1. Profile
Shanda Interactive Entertainment Limited (SNDA), through its subsidiaries, engages in the development and operation of online games in China. It offers a portfolio of online games, which users play over the Internet. The company's content offerings primarily comprise online games, including massively multiplayer online role playing games (MMORPGs) and casual games, as well as online chess and board games, a network PC game platform, and wireless games. MMORPGs are action-adventure based, and draw upon martial arts and combat themes. Casual games are session-based, which can be played to a conclusion within a short period of time. Shanda Interactive also offers wireless games to the users of mobile phones. In addition, the company, through its EZ Center platform, provides users with access to additional content and services, including movies, music, literature works, finance and investment information, travel information, news, and educational programs. As of December 31, 2005, it operated 12 online games, including 7 MMORPGs and 5 casual games. The company was co-founded by Tianqiao Chen and Danian Chen in 1999 and is based in Shanghai, China. Shanda Interactive Entertainment Limited is a subsidiary of Skyline Media Limited.
2. Technical Analysis
2.1. Long Term Chart
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37366;image)
SNDA has been bullish, has been bearish and it is long term bullish now.
2.2. Short term chart
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37367;image)
The stock has been building an ascending channel, with higher highs and higher lows, which is by definition a bull trend. The 50 days SMA is also above the 200 days SMA.
3. Fundamental Analysis
3.1. Dilution Factor
3.1.1. # Shares Outstanding & Market Cap
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37368;image)
The number of ADS outstanding has remained fairly stable over the past 4 years. The current market cap is $2 B.
3.1.2. Balance Sheet Analysis
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37414;image)
The company transformed its long term debt in short term debt, since long term debt declined from $275 M in 2005 to just $0.6 M now and the current ratio declined from 5.53 in 2005 to 1.4 in Q1 2007.
I must consider this balance sheet healthy, even though the current ratio is below 2, because cash and marketable securities account for 92% of total current assets. The company has $462.5 M in cash, marketable securities and short term investments.
Considering this information I expect the company to increase the share count by just 1% a year going forward. The dilution factor on my valuation model will be 1.01.
3.2. Revenues & Gross Margin
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37369;image)
SNDA's revenues are expected to grow about 20% a year going forward, but Q1 2007 was exceptionally strong, with revenues growing 55.9% from Q1 2006, to a record of $68.8 M.
Gross margin has remained stable around the 60% mark.
Since Q1 2007 was very strong I'm going to be more optimistic than the average analyst and I'll expect 30% revenue CAGR for the next 3 years (1.3 on the valuation model).
3.3. EPS & Net Profit Margin
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37370;image)
I enjoy fat margin businesses, and SNDA is clearly one of those. Not as fat as NTES, though. Maybe this means it is possible for SNDA's net profit margin to expand from roughly 33% to 50% or more. That would be a very significant fundamental development.
Net profit margin in Q1 2007 (without the benefit of a sale of SINA's shares) already expanded to 38.37%, therefore I'll consider a net profit margin of 40% in my valuation model.
3.4. EPS Multiple Estimate
The Internet Software & Services industry average earnings multiple is 37.26 (http://finance.yahoo.com/q/co?s=SNDA), but I'll consider just 30 on my valuation model (which is high, but considering China's economy growth rate and the company's internal fundamentals I think it is appropriate).
4. Valuation Model
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37371;image)
Inserting the 4 working variables in my valuation model I get to the conclusion that SNDA is attractive at this point, with an expected share price CAGR of 39% for the next three years. The optimal selling price is $48.32 and the stock closed Friday at $28.06.
5. Trading Plan
The trading plan is to buy SNDA, 6.66% of capital as always.
Looks good should go up tomorrow, with china up big on Monday.
Target $40.00
David,
Don't you think that you should wait for the stock to reach the support line of the trend, instead of jumping in the middle of the channel? I know that your main vision is the fundamental value of the stock, but the technical analysis is also important....I'm wainting a little bit more on this one.
Cheers.
P.S. - I'm convincing my wife to go to Ericeira :P
Quote from: yukiii on May 29, 2007, 05:16:15 AM
Looks good should go up tomorrow, with china up big on Monday.
Target $40.00
Yes, China was up a lot on Monday, but down today, so probably not a big factor. I'm glad you like it too :)
QuoteDavid,
Don't you think that you should wait for the stock to reach the support line of the trend, instead of jumping in the middle of the channel? I know that your main vision is the fundamental value of the stock, but the technical analysis is also important....I'm wainting a little bit more on this one.
Hi Dracull, yes, probably SNDA will eventually touch the base of its ascending channel, but that can be at a higher price than today's price. However I don't blame you for trying to get it a bit cheaper, that would have worked with the stocks I bought recently (doesn't mean SNDA won't shoot higher right away).
QuoteP.S. - I'm convincing my wife to go to Ericeira :P
Life is good in Ericeira, take her for a lunch at Cesar's restaurant (no, it's not mine ;D) and then for a walk in Santa Marta's park on a sunny day (but not on a holiday). I'm positive she'll be convinced.
Quote from: David Randolph on May 29, 2007, 05:43:43 AM
Quote from: yukiii on May 29, 2007, 05:16:15 AM
Looks good should go up tomorrow, with china up big on Monday.
Target $40.00
Yes, China was up a lot on Monday, but down today, so probably not a big factor. I'm glad you like it too :)
Quote
up 2.4% today
Asian Stocks Rise as Japan's Jobless Rate Drops; Mizuho Gains
By Chen Shiyin and Chua Kong Ho
May 29 (Bloomberg) -- Asian stocks advanced for a second day after reports in Japan showed an unexpected drop in unemployment and a rise in household spending.
