Palicapital the grand game to buy

Beijing time September 30 Evening News, U.S. investment company Pali Capital issued an investment report in Wednesday, announced the grand game into the scope of the study, and give its "buy" (purchase) Initial rating. The following is the full report: We have included Shanda games in the scope of the study and given a "buy" rating. Shanda games are now in a favorable position to achieve long-term growth. The company's share price is now 9% per cent lower than the initial public offering (IPO), thanks to concerns about the short-term growth capability of Shanda games. But we think the market worries are excessive. With strong business fundamentals, Shanda Games will achieve long-term growth, while the seamless combination of the 3 growth drivers will drive the company's sustainable growth: 1 Grand games have a variety of game products that can attract a wider range of players. 2 The operation ability of Shanda game will ensure the stickiness of the user. 3 The company's upcoming new games will continue to attract new players. Supported by strong fundamentals, we believe that the current valuation level of Shanda games is low. By 2010 per share earnings forecasts, Shanda games currently has a dynamic P/E ratio of 12 times times lower than the industry level of 11%.　　Given the strong fundamentals and attractive valuations of Shanda games, we give the grand game a "buy" rating and a 15 dollar target share price. The IPO price for Shanda Games is 12.50 U.S. dollars, at the upper limit of the IPO price range of 10.50 to 12.50. Shanda's shares are now 9% below the IPO price. The reason for the sell-off is that short term growth is not enough to prop up stock prices, especially given the weaker performance of the tower in the second quarter, which is likely to continue into the third quarter. However, we believe that the fourth quarter Shanda games will be very strong business operations. This is based on 3 reasons: 1 The performance of the "Tower of Eternity" is becoming stable and showing upward trend. The effect of the "Tower of Eternity" data will be fully reflected in the fourth quarter of this year. As a new game launched from April 16 to 17th, the performance of the "Tower of Eternity" is controversial. The game initially performed well, but was subsequently influenced by Plug-ins. In order to counter the plug-in and retain users, the grand game on August 13 launched a data film. However, due to the large installation package, Shanda games will take some time to complete the full upgrade to the data sheet. 2 The other games that the Shanda games run are growing well.　　3 games under the umbrella of the game is not likely to face the risk of excessive fees, because Shanda games run more online, and do not rely on a one or two game. The option pool for Shanda Games is about 44 million shares (equivalent to 22 million shares in the US depository). At the end of the second quarter of this year, about half of the options were awarded to Shanda game employees. Some of these options can be done in the third quarter of this year. Therefore, we expect a total of 9.1 million dollars in stock compensation (SBC), which will make the grand game of the third quarter of the US accounting standard gross marginThe rate fell from 37.2% in the second quarter to 36.3%.　　But we think the figure will rise again to 37.9% in the fourth quarter. We believe that, in view of its more perfect game product line, the valuation level of Shanda game should be higher than the average level of the Chinese net swims industry, or at least not lower than the level of other companies in the same industry. NetEase's current P/E ratio is 15.9 times times, so we think 15.5 times times the P/E ratio is reasonable for shanda games. At this price-earnings ratio, the goal of Shanda Games is 15 dollars. We believe that the Grand game business fundamentals listed below support such a P/E ratio: 1. A variety of game products will attract players of different interests and wider range. One of the big competitive advantages of Shanda is its variety of game products, so companies that concentrate on products can attract a larger group of players. Shanda Game products include 3D, 2.5D and 2D games, according to the type of game includes fighting games, round game, strategy-type web games, action games, real-time strategy games, horizontal version of Action games, third-person shooter games. NetEase's online games more to the fantasy type, and perfect time and space of the online games to the main.　　Chinese nets play a different game preferences, so Shanda games can provide players in other places can not find the game products, as the Chinese game market continues to develop, we believe that online games players and the company's market segmentation will be inevitable. 2. Shanda games have the ability to operate games that other companies do not have, which will ensure the stickiness of the game. From the first quarter of 2007 to the two quarter of 2009, the number of activities paid accounts for Shanda's games rose from 293,000 to 493,000. This proves that Shanda's game has a high stickiness. Shanda has more than 10 years of operating experience and has run at least 31 games, more than any other peer. The quality of the game and the diversity of the games to make a deeper understanding of how to operate online games.　　As a result, the company knows what kind of content is popular with players and can bring the right content to the player in a timely manner, which will increase the player's interest in the game. 3. The rich new games will help the Grand games keep adding new users. Shanda Games currently has 24 games will be launched, and perfect time and space and NetEase only 7 and 9 respectively. We believe that the number of games to be launched will continue to grow, because the company has a variety of new game sources, including: 1 of its own research and development of the game, 2 from the "18 Plan" game, 3 authorized game, 4) jointly developed game. The source diversification strategy has become an industry trend.　　More importantly, Shanda's ability to operate will make it easier for the company to avoid a variety of games that negatively affect each other, which is critical to attracting new players through new games. Shanda games are exposed to the following risks: 1 The impact of fraud and private servers in the game; 2 the centralization of revenue; 3 the market competition tends to be fierce; 4 The company's management lacks experience in communication with Wall Street; 5 changes in regulation; 6) regulatory growth. (D-Gold)