The perfect world share price seriously underestimated investors, Nasdaq does not believe "two startups"

After Grand and giant, the perfect world will be privatized. On January 2, 2015, the perfect world of Nasdaq-listed Chinese gaming companies announced a 20-dollar privatisation proposal from the company's chairman, Chi, on December 31, 2014. If the perfect world is privatized, it will be the 3rd proposed privatisation of the company.

The reason for privatization is that its share price is considered grossly undervalued. Some analysts believe that the perfect world net cash balance plus office building, the value of more than 4 billion yuan, which is still stable to provide cash flow and profit of the game business, and its market value is currently more than 5 billion. Fosun International and other companies continue to increase their holdings of perfect world stocks.

At present, the relevant online gaming industry in the domestic a-share has a better valuation, which also allows the privatization of a A-shares to become a possible path. In less than one months before this proposal was announced, the perfect world of affiliated companies was the perfect film and television in the A-share backdoor listing obtained the CSRC's approval. The privatisation of the perfect world also gives investors the expectation that they will be injected into a shares listed companies.

Stock prices are grossly undervalued, attracting investors

In July 2007, the perfect world of online games was listed on Nasdaq at a price of 16 dollars, and the stock was priced at 15.76 U.S. dollars, lower than the IPO offer, before the perfect World chairman Chi announced the privatisation proposal in January this year. If the price were to be compared with the highest price of $48.1 in September 2009, the share price had fallen by nearly 70%.

Chi offered to buy all the other Perfect world shares at $20 a share, a price equivalent to a premium of 25.7% on the perfect World December 30, 2014 stock closing.

At present, the perfect world's market value in 900 million U.S. dollars up and down, into renminbi but more than 5 billion, p/E is more than 9 times times. In contrast, a-share game company Palm Technology market value of 20.5 billion yuan, the main interactive entertainment market value of 9.56 billion yuan.

Industry insiders have pointed out that the perfect world share price is seriously underestimated.

January 2, 2015, the perfect World announced the privatisation proposal on the day, the share price rose 3.49 U.S. dollars, closed at 19.25 U.S. dollars, the rise of 22.14%. In investors ' forums such as snowball, many investors expect the price of privatisation to be at 25 to 30 dollars, even though the chi is currently offering a privatisation price of $20 trillion.

Shen Nong Investment analyst Wang Zhuoji is one of the investors who firmly sees the perfect world at the Snowball Forum, and last week he shared his investment logic in the perfect world with the Beijing News reporter.

Wang Zhuoji said that the original reason to choose the perfect world, on the one hand because the company is seriously underestimated, from the financial valuation, the perfect World's P/E ratio, the city net rate is lower than peers, the unit market value corresponding to the monthly water, research and development costs are higher than peers; He found that some of the big companies in the country already have a strong interest in such companies. "I thought more about the possibility of bat equity, akin to Ali investing in Youku potatoes and Weibo. "Wang Zhuoji said.

In the high-level contact with some of the domestic companies, he accidentally found that some companies to the perfect world deep Research: "I once asked a boss, how he sees the perfect world, the other side of the first sentence is that this is a company breaking through net cash." ”

This remark is not empty. In April 2013, there have been reports that the perfect world net cash balance of more than 2 billion yuan, plus Chaoyang District office value of more than 4 billion yuan, which is not the stability of the traditional business value of a large number of benefits.

Some of the big investment firms in the country have already acted to hunt undervalued assets like the perfect world.

An important buyer is the Fosun. In recent years, Fosun International has been overweight in the perfect world. 2012, Fosun International bought 3.94 million shares of the perfect world, accounting for more than 8.31%, 2013, Fosun continued to increase holdings, the proportion reached 13.17%. At present, Fosun International is the perfect second largest shareholder in the world, the shareholding ratio is second only to the perfect World Chairman Chi.

Nasdaq doesn't believe in "two startups"

Why is the perfect world undervalued?

Shanda Network CEO Chen has repeatedly stated publicly that "Wall Street does not understand Chinese games." "Previously, companies such as giants networks and Shanda games have been privatized because their share prices have been underestimated," he said. The Giants finally completed privatisation in July 2014 and formally withdrew from the city. In the retreat, the giant's stock price fixed at the close of the 11.92 U.S. dollars, the market value of 2.87 billion U.S. dollars, listed nearly 7 years, the giant network lost nearly half of the market.

Earlier privatization is the Grand network, the company landed in 2004 Nasdaq, its subsidiary of the Grand Game 2009 also landed in the U.S. stock. But in 2011, the Shanda network began to privatize, the February 2012 privatisation deal was completed, and in January 2014, Shanda Games were announced to be privatized, and privatization is now underway.