Mizuho Financial Group Inc. climbed to a three-month high, on speculation the improving economy will allow the Bank of Japan to lift interest rates, widening lenders' profit margins. China's CSI 300 Index rose to its third straight record as households poured more money into equities, drawn by a rally that's made the benchmark the world's best performer this year.
``The positive economic data from Japan is helping sentiment for the rest of the region,'' said Leslie Phang, who helps manage about $1 billion at Commonwealth Private Bank in Singapore. ``China's continued rally also augurs well for Asia as a sudden sell-off will spook investors.''
Hi yukiii, I guess it depends on the Index used. I've been following China by the Shangai SE B index, which was down 3.41% today:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37372;image)
Bloomberg uses this Index, but perhaps your CSI 300 Index is a better gauge.
David,
Why would you want to get into SNDA when you have a winner like GIGM?
The upside potential in GIGM is far higher..
Nick
Support on this is $27.00 buy now at $27.85, or take a chance it goes to support. I am in at $27.85
Quote from: nicknite20 on May 29, 2007, 12:05:44 PM
David,
Why would you want to get into SNDA when you have a winner like GIGM?
The upside potential in GIGM is far higher..
Nick
Why do you think GIGM potential is much higher then SNDA? I don't see it.
GIGM has a 5 year 40% Growth Rate with a low PEG of I think 0.5
SNDA has a 5 year 20% Growth Rate with a higher PEG relative to GIGM.
Quote from: wxmang on May 29, 2007, 04:53:57 PM
GIGM has a 5 year 40% Growth Rate with a low PEG of I think 0.5
SNDA has a 5 year 20% Growth Rate with a higher PEG relative to GIGM.
Don't look at the past, this year GIGM 25% growth next quarter 0% growth, this past quarter neg growth.
SNDA 68% growth, next quarter 30% growth past quarter 43% growth.
SNDA much better Value
Point taken.
Thanks Yukii :)
I sold my GIGM today and bought SNDA, I wiil see what GIGM does next quarter.
NEW YORK, May 23 (newratings.com) - Analysts at CE Unterberg Towbin reiterate their "buy" rating on Shanda Interactive Entertainment Limited (SNDA.NAS). The target price has been raised from $34 to $40.
yukii:"Don't look at the past, this year GIGM 25% growth next quarter 0% growth, this past quarter neg growth."
GIGM next qtr 0% growth? I respectfully disagree..how did you come up with that?
Revenues grew 50% over last quarter, 95% year on year. Net Income grew 165%
I'll continue holding GIGM.
Lets compare notes (& returns) over the next 3 months.
http://www.gigamedia.com.tw/
Quote from: nicknite20 on May 29, 2007, 08:34:01 PM
yukii:"Don't look at the past, this year GIGM 25% growth next quarter 0% growth, this past quarter neg growth."
GIGM next qtr 0% growth? I respectfully disagree..how did you come up with that?
Revenues grew 50% over last quarter, 95% year on year. Net Income grew 165%
I'll continue holding GIGM.
Lets compare notes (& returns) over the next 3 months.
http://www.gigamedia.com.tw/
GIGM reported a sharp rise in first-quarter profit and revenue, but forecast sequentially lower revenue growth on a percentage basis in the current quarter.
GigaMedia attributed seasonal factors, notably a downturn in online gaming during the summer, and increased competition in its markets for the expected decline.
I you look at the last few quaters you have .17 .14 next 2 quarter estimated at .15 and .15
Where is the 165% growth now or going forward. Don't fool your self....
yukii, "sequentially lower revenue growth on a percentage basis in the current quarter" does not translate to Zero growth.
They grew 50% over previous quarter..sequentially lower growth could be anywhere upto 49%.
Anyway, doesnt matter..every1 is entitled to their opinions..I'll continue to hold GIGM.
Quote from: nicknite20 on May 29, 2007, 09:06:09 PM
yukii, "sequentially lower revenue growth on a percentage basis in the current quarter" does not translate to Zero growth.
They grew 50% over previous quarter..sequentially lower growth could be anywhere upto 49%.
Anyway, doesnt matter..every1 is entitled to their opinions..I'll continue to hold GIGM.
You are not following the last 2 quarters the next 2 quarter no sequentially growth. last 4 quarter .59
estimate for the year 2007 .64 last year 2006 .51.
Yes earning are up alot from the first quarter last year, that's history next quarter the comparables will be .18 for the 2 quarter they will not beat it. Don't be blinded by the truth.
Tommorrow probably won't be too pleasant, especially for Chinese stocks.
Quote from: BigSully1 on May 30, 2007, 12:10:09 AM
Tommorrow probably won't be too pleasant, especially for Chinese stocks.
Yeah down 6%, on triple trade price, how weak is that. It will not affect the economy.....
Quote from: yukiii on May 30, 2007, 12:13:55 AM
Quote from: BigSully1 on May 30, 2007, 12:10:09 AM
Tommorrow probably won't be too pleasant, especially for Chinese stocks.
Yeah down 6%, on triple trade price, how weak is that. It will not affect the economy.....
I didn't say it would affect the economy, smart aleck.
Quote from: nicknite20 on May 29, 2007, 12:05:44 PM
David,
Why would you want to get into SNDA when you have a winner like GIGM?
The upside potential in GIGM is far higher..
Nick
I agree with you nicknite20, I see more upside potential in GIGM than in SNDA, but I have a money management rule that says I need 15 different stocks to be full invested, so I can't put all my money in GIGM.
I'm making a strong bet on online gaming, as the group now accounts for about 20% of the Main Portfolio, since I have GIGM, NTES and SNDA from that space. I think it is a sector that will keep growing, indifferent to economic cycles, for the next 10 - 20 years.
