, it should be noted that a major component of the company’s cost structure is in its human capital costs. As the company adds new contracts, it also needs to add employees.
Pansoft has been working to keep salaries in line but nonetheless the company is growing at a quick pace and needs to be able to service its new contracts. As other new contracts are announced, on a seemingly regular basis, the company does appear to be establishing itself as a leading player in the systems integration and management solutions marketplace, both in China and internationally. Pansoft may seem small now, but a savvy investor might want to keep a casual eye on it as the economy moves and the company stretches current successes.
Let us hear your thoughts below: