Morgan Stanley maintains a swim in stock reduction rating target 22 USD

Beijing Time July 29 Evening News, Morgan Stanley today issued an investment report to maintain a nasdaq:cyou "reduction" rating, the target share price from 23.80 U.S. dollars to 22.40 dollars.

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

In the second quarter of the 2014 fiscal year, the diluted earnings per share exceeded expectations, but for the first time the revenue fell below the company's guiding expectations. Traditional game revenues continue to slump, and the number of active users continues to decline. In the short term, the impetus that the platform strategy brings is still limited, and investment will continue. To this end, we continue to maintain a "reduction" rating of the stock.

Revenue for the first time lower than the guidance expected: the second quarter of the total revenue of 177.8 million U.S. dollars, the chain fell 2%, year-on-year decline of 3%, compared with the company's guidance expected lower limit of 2.3%, mainly by the game's low lower level of revenue drag. The second quarter of the game revenue of 153.9 million U.S. dollars, the chain fell 6%, year-on-year decline of 9%, compared with the company's guidance expected lower 4.4%. This is the first quarter since the initial public offering, which is lower than the company's guiding expectations. Company management has said that the main decline in revenue is "Tianlong eight", "the Divine Comedy" and "Pinball Hall," the performance of the downturn.

Continued investment promotion platform: Tour management in the earnings conference call, said, will continue to pursue platform strategy, the promotion platform of higher sales and marketing expenses will continue at least until the end of 2015. In addition, the tour is likely to release new games in the second half of this year, so operating expenses will continue to grow, and margins will be under pressure.

Expected game revenue rebound: 3 upcoming PC games and several pages and mobile games, is expected in the second half of this year to reverse the trend of game revenue decline.

Valuation: We continue to maintain a "reduction" in the share of the stock, the target share price from 23.80 U.S. dollars to 22.40 U.S. dollars. (Li Ming)