We haven’t written about this company for a while, as Chinese shares were in a heavy sell-off and there wasn’t much news out. But that doesn’t mean we changed our opinion about eFuture, Chinese producer of supply chain management software. There is great news out this morning.
Here is the news:
- BEIJING, July 23 /Xinhua-PRNewswire/ — eFuture Information Technology Inc. (Nasdaq: EFUT – News; ”eFuture”), a leading provider of front-end supply chain management software and services to China’s retail and consumer goods industries, today announced that it has signed a contract to provide its mySHOP Retail Business Management System 3.0 (”mySHOP 3.0” or ”the system”) to Tiens Group Co., Ltd. (”Tiens Group”). eFuture will install the system at Tiens Group’s six distribution centers, 100 subsidiary stores, 100 direct- sales stores and 1,000 franchised chain stores, which have a total customer base of over 10 million.
There is little we have to add, apart from the fact that this is substantial (“100 subsidiary stores, 1000 franchised chain stores” etc.). You have to realize that turnover in this business is very low, so once a client has been won over, other chances open up:
- Other software could be sold, and EFUT has been on an acquisition spree to both increase it’s geographical footprint but more especially to get the best complimentary software
- Service contract is free for the first year, but will provide monthly revenues in a year from now.
We think it’s a neat business model and the Chinese market still offers huge opportunities. The market seems to agree with us this morning. It’s up 10%, and rightly so. We think long-term, there is significantly more upside here.