SNDA had 2.34 million active customers in Q1 2007, I think that over time this number may very well increase 10 fold. I mean, what's 23.4 million people in a $1.3 B universe? I also believe these online gaming Chinese companies will eventually expand overseas, they're leading the world in this particular space, which is really incredible considering the innovation and technical skills involved.
SNDA has $68.8 M in revenues in Q1 2007 and forecasts $70.9 - $72.9 M in Q2 2007 (http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070523:MTFH47530_2007-05-23_01-27-06_SHA18131&type=comktNews&rpc=44), so there will be sequential revenue growth. EPS will probably be something like $0.40 - $0.45 in Q2 2007 (it was $0.37 in Q1 2007 if we exclude SINA's share sale gain). If there's some more growth in Q3 and Q4 we can be talking about a $2 EPS number for the full year of 2007 (analysts estimate just $1.38, but they've been raising estimates lately (http://finance.yahoo.com/q/ae?s=SNDA)).
I'll continue holding SNDA.
yukii, in the previous quarter, there was a 1 time gain due to sail of ISP..thats the reason EPS was higher..
"I agree with you nicknite20, I see more upside potential in GIGM than in SNDA"
Thanks David, thats all I want to hear :)
Quote from: nicknite20 on May 30, 2007, 07:46:06 AM
yukii, in the previous quarter, there was a 1 time gain due to sail of ISP..thats the reason EPS was higher..
Shanda Rises on Strong 1Q, 2Q Outlook
Wednesday May 23, 2:25 pm ET
Shanda Shares Jump Following Better-Than-Expected 1st-Quarter Earnings, 2Q Revenue Forecast
NEW YORK (AP) -- Shares of Chinese online video game operator Shanda Interactive Entertainment Ltd. advanced Wednesday after the company's first-quarter earnings soundly beat the Street's consensus estimates and it forecast better-than-expected revenue in the second quarter.
ADVERTISEMENT
Shanda's American Depositary Shares gained $1.10, or 3.8 percent, to $29.75 in afternoon trading, after hitting a new 12-month peak of $30.63 earlier in the session, topping their prior high of $28.70.
The company said late Tuesday it earned 448.8 million yuan ($58.7 million), or 80 cents per ADS for the quarter that ended March 31. Its results were aided by the sale of 4 million shares in Chinese Web portal operator Sina Corp. Stripping out that gain, Shanda's profit totaled 204 million yuan ($26.7 million), or 36 cents per ADS.
Sales increased 56 percent to 532.3 million yuan ($68.8 million), from 341.4 million yuan in the year-ago quarter. The company saw a big rise in revenue from its massively multiplayer online role-playing games, or MMORPG's, which made up the bulk of its sales -- 414 million yuan ($53.5 million), compared with 225.2 million yuan in the same quarter in 2006.
The results surpassed expectations of analysts polled by Thomson Financial, who projected earnings of 29 cents per ADS on sales of $65.7 million.
Shanda also said that while its second quarter is usually weak, it expects to see between $70.9 million and $72.9 million in quarterly sales, well above Wall Street's outlook for $67.5 million.The company also anticipates its operating margin will decline to as low as 35 percent in the quarter, because it will increase marketing efforts for new games and expansion packs Shanda is releasing.
In a client note Wednesday, C.E. Unterberg Towbin analyst Tian X. Hou raised the price target for the company to $40 from $34, representing upside of nearly 40 percent over its finishing price Tuesday of $28.64. The analyst, who also reiterated a "Buy" rating on the company, said the move resulted from Shanda's reporting
a "blowout" first quarter and positive revenue guidance for the current quarter.
Thanks for that report on SNDA yukiii. I have little doubt that after the current consolidation phase ends the stock will make a bullish breakout. The market's response to the second or third "China scare" was quite positive, with SNDA closing 1.36% higher on the day.
After the buy the rumor, sell the news, we're in the buy the sell the news mode, I don't know if you know what I mean. ;D
I'll keep on holding SNDA with strong hands.
SNDA has been surpassing analysts estimates every quarter:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37492;image)
Even though they keep raising estimates. I believe this process will continue for years to come, and the stock price, of course, will also keep rising on a trend basis. I'll continue holding SNDA.
Nothing new for SNDA today, I'll continue holding it.
SNDA's casual games revenues are growing very fast:
«-- Casual game revenues increased 26.3% quarter-over-quarter and increased 7.8% year-over-year to RMB91.0 million (US$11.8 million).»
26.3% sequential growth, and just 7.8% from the year ago levels. So momentum accelerated a lot in Q1 2007. The company has 5 casual games:
http://www.snda.com/en/products/casual.htm
I guess these games are starting to get traction now.
This is one area where the Chinese seem to be truly innovative, not just making copy cats of western products. I believe there's a great opportunity for SNDA and NTES in Europe for example, people here don't play these online games.
Anyway, China is big enough for them to grow immensely. It was interesting to note that two of SNDA's casual games were recommended by the Ministry of Culture for teenagers.
I'll keep holding SNDA.
«Revenues from MMORPGs in the first quarter of 2007 increased 9.5% quarter- over-quarter and increased 83.9% year-over-year to RMB414.0 million (US$53.5 million), accounting for 77.8% of total revenues. The sequential growth in MMORPG revenues was primarily due to the new expansion packs for our main game titles and in-game promotions related to the Chinese New Year holiday. Revenues from most of Shanda's MMORPGs increased during the quarter, with Mir II, Woool, Magical Land and ArchLord experiencing the most growth.
