Morgan Stanley launches investment report today to maintain a nasdaq:cyou rating

The following is a summary of the contents of the report:

Profit margins will be under pressure in the near term, mainly because of the investment in new games and mobile products, which we expect to rebound in the first half of 2014.

Third-quarter results: Revenue of 183 million U.S. dollars, an increase of 10% per cent, consistent with the company's guiding expectations. Diluted earnings per share of 1.37 U.S. dollars, down 4% year-on-year, consistent with corporate guidance expectations, compared to our expectations of 3%.

Positive factors: 1 The fourth quarter will be expected to increase revenue by 5% to 9%, year-on-year growth of 11% to 15%. Game revenues will grow by 6% to 9%, up from 8% to 11% year-on-year. 2 "New Tianlong Eight" October 25 public test, 3 net cash 526 million U.S. dollars, the market value of 25% to 30%.

Negative factors: 1. According to non-US general accounting standards, the net profit margin of the fourth quarter will fall 9% to 11% year on year, which is mainly dragged down by higher marketing costs and game licensing fees. 2 The total number of active users for the month is 31 million, down 21% year-on-year. But with the launch of the new Tianlong Eight, the rally has begun.

Valuation: We continue to maintain a "overweight" rating on our shares, bringing our target share price from 44 US dollars down to $40.