Nomura maintains Shanda game to buy rating target 4 USD

News and information Technology http://www.aliyun.com/zixun/aggregation/17197.html "> Beijing time March 5, Nomura released its research report today to maintain the" buy "rating of the Shanda game stock, with a target price of $4.

The following is a summary of the report:

Investors have been worried about the short-term growth prospects of Shanda games in the past 3 quarters, especially given the slowing growth of old games such as the Blood legend and the legendary world, and the uncertain timing of new games such as Final Fantasy 14.

Shanda Gaming shares have been under pressure to fluctuate between 2.70 and 3.20 in recent months. While we understand that business fundamentals are still relatively weak and uncertainties remain in the short term, we believe that all risks are reflected in the stock price. And according to our cross check using the classification plus total valuation method (SOTP), the unit appears to be undervalued.

When using the classification plus total valuation method for cross check, we noted that:

1 Grand game has 453 million USD net cash and cash equivalents (excluding cash from Actoz). In addition, according to Actoz's latest stock price calculation, the company's 51.2% stake is also worth 218 million of dollars. The total amount of these assets is $671 million trillion, equivalent to $2.47 per share of ads (US depository shares), accounting for about 82.3% of Shanda's $814 million worth.

2 in the 2013 fiscal year, we estimate that Shanda will generate 205.4 million dollars in cash flow (excluding Actoz), which contributes $0.76 per share, with a corresponding free cash flow yield of 25.3%.

3 The total amount of net cash, Actoz shares and free cash flow in fiscal year 2013 will be 877 million U.S. dollars, equivalent to $3.23 per share ads. Even if the company's free cash flow of fiscal year 2013 is only 50% of our expectation, that is, ads of $0.38 per share, the total will still reach ads of $2.85 per share.

4) We believe that Shanda's current 3-dollar share price suggests that its core gaming business is valued at almost zero. While business fundamentals may be weak in the short term, we believe that the big game fiscal year 2014 and future earnings and cash flows may still be positive.

In the first quarter of fiscal year 2013, we maintained revenue forecasts for 173.6 million US dollars (0.9% quarter-on-quarter growth) and 0.16 US dollar non-US GAAP earnings per share. For the entire 2013 fiscal year, our total revenue is expected to remain at $728.9 million (down 1.7%), and non-US GAAP earnings per share are expected to remain at $0.68 trillion. We reiterate the "buy" rating of the Grand game, with a target price of $4, which corresponds to 5.9 times times the expected earnings per share of our 2013 fiscal year 0.68. In our view, the risk of the unit falling at this stage is very small.