The number of APA for MMORPGs was 2.34 million in the first quarter of 2007, up 2.3% from 2.29 million in the fourth quarter of 2006. ARPU for MMORPGs increased 7.1% to RMB59.0 in the first quarter of 2007 from RMB55.1 in the fourth quarter of 2006, due to increased consumption of in-game premium features.»
The following games are played by 2.34 million people and are responsible for roughly 78% of the company's revenues: http://www.snda.com/en/products/mmorpgs.htm
The company will keep releasing more games and more people will play them, I don't see how this trend may stop. They have 2.34 million people playing the games, why not 10 million in the not so distant future? 10 million isn't much in a 1.3 billion people country.
I'll keep holding SNDA.
There was this news out for SNDA:
• Dynasty Gaming and Shanda Interactive Entertainment Sign LOI to Negotiate Software Licensing (http://biz.yahoo.com/pz/070606/120933.html)
PrimeNewswire (Wed 10:09am)
It's nice that SNDA will be launching a Mahjong online game, but it isn't big news for a $2 B company like SNDA.
Now, for DNYFF.OB, a $34 M market cap, it is pretty significant. DNYFF.OB also has an agreement with SOHU to license its online gaming Mahjong software in China. The company still didn't have any revenues in Q1 2007, but I've checked and they still have $5.5 M in cash and just about $0.5 M in liabilities. Revenues seem to be around the corner:
«An agreement with Las Vegas From Home.com Entertainment Inc. (http://www.lvfh.com) allows Dynasty to provide all of its marketing channel partners with its own Mahjong game together with LVFH's full suite of popular Asian-style specialty games. Commencement of multi-site online play of Mahjong in China is expected to begin in April, 2007. Competition for seats at a World Cup of Mahjong event, scheduled for June 2007 in Macau, PRC, will serve as an incentive for a large universe of players.»
Hmm, but I've searched Google for this and found dates for the tournament at December 2006 (http://www.readybetgo.com/news/dynasty-ho-mahjong-1236.html), then April 2007 (http://www.google.pt/url?sa=t&ct=res&cd=6&url=http%3A%2F%2Fwww.forbes.com%2Fbusinesswire%2Ffeeds%2Fbusinesswire%2F2007%2F04%2F02%2Fbusinesswire20070402005197r1.html&ei=7ednRsqHM56MQ_3N4dQE&usg=AFQjCNHX8ZUJz_LFa2ii_N3yGVreqKt7cg&sig2=89CS4rpNX2aZ8MDWlRDc0g) and now June 2007. Risk is high because, despite the good news, the stock is heading down:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=37756;image)
People make questions, management does not answer them:
http://www.agoracom.com/ir/dynastygaming/messages
It could be a good idea to invest the remaining 4% of cash available in the Main Portfolio (http://www.3stocksonfire.org/3stocksonfire.php), but it seems too risky at this point.
I'll keep holding SNDA.
David,
Im always confused between the world cup of mahjong that Dynasty is promoting, and the world series of mahjong that GIGM is planning to hold.
Also, incase ur planning to invest in Dynasty..dont..too speculative. Theyve been "claiming" to launch world cup of mahjong for almost a yr now.
Nick
Quote from: nicknite20 on June 07, 2007, 08:02:18 AM
David,
Im always confused between the world cup of mahjong that Dynasty is promoting, and the world series of mahjong that GIGM is planning to hold.
Also, incase ur planning to invest in Dynasty..dont..too speculative. Theyve been "claiming" to launch world cup of mahjong for almost a yr now.
Nick
Thanks for your message Nick, I was just checking it out. The stock went down about 3% yesterday with just 11,000 shares traded, so no impact from the SNDA news.
SNDA itself also went down, by 2.7%. I wonder if Dracul won't get it at the bottom of the ascending channel.
I'll keep holding SNDA for the long term.
International expansion just started at SNDA:
• Shanda Licenses Woool, Magical Land and Crazy Kart to Overseas Markets (http://biz.yahoo.com/prnews/070608/cnf015.html?.v=7)
PR Newswire (Fri, Jun 8)
Probably 5-10 years from now these Chinese online gaming companies will be selling across the world, even in America. It is one of the few sectors where the Chinese have their own unique product and business model, not a copy of something from the West.
Nice reaction to the 50 days SMA, I'll continue holding SNDA.
fyi:
Shanda's self-developed games enter overseas markets
Monday , June 11, 2007 04:46ET
BEIJING, Jun 11, 2007 (Xinhua via COMTEX) -- Shanda Interactive Entertainment Ltd. ( Nasdaq: SNDA) recently reached agreements with local online game operators respectively in Vietnam, Hong Kong and Macao to provide them with the operation rights for its self-developed games, including "the World of Legend", "Crazy Karts" and "the Magical land".
The Vietnam-based game operator VTC Intecom gained the exclusive right to run "the World of Legend" and "Crazy Karts" in that country for three years. It is learned that the registered gamer number for "Crazy Karts" in Vietnam has reached 200,000, and the game will go into formal operation in late June.
Chen Tianqiao, board chairman of Shanda, said it is the first step of Shanda's overseas strategy to enter into the Vietnamese market. The company plans to promote more self-developed games in overseas markets.
Thanks la-onda, first neighbor Vietnam, then the World for Shanda?
It will take several years, but I think so.
Nice pick up in volume and price yesterday. I'll continue holding SNDA.
Everything was down today, SNDA held better than most stocks. I have NTES, SNDA and GIGM in this online gaming sector, I just love it. I'll keep holding SNDA.
