Xiao Mo: The Grand game of the first quarter expected to be poor to maintain overweight rating

Beijing time March 1 Evening News, JPMorgan released a study in Monday, said the Grand game (Nasdaq:game) 2009 fourth quarter earnings, but the first quarter of 2010 disappointing results, the company needs to gradually regain investor confidence.　　JPMorgan maintains a rating on Shanda's "overweight" (overweight). The following is a summary of the report: The Shanda game was previously announced, with revenues of $195.5 million in the fourth quarter of 2009 (up 5% in the chain, up 39.4% per cent year-on-year);　　Shanda played 23 cents per share after the quarterly adjustment (2.6% on the chain, but up 45.3% per cent on a year earlier), which JPMorgan previously expected to yield 20 cents a share in the quarter, with the market expecting an average earnings of 21 cents per share. JPMorgan said the 2009 fourth-quarter results of the Shanda game were in line with expectations. The average paid user (APA) and per-user average income (ARPU) rose 4% and 3%, respectively, during the season's grand game multiplayer online role-playing game (MMORPG).　　When the quarterly multiplayer online role-playing game revenue grew by 7.6%, casual gaming revenue fell 28% on a month-on-month basis, mainly because the quarter was the off-season. JPMorgan said the first-quarter results of the Grand games released in 2010 were disappointing. Shanda games are expected to fall 10% to 15% in the first quarter of 2010, while the market is expected to grow by 6% per cent on a month-on-month basis. Shanda blamed the first-quarter income fall on the "Blood Legend" (MIR 2) upgrade package released in December 2009. "Blood legend" accounted for the grand game income of about 50%. The new features of the upgrade package have led to an imbalance in the game (a high level of investment between the player and the low money into the unfair situation between the players), leading some gamers to reduce their financial commitment to the blood legend.　　Shanda Games has released patches and plans to release the new upgrade package by April. JPMorgan also challenged the ability to execute Shanda's games, thinking that the CEO's departure would have a negative impact and that the "blood legend" was weaker than expected. But JPMorgan believes Shanda has the industry's leading gaming brand, has the largest sales and marketing channels, and has an excellent track record of past executions.　　JPMorgan's view is that Shanda's games need two to three quarters of outstanding performance to win back investor confidence and push up share prices. JPMorgan maintained an overweight rating on Shanda, cutting its December 2010 target share price from $14.5 trillion to $11.　　JPMorgan Chase, after diluting the Grand games in 2010 and 2011, cut earnings per share by 19% and 23% respectively, while lowering revenue forecasts for the games. JPMorgan said that in accordance with the Grand Games in 2010 and 2011 after dilution after diluted earnings per share and the bank's goal for the grand game set the target price calculation, the Grand game 2010 expected the profit ratio of 14.2 times times, 2011 expected the profit ratio is 11.6 times times.　　Excluding cash positions totaling $436.4 million trillion (1.3 US dollars per share), JPMorgan's expected 2010-year profit ratio for Shanda was 13 times times that of 2011, which was 10.7 times times the expected profit ratio. JPMorgan's view is that, given its strong business and cash position, the stock is currently undervalued, maintaining an overweight rating for Shanda games. (Yi Fei)