A U.S. stock analyst told reporters that giant networks, Shanda games, the perfect world, these companies are the traditional end of the company, is now moving to the hands of the transition, belong to the "two pioneering", the traditional end-trip growth may be the capital market to underestimate the reasons for the value.

In terms of profit figures, the performance of the perfect world is indeed slipping. 2010, the perfect World net profit of 840 million Yuan, 2011 to 984 million yuan, and 2012 net profit almost halved, leaving only 540 million yuan, 2013 net profit is only 542 million yuan.

Sluggish performance directly led to a slump in share prices, and the perfect world, for a long time from 2011 to 2013, was below $10 trillion.

However, behind the dismal performance, there is a hidden opportunity.

Some insiders pointed out that the perfect world online business such as "Perfect World International Edition", "The fairy" and so on are still creating a lot of cash flow and profits, the net profit is because the company to mobile gaming transformation, put a lot of money. Financial results show that the perfect world to continue to increase the hand-travel research and development and market costs of investment. The person believes that while the short-term burning of money caused by the pressure, but will enhance long-term competitiveness.

In addition, from the second half of 2013 to date, the perfect world has acquired video game bus, 766, the Pacific and other games sites, and through with Baidu cool swap shares, get the actual operation of the pocket bus right. The perfect game puts considerable profits into the "two-time venture".

Privatization triggers regression of a-share speculation

There is a view that the perfect world to privatize, is to return a shares.

With the concept of hand-swimming, a-share listed game company's market value has been rising, multiples frequently. For example, the Sino-Green PO's P/E ratio of more than 100 times times, palm technology, God Interactive Backdoor branch Crown Wood after the P/E ratio is also far beyond the perfect, grand P/E. Industry believes that it is this point, to the perfect world to return a share of power.

The perfect world has not disclosed much more information about privatization and future capital operations, but told Beijing News that the board of Directors has formed a special committee of three independent directors to assess Mr. Chi's proposal for privatization, and no decision has yet been taken.

According to media reports, in October 2014, the perfect World announced the reorganization of the research and development team, the establishment of five new subsidiaries, five new companies business focus, are hand-tour.

Industry analysis that, in the hand parade development period, the most important to seize the market, which requires a large amount of capital investment, on the one hand, rapid development of new products, on the other hand layout promotion channels. The choice to privatize at this time, for perfection means to remove the burden of performance, to put more resources in the new business development operations.

According to media reports, Guixe, the giant's president, said privatisation was giving the giant network a breather. "In the past quarter, the company's operating pressure is very large, but also often lead to corporate strategic short-sighted, so that there are problems in product planning." ”

A-share listing is difficult to determine

It is noteworthy that the perfect world of the relevant company perfect film and television, just in the A-share backdoor Jinlei shares listed, as early as 2011, this asset is from the United States listed in the perfect world of stripping.

The privatisation proposal of the perfect world, let some investors of a shares have this expectation--will the perfect world's game assets inject into the Jinlei shares of listed companies in the future? In fact, in the A-share market, "Film + Game" is the hot speculation theme.

July 2010, the perfect world with about 110 million yuan and 82.3 million yuan of cash to invest and buy Beijing Xin Bao Source and Shanghai Bao Hong Film majority stake. Xin Bao Source and Acer mainly engaged in film and television filming, production and distribution, including the audience well-known TV drama "Struggle", "My Youth who Master", "like the Fog like rain and wind" and so on. August 2011, the perfect World at 360 million yuan price external sales of its film and television culture subsidiary perfect movie, this distance July 2010 Perfect world to buy film and television company in the past just a year.

At that time, the owner of the company, is the Beijing happy Permanent Film Culture Co., Ltd., the actual control person, is the perfect World Chairman Chi.

In the perfect film from the listed company after the stripping, in November 2011, the company's main cast "lovelorn 33 days" release, and Harvest Box office miracle, 350 million yuan total box office became the most box-office small cost film, and triggered the same type of film.

September 2014, the perfect film and television backdoor Jinlei shares landed a shares, December 2014, the asset reorganization was approved by the CSRC.

In some investor forums, investors have suggested that if the Jinlei shares can form a "film + game" corporate structure, valuations should refer to Huayi Brothers. Huayi Brothers, the film company, has invested in technology and silverside technology, and is implementing a "video-interactive" strategy, compared to the market capitalisation of Jinlei shares of 9.1 billion, while Huayi Brothers has a market capitalisation of 34 billion. In other words, a perfect world may be a sudden increase in billions.

But some analysts point out that the perfect world has only received Chi's privatisation proposals, and there is still uncertainty about whether it will eventually be privatized. After privatization, the perfect game asset even if return a A shares, also may be independent listing, whether will inject Jinlei shares also have doubt.