Support is $27.20
It seems SNDA made its short term bottom at $26.6, as it touched the ascending 50 days SMA. There were positive news out yesterday:
• Shanda Licenses Olympic-Themed Table Tennis Game from Actoz (http://biz.yahoo.com/prnews/070613/cnw017.html?.v=15)
PR Newswire (Wed 9:00am)
Shanda seems to be much more aggressive than NetEase in terms of their growth plans. Probably that explains the higher valuation for SNDA. But I like both stocks.
I'll keep holding SNDA.
Another small but positive day for SNDA. I'll keep holding it for the long term, as I'm a great believer in online gaming companies.
Anybody knows what's happening with SNDA? It seems to be halted now.
Seems to be trading on my LVLII David.
Quote from: ygtrdr on June 15, 2007, 11:20:41 AM
Seems to be trading on my LVLII David.
Thanks for the info ygtrdr, I guess there's a problem with my AlphaTrade quotation system, not showing SNDA quotes, but I see the stock trading on other sources, like IB. Thanks.
Another positive day for SNDA, and finally I'm in the green on this holding too. I believe that slowly, but surely, they will all be in the green column (unless I perceive there was a mistake and I sell them at a loss).
Shanda has a very informative website, if you don't have anything better to do on a Sunday ;D, take a look: http://www.snda.com/en/index.jsp
I'll keep holding SNDA.
It looks like all Chinese online gaming stocks were down today, and SNDA was no exception, 2% down on the day.
But nothing changed, the technical trend is still bullish and fundamentals are still attractive, so I'll keep holding.
It seems Dracull will be right and able to buy SNDA at its ascending channel support level ::) Unfortunately the market is worried about the Chinese government action to prevent children from spending so much time playing games over the internet. And that's why we're able to buy these outstanding businesses for low valuations.
The bullish catalyst will happen when the market sees that, despite the government's efforts, the number of people playing the games will keep growing. Just like it happen when the government put those warning labels at cigars packs. MO's revenues and profits kept rising.
I'll keep holding SNDA despite the short term adversity.
Nothing new on SNDA, I'll keep holding.
SNDA seems to be stealing NTES leadership position in China's online gaming market. It's revenues are expanding, net profit margin can also expand and the market cap is lower. It is already hard for me to be letting go of NTES, it would take a lot to shake me out of SNDA too.
I'll keep holding SNDA, nice 1.16% advance day yesterday.
It looks like someone is buying my "leadership takeover" theory, look how SNDA went up on strong volume in the face of Friday's weak general market. My hands on SNDA are stronger now that I've sold NTES, because I don't think I can afford not having at least two stocks of the online gaming sector in the Main Portfolio.
In the green in SNDA now, I hope it sticks and grows. Will keep holding the stock.
Volume was above average for the second trading day and the stock recovered well from the lower open. No news out. I'll keep holding SNDA.
SNDA has been showing some relative strength, both against the general market and its industry peers, like NTES, GIGM and NCTY, for example. This tells me the market sees SNDA's taking market share in the Chinese online gaming market, or it feels its expansion efforts to international markets will bear fruits.
I'll keep holding SNDA.
Wow, quite spectacular white marubozu today on SNDA. Volume was also above average, at 868,300 shares.
However, just after the close there was a Form S-8 filed with the SEC (http://www.sec.gov/Archives/edgar/data/1278308/000114554907001139/h01317sv8.htm) that means about 5% dilution for existing shareholders. Nothing unexpected, because it is related to the stock options plan previously approved, but it will nevertheless make me revise my dilution factor from 1.01 to 1.05.
The good news is people exercising options are buying 4,449,235/2 = 2,224,618 ADS at $28.55 for $63.5 M in net proceeds for the company. Well, the stock closed just 4.7% above $28.55 today.
I think the stock will react well to the news. I'll keep holding SNDA.
It seems Dracull wasn't able to buy SNDA at the lower end of the ascending channel and the stock is now 12.83% above my entry price. This sure was a nice "surprise".
The stock reacted very well to the news I posted over the last update:
Quote from: David Randolph on June 27, 2007, 06:05:45 PM
Wow, quite spectacular white marubozu today on SNDA. Volume was also above average, at 868,300 shares.
However, just after the close there was a Form S-8 filed with the SEC (http://www.sec.gov/Archives/edgar/data/1278308/000114554907001139/h01317sv8.htm) that means about 5% dilution for existing shareholders. Nothing unexpected, because it is related to the stock options plan previously approved, but it will nevertheless make me revise my dilution factor from 1.01 to 1.05.
The good news is people exercising options are buying 4,449,235/2 = 2,224,618 ADS at $28.55 for $63.5 M in net proceeds for the company. Well, the stock closed just 4.7% above $28.55 today.
I think the stock will react well to the news. I'll keep holding SNDA.
Even though the stock stands at the top of its ascending channel, I feel I shouldn't take profits here, both because the technical trend is bullish and also because SNDA is still cheap relative to its fundamental trends (http://www.3stocksonfire.org/fundamental.model.php?ticker=SNDA&portfolio=main).
I'll continue holding SNDA.
fyi:
Exclusive game-operating right sends Shanda price to record high
Tuesday , July 03, 2007 05:25ET
BEIJING, Jul 3, 2007 (Xinhua via COMTEX) -- China's leading online game operator Shanda Interactive Entertainment Ltd. (Nasdaq: SNDA) announced on July 2 it has entered into an agreement with the Japanese game developer TECMO for an exclusive license to run online game "DOA ONLINE" in China's mainland, Hong Kong and Macao.
The game will be the online edition of TECMO's flagship 3D combat game.
Shanda said it will join hands with the Japanese company in developing the game. And both the two will make profits from the new technologies derived from that development.
Shanda revealed that the game will go into the market before 2008 Olympic Games and finally be provided to the world market. It also said the two companies will continue their cooperation in network entertainment area. The share price of Shanda went up 4.55 percent to close at 32.41 US dollars, hitting a record high in one year.
