Jaffray Tuesday Research Report to maintain a neutral rating for Shanda games

Summary: Check the latest quotes Beijing time September 4 afternoon news, the U.S. investment Bank Jaffray (PiperJaffray) released a study in Tuesday, to maintain the Grand game (Nasdaq:game) stock neutral (Neutral) rating, as well as the 4 dollar target share price unchanged. The following is a summary of the report

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Beijing time September 4 afternoon news, the U.S. investment Bank Jaffray (PiperJaffray) released a study in Tuesday, maintaining the Grand game (nasdaq:game) Stock "neutral" (Neutral) rating, and the 4 dollar target share price unchanged.

The following is a summary of the report:

We maintain a "neutral" rating for the Grand game, as we look forward to further implementation of the game pipeline and a sustained pick-up in core game performance. Shanda Games revenue and earnings per share exceeded expectations in the second quarter. The company's third-quarter revenue guidance forecast was 3% to 4% per cent quarter-on-quarter, below what we and Wall Street had expected. We lowered our revenue forecasts to reflect the sluggish growth of MPU (monthly paid subscribers). But with the inclusion of the latest acquisitions, we raised the company's earnings forecasts per share. We still maintain the 4 dollar target share price, corresponding to the 2014-year earnings ratio of 2.5 times times, plus 1.83 dollars per share of net cash.

Second quarter revenue and earnings per share exceeded expectations. Shanda Games in the second quarter to achieve revenue of 175.6 million U.S. dollars (the chain growth of 1.5%), slightly higher than our 173.2 million U.S. dollars expected (Wall Street on average expected to be 174.7 million dollars). GAAP (US general accounting standards) yields 0.22 dollars per share, higher than us and Wall Street's 0.20 dollar forecasts.

Strategic focus shifts to mobile games. In the second quarter, mobile gaming revenues were 16.5 million dollars, accounting for about 9% of total revenue. Although the "Million King" in South Korea has slipped, but the game since its release in July this year has been in the Chinese market has grown quite impressive. There are 36 mobile games in the company's current game pipeline. Thanks to the support of the new G-home mobile platform, mobile gaming is expected to contribute 50% of revenue to the company within 3-5 years,

Wait for the game pipeline to be implemented. Other important MMO (large multiplayer online) games of interest include self-developed 0 world (last year's survey), Dungeon Striker (second quarter of 2014) and Final Fantasy 14 (officially released early next year). Important games to watch in mobile gaming include the progress of the Million King Arthur in China, Solitaire game "Guardian Cross", mobile version of "The Valley of the Dragon" and "Hell" (the game is expected to be released in South Korea at the end of the third quarter or the beginning of the fourth quarter, after the end of the fourth quarter in China).

Expected adjustments. We lowered the third-quarter revenue forecast from $186.3 million trillion to $182.4 million (the company's guidance forecast was 180.9 million to 182.6 million dollars and Wall Street was expected to be $184 million) to reflect the continued weakness of the company's MMO game MPU growth. However, the launch of the Million-King Arthur in China has helped to offset the downturn by boosting the mobile business rebound. We're going to raise the grand game 2013 earnings per share from $0.69 to $0.81 to consolidate operations and distribution platform services from the parent company's Shanda network. We have a big game. The NON-GAAP operating profit rate of the third quarter is expected to be 42%, which conforms to the guidance forecast of management 42% to 43%.