Goldman Sachs maintains a neutral rating on Shanda games stocks

Lead: Goldman Sachs today published its investment report, maintaining a "neutral" (Neutral) rating for the Nasdaq:game stock game. The following is a summary of the report: The News of the Grand game in the third quarter to achieve income of 1.096 billion yuan, 14% year-on-year decline, the chain down 2%, basically with our expectations and the company's guidance forecast flat. Shanda games to achieve operating profit of 306 million yuan, and we and analysts average expectations. MMORPG (Massively multiplayer online role-playing game) fell 3%, down 18% year-on-year, to the same extent as we expected. APA (Active pay account) decreased by 5% in the chain, only 9.2 million people, while ARPU (per user average income) stable at 35 yuan. Because of "Legend II" and "legendary World" by reducing profits to stabilize the game, so MMORPG the chain of decline has brought negative effects. Leisure gaming revenue is 8% lower than we expected, but it is still achieving 7% quarter-on-quarter growth, benefiting from positive seasonal factors. APA Leisure game to reduce 10%,ARPU quarter-on-quarter growth of 18%, reached 31 yuan.　　Other income is 48 million yuan, higher than our 27 million yuan forecast, mainly because the grand game began to be counted separately into overseas income. Grand game U.S. General accounting standards Gross profit margin of 59% (the chain growth of 1%), slightly higher than our expectations, rather than the U.S. general accounting standards operating profit rate of 31.2% (2% chain reduction, 8% year-on-year), and our expectations are flat. Equity incentive spending is 23 million yuan, less than 44 million yuan in the second quarter. The U.S. General accounting standards per share of U.S. depository shares yield of 0.15 U.S. dollars, lower than our expectations of 18%, mainly because of the difference in government subsidies. As of the third quarter, the Grand game cash reserves of 3 billion yuan, equivalent to each share of the United States depository shares for 1.60 U.S. dollars. Deferred income rose 15% to 222 million yuan a quarter.　　As of November 2010, Shanda has bought 5.8 million shares in the US depository for 36 million yuan. Analysis we believe that the third quarter results are basically the same as expected. The month-on-month decline of MMORPG's income shows the weakness of Legend II, but it is offset by the new revenue contribution of the Dragon Valley.　　The Shanda game will give the fourth-quarter guidance forecast during the analyst call meeting, and we expect to focus mainly on the stability of Legend II and whether the Dragon Valley can lead to a return to growth on a month-on-month basis. The meaning of our expectations and the target share price is being studied, depending on today's analyst conference call. (PEI)