SNDA makes another accretive acquisition:
• Shanda Acquires Online Game Company Aurora Technology (http://biz.yahoo.com/prnews/070705/cnth015.html?.v=25)
PR Newswire (Thu 7:30am)
No financial details revealed, at least not yet. SNDA really needs to rise a lot to compensate for my weak hands and NTES miss arrrgghhhh :-[
Well, I already talked a bit about SNDA after the open, there were some news out:
Quote from: David Randolph on July 05, 2007, 08:56:15 AM
SNDA makes another accretive acquisition:
• Shanda Acquires Online Game Company Aurora Technology (http://biz.yahoo.com/prnews/070705/cnth015.html?.v=25)
PR Newswire (Thu 7:30am)
No financial details revealed, at least not yet. SNDA really needs to rise a lot to compensate for my weak hands and NTES miss arrrgghhhh :-[
Not a lot of movement in SNDA's shares, it goes to show how diversified this online gaming company is.
I'll keep holding SNDA.
SNDA is, according to my valuation model, the least attractive stock in the Main Portfolio, because there's just 35% to go to the optimal selling price. I see that I considered 30 as my earnings multiple estimate (http://www.3stocksonfire.org/fundamental.model.php?ticker=SNDA&portfolio=main), which seems quite high, but the Internet Software & Services industry trades at 40 times earnings (http://finance.yahoo.com/q/co?s=SNDA).
I feel sad about selling NTES essentially due to a technical breakdown and what that could mean for the future fundamentals, I can't take the risk of letting SNDA go just because it is at the upper end of its trading channel.
I'll continue holding SNDA.
David,
If you consider NTES a mistake in selling, why don't you buy it back now? It is at about the same levels as it were when you first bought it. If your fundamental value model provides a support for this decision, then why not buy again? Or, perhaps, you think now that you got the cash, you don't have to rush and look for another/better opportunity?
Thank you.
Berloga.
Quote from: berloga on July 09, 2007, 09:08:55 AM
David,
If you consider NTES a mistake in selling, why don't you buy it back now? It is at about the same levels as it were when you first bought it. If your fundamental value model provides a support for this decision, then why not buy again? Or, perhaps, you think now that you got the cash, you don't have to rush and look for another/better opportunity?
Thank you.
Berloga.
I've been thinking about buying back NTES, but you're right, I've been actively searching for a more promising opportunity, because NTES catalyst was the company buying back shares, but it still looks like it is losing its leadership role to SNDA.
I'll probably buy two new stocks this week (as I'll have about 16% cash available after selling GW), but I'm still studying to see if I can come up with better ideas than buying back NTES or SILC, for example.
Thanks :)
just FYI:
Shanda to Acquire Homegrown Online Game Operator
Monday , July 09, 2007 07:12ET
SICHUAN, Jul 09, 2007 (SinoCast via COMTEX) -- Shanda Interactive Entertainment Limited (Nasdaq: SNDA), a top online game operator in China, is set to spend more than CNY 100 million acquiring a Chinese homegrown online game operator Chengdu Aurora Technology Development Co., Ltd., announced the purchaser on July 5, 2007.
Its CEO Chen Tianqiao indicated that the acquisition was a support to its 3D online game production line and good for the expansion of its research and development base in Chengdu, capital of China's southwestern Sichuan province.
After the deal, the purchaser is expected to still take a leading position among its counterparts. Its revenue from online game hit CNY 505 million in the first quarter of 2007, slightly surpassing its major rival NetEase.com, Inc. (Nasdaq: NTES) to turn to be the No.1 in the sector again.
The Chengdu-based company, founded in 2004, is operating two types of self-developed 3D online games and one of the game has more than six million registered users presently.
Yeah, that's it la-onda, SNDA is taking the lead in online gaming in China:
«After the deal, the purchaser is expected to still take a leading position among its counterparts. Its revenue from online game hit CNY 505 million in the first quarter of 2007, slightly surpassing its major rival NetEase.com, Inc. (Nasdaq: NTES) to turn to be the No.1 in the sector again.»
There's nothing new from a technical or fundamental standpoint, I'll continue holding SNDA.
Corporate insiders own more than half of SNDA:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=38817;image)
I like that.
I'll continue holding SNDA.
Nothing new on SNDA, not many people holding the stock either (from the page views I get at each update), so let me just say that I'll continue holding and move on to the next.
I am holding. I think it's a very nice pick and I won't let go of it as I did NTES. SNDA is a stronger player on the market, at least for now.
Thanks. ;)
I am holding too David. Just not much to say besides that it looks great :D.
Amarens
Ps: I've been in a share Arques Industries (Frankfurt stock exchange). It is going through the roof. It says it's also on OTO market. Any idea what that is. Think it could be a good pick.
Quote from: berloga on July 12, 2007, 09:45:49 AM
I am holding. I think it's a very nice pick and I won't let go of it as I did NTES. SNDA is a stronger player on the market, at least for now.
Thanks. ;)
Quote from: Amarens on July 12, 2007, 10:16:18 AM
I am holding too David. Just not much to say besides that it looks great :D.
Amarens
Ps: I've been in a share Arques Industries (Frankfurt stock exchange). It is going through the roof. It says it's also on OTO market. Any idea what that is. Think it could be a good pick.
Ah, I'm glad to know that someone else is holding SNDA. I don't know what OTO market is Amarens, as I "googled" it I got a cars marketplace in Turkey, it seems like "oto" is car in Turkish lol
I'm glad you own a stock that is rising a lot, but you know, the Main Portfolio only buys US traded stocks.
