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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Josef Svejk who wrote (12455)	7/22/1998 8:23:00 PM
From: Pendretti	Respond to of 13949

EGNS summary: so much undervalued. Jeff (M) and others, I want to mention over here why EGNS is so much undervalued, recent price: $ 1.60. I hope you will take a look at it. EGNS has up to now had revenues of $ 1 mln. a year and they broke even the last years. The company has developed tools remediation and Y2K for the Data General COBOL market and EGNS is the only company that has it. Just before the end of q2 they closed a deal with Data General. DG is now selling their products to their customers of which there were about 3.200 initially located. The products sell between $ 18.000 - $ 32.000 a piece. But the good thing is that because of the y2k problem, and time is running out, companies are going to address the problem now and it is possible to cross sell the other products of EGNS. So, I expect on average more sales per customer. So, let us expect they sell to 800 customers (only 25% of target clients, but remember EGNS is the only company who has the tools for the DG machines) and an average of $ 20.000,- per customer (which is the minimum IMO) we should see revenues of $ 16 mln. IMO we will see more out of this deal, but I want to be conservative here. So, IMO this would account for about $ 5 mln. a year (5 times normal revenues). And now the big news which is not reflected in the stock price yet. The Joint Venture in China in which EGNS will have a controlling interest (51%). What is so good about this JV besides the revenues it will generate. The JV is able to deal with ALL COBOL languages, so also IBM. And 90% of the Chinese market is COBOL. So EGNS will get big revenues out of there and this JV is the company for Chinese companies to turn to. So 51% of a conservative $ 100 mln. in revenues for EGNS for the next 3-5 years will generate $ 10 mln. in rev. a year for EGNS. This is 10 times what they have achieved so far. After the closing of the China deal South Africa will be next and there are a lot of DG customers also over there. So, they have the possibility to do the same thing in SA as in China. It will IMO only generate even more revenues. This achieved China deal will also create possibilities in the US because they will notice what EGNS is capable of. So, in comparison with the last year they will be able to show better revenues from q3 and on. Q2 figures will be somewhat better, q3 even more and q4 even much more IMO. And next year I expect revenues of about $ 20 mln. or more. So, when calculating with big margins, 80%, and fully diluted with 22 mln. shares (after the options/warrants are exercised there will be about 13 mln. shares in the float), we should see EBITDA of about $ 0.73 a share. With a P/EBITDA of 10 (conservative) this would calculate into a $ 7-8 stock IMO. And now about the stockprice. The run up to $ 3 a few months ago was caused because of the possible acquisition of CBR (which has split up in Intermost and an other company). CBR had the license to built a Chinese Yahoo and this news hit up on the internet news pages and the stock was bought and it ran up. On the way up the MM are building up a short position because there are more buyers than sellers. When the profit taking started at $ 3 and lower, the stock went down and MM were able to cover their short positions. BTW, Intermost (former CBR) is very eager to do business with the new JV and they have a strong sales force, so this would be very positive also. Why hasn't the stock run up again on the good Data General and China news. Because nobody is looking at Y2K stocks in which EGNS is categorized and because it is hard to tell if the company will get contracts. So, when we will see the contracts getting in, we will see good q figures coming out, we will see the China deal and SA deal closed we will see the stock move up. And you can expect interest from bigger investors also in the next months, because when all the deals are closed EGNS will be going back to the Regional Investors Bankers Association and present the new EGNS and then we can expect them to make a move. Other important information. EGNS is a fully reporting company for many years, has no debt and has cash in the bank. So, for interested people, this is my # 1 stock pick and I will hold on to it for a long time because I believe this company will give me 300-400% return on my investment within the next months. More info can be found on the thread on SI but also on www.ragingbull.com (this thread is free BTW). If you have any questions, let me know. I just hope I contributed and hope to see you on one of the threads soon or we can discuss it over here. Rene.