LongRuan Shares Up 125% on First Day on Star Market
The GIS software developer's market cap more than doubled in the morning trading.
LongRuan Technologies (龙软科技, 688078:SH) made its debut on the Shanghai Stock Exchange Star Market on December 30. The share price reached CNY 48.70 (USD 6.97) at the midday break.
Last week, EqualOcean analyzed the company's business. We found that LongRuan's HR capabilities are a bit weaker than those of their closest industry counterparts. Another related concern we raised was about an uneven salary system: the firm's top-management banked 13% of the net profit in 2018. Continually growing operating income and rallying profit margins are among the bright spots detected in our outlook.
Founded in 2002, the Beijing-based enterprise builds its product mix around Geographic Information System (GIS) technology, comprising four revenue streams: GIS software sales (accounted for 21.09% of operating income last year), professional application software (59.57%), technical services (16.66%) and system integration (2.67%).
The vast majority of its clients are doing the same thing – they mine coal. There is an extensive list (in Chinese) of diggers scattered across the country, and all of them need smart algorithms-driven companions that can help to prevent disasters and optimize their core business activities.
Although a bunch of new energy technologies are picking up steam, in China, coal is still the main thing people squeeze joules from. Despite multiple ecological concerns, the country's industry players continue to excavate more of it. According to Reuters, coal mining capacity increased by nearly 6% last year, reaching 3.53 billion tons. Which is definitely good news for LongRuan.
The firm has a litany of market rivals in China. One of them, Shandong province-based Lionking Software (山东蓝光), is serving clients across a handful of industries, leveraging a Computer-Aided Design (CAD) platform as well as the broad arsenal of GIS and Management Information System (MIS) tools. Another challenger is Artificial Intelligence of Things (AIoT) company Jingying Shuzhi (精英数智) that spans several fields from insurance to logistics; it is also active in mining and quarrying.