As for SNDA, this Knobias link that la-onda provided is truly amazing. On July 10, an analyst said SNDA was a buy and gave a $43 price target (http://www.knobias.com/story.htm?eid=3.1.a8b0683f5d406ceaf1eb01b34dae6fe7a898542b4d96713263bbdd748e465aa2). His justification was:
«The firm believes upside potentials for revenues and margins have not been fully priced into the stock.»
And I agree.
Yesterday we've had this press release out from Shanda:
Shanda launches three programs to attract online games (http://www.knobias.com/story.htm?eid=3.1.09e95b312d9bb5166c2053f850c5dc807f820f9b5e0bcabf15a77030eabb7c0c)
I enjoy the company's "democratic spirit", giving opportunities to small companies or individual game developers.
I don't have a chart to post because my Metastock isn't working properly :-[
I'll keep holding SNDA.
Quote from: David Randolph on July 13, 2007, 06:08:54 AM
I'm glad you own a stock that is rising a lot, but you know, the Main Portfolio only buys US traded stocks.
Oops :-[ Forget. Well, still interesting information for those investing in germany. Frankfurt is it's main stockexchange and today seems a good day to pick it up, since some people are taking profits.
Amarens
SNDA is just 29% away from my optimal selling price of $43 ...
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=38948;image)
... and my fundamental estimates seem stretched enough. So the trading plan is to keep holding in order to take profits around the $43 area.
(no chart for SNDA, the stock closed at $33.3)
Strangely, not even my new, just installed Metastock has data for SNDA. So, in lack of a better alternative, I'll leave you the StockCharts updated chart.
No news out yesterday, I'll continue holding SNDA.
SNDA's management looks confident about the future of online gaming in China (and the World), and has been investing heavily. Yesterday we knew about the company buying a stake in another company which looks rather interesting, because its focus is on advertising in online games:
Shanda Marched into In-game Ad Sector (http://www.knobias.com/story.htm?eid=3.1.048995993b5330a20d0e857037b051e98d7f2bd6f917cf24f24698900bc0ed7e)
I'll keep holding SNDA.
Good news for SNDA, partnering with another $2 B company:
THQ and Shanda Announce Company of Heroes Online(TM) (http://biz.yahoo.com/bw/070719/20070719005307.html?.v=1)
I never heard about the Company of Heroes game, but let's face it, it has been 20 years since I played my last PC game, I believe ;D
It seems to be a big deal.
I'll keep holding SNDA, and my Metastock chart is back ! (I got rid of that annoying ascending channel).
SNDA has been holding around the $33 mark. The optimal selling price given by my valuation model is $10 higher (http://www.3stocksonfire.org/fundamental.model.php?ticker=SNDA&portfolio=main). I'll keep on holding SNDA.
SNDA's 2nd quarter earnings will be released only on August 15, so between now and then it is possible that the stock will come down to touch the $30.62 support, prior resistance level. But I expect the quarterly figures to be nice and the stock to get a boost to new highs after the earnings release. I'll keep holding SNDA.
What happened today on SNDA wasn't unexpected, if we consider my latest update:
Quote from: David Randolph on July 22, 2007, 04:28:48 AM
SNDA's 2nd quarter earnings will be released only on August 15, so between now and then it is possible that the stock will come down to touch the $30.62 support, prior resistance level. But I expect the quarterly figures to be nice and the stock to get a boost to new highs after the earnings release. I'll keep holding SNDA.
Everything as expected, I'll continue holding SNDA.
SNDA went down a bit more. Perhaps it is moving down to close the gap at $29.93, or maybe to touch the 50 days SMA support, currently at $29.45. Anyway, the trend is bullish, and the trend is my friend. Fundamentals are also attractive as SNDA regained its market leading position in China's online gaming industry.
Quote from: David Randolph on July 25, 2007, 05:23:05 AM
SNDA went down a bit more. Perhaps it is moving down to close the gap at $29.93, or maybe to touch the 50 days SMA support, currently at $29.45. Anyway, the trend is bullish, and the trend is my friend. Fundamentals are also attractive as SNDA regained its market leading position in China's online gaming industry.
SNDA did everything right, from a short term technical perspective: it closed the gap, touched the 50 days SMA support, volume picked up a bit and ended with a doji, which is a short term trend reversal candlestick. But this is just short term mambo jumbo, and it can be wrong. We'll see what happens today.
But I'll hold SNDA beyond today.
SNDA has this habit of crossing just a bit below the ascending 50 days SMA as the bullish trend continues, as you can see on the chart below.
There was a press release out yesterday:
Shanda Prepares Professional Online Game Fund (http://www.knobias.com/story.htm?eid=3.1.57d2e8e988a40b8f2da19afd97d0c40a9682bb702fea6f034f37776c60559f43)
Shanda's management is truly innovative, I like them ... and the stock.
And Dracull had his chance of buying at the bottom of the ascending channel of the chart below, I hope he did it.
The setbacks are awful, but over the long term, the stock will probably keep moving up, since fundamentals of the business are attractive.
SNDA rose 2.5%, responding to the long term ascending support. When it revisits the top of the channel it will probably be at $40 plus.
SNDA was enjoying a nice 3% rally until American Home Mortgage (AHM) said it could no longer fund loans and was considering liquidating its assets ???
I wonder what online gaming in China has to do with mortgage loans in the US ::)
I'll continue holding SNDA.
Another touch on the base of the ascending channel and SNDA is set to go higher, I believe.
The company's management is really confident in the online gaming market potential, given today's news:
Shanda lifts salary by 20 pct to attract talents (http://www.knobias.com/story.htm?eid=3.1.a4f9e6a38c9dfc18cf7c6b7d6f6424595351e30d402b0d575801095f0a84cbe8)
I hope this doesn't hurt net profit margin.
I'll hold SNDA.
Nice 3.1% rally for SNDA. The company will report 2nd quarter earnings on August the 27th:
• Shanda Interactive Entertainment to Report Second Quarter 2007 Financial Results on August 27, 2007 (http://biz.yahoo.com/prnews/070802/cnth018.html?.v=11)
PR Newswire (Thu 9:00am)
I'll keep holding SNDA.
According to the general market analysis I wrote today (http://www.3stocksonfire.org/trading/index.php?topic=10059.msg103651#msg103651) I must sell two of the Main's holdings (http://www.3stocksonfire.org/3stocksonfire.php), and I have opted to sell SNDA, exclusively based on valuation: SNDA is the Main's holding with the least potential, given the estimates I have in the valuation model.
The trading plan for SNDA is SELL.
SNDA looking good.
Up 13% today on ER
http://stockcharts.com/h-sc/ui?s=SNDA&p=D&b=5&g=0&id=p59191861522
Source: Shanda Interactive Entertainment Limited
Shanda Reports Third Quarter 2007 Results
Tuesday November 27, 5:13 pm ET
Third Quarter 2007 Net Revenues Increased 16.3% QoQ and 50.3% YoY to US$87.4 million, EPS per ADS US$0.44, Results Top Guidance
SHANGHAI, China, Nov. 27 /Xinhua-PRNewswire/ -- Shanda Interactive Entertainment Limited (Nasdaq: SNDA - News), or Shanda, a leading interactive entertainment media company in China, today announced its unaudited consolidated financial results for the third quarter ended September 30, 2007.
Third Quarter 2007 Highlights:
-- Consolidated net revenues achieved a record high of RMB656.3 million
(US$87.4 million), an increase of 16.3% QoQ and 50.3% YoY, exceeding
the upper end of the Company's guidance of QoQ growth between 8% and
11%.
-- Online game revenues, including MMORPGs and casual games, was RMB633.7
million (US$84.4million), an increase of 16.6% QoQ and 54.9% YoY.
-- Gross profit was RMB457.9 million (US$61.0 million), an increase of
20.6% QoQ and 86.6% YoY.
-- Operating income was RMB257.9 million (US$34.3 million), an increase
of 5.6% QoQ and 128.9% YoY. Operating margin was 39.3% in the third
quarter of 2007, compared to the Company's guidance of no less than
35%.
-- Net income was RMB238.9 million (US$31.8 million), compared to
adjusted net income of RMB238.4 million in the second quarter of 2007
(excluding the net gain of RMB177.5 million from the disposal of SINA
shares), and net income of RMB143.5 million in the third quarter of
2006.
-- Earnings per diluted ADS were RMB3.26 (US$0.44), compared to adjusted
earnings per diluted ADS of RMB3.28 in the second quarter of 2007
(excluding the net gain of RMB2.42 per diluted ADS from the disposal
of SINA shares) and earnings per diluted ADS of RMB1.98 in the third
quarter of 2006.
-- Active paying accounts (APA) for MMORPGs increased 13.2% QoQ to 3.08
million.
-- Average monthly revenue per active paying account (ARPU) for MMORPGs
increased 3.0% QoQ to RMB59.7.
"Our game revenues reached a record high in the third quarter due to the strong organic growth of our main titles," said Tianqiao Chen, Chairman and Chief Executive Officer of Shanda. "Leveraging our CSP model and operating platform, we introduced new expansion packs and held special promotions during the summer holidays, which translated to growth in both our ARPU and APA. We have also built a strong game pipeline for 2008 to include a series of exciting new MMORPGs, casual games and expansion packs. We believe the growth of our content will allow us to continue to expand our business going forward."
Conference Call and Webcast Notice
Shanda will host a conference call on November 28, 2007 at 9:00 a.m. Beijing/Hong Kong time, corresponding with November 27, 2007 at 8:00 p.m. Eastern Standard Time, to present an overview of the Company's financial performance and business operations. A live webcast of the conference call will be available on the Company's corporate website at http://www.snda.com.
Financial Results
Net Revenues
Shanda reported net revenues of RMB656.3 million (US$87.4 million) for the third quarter of 2007, representing a 16.3% increase compared to RMB564.4 million in the second quarter of 2007 and a 50.3% increase compared to RMB436.8 million in the third quarter of 2006.
Online game revenues in the third quarter of 2007 increased 16.6% quarter- over-quarter and 54.9% year-over-year to RMB633.7 million (US$84.4 million).
Revenues from MMORPGs in the third quarter of 2007 increased 16.6% quarter-over-quarter and 66.0% year-over-year to RMB551.5 million (US$73.4 million), accounting for 84.0% of net revenues. The sequential growth in MMORPG revenues was primarily due to continued increase in revenues generated by the Company's major titles, including Mir II, Woool and Latale, and an initial contribution from Feng Yun Online, which was acquired in conjunction with the Company's acquisition of Aurora Technology Development Co. Ltd. ("Aurora"), in July 2007.
The number of APA of MMORPGs increased 13.2% to 3.08 million in the third quarter of 2007 from 2.72 million in the second quarter of 2007. ARPU for MMORPGs increased 3.0% to RMB59.7 in the third quarter of 2007 from RMB57.9 in the second quarter of 2007. The quarter-over-quarter increase in APA is mainly due to the continued growth of users of existing titles and the initial contribution from Feng Yun Online. The quarter-over-quarter increase in ARPU was primarily due to an increased consumption of in-game premium features in connection with the launching of new expansion packs for the Company's major titles and in-game promotions.
Revenues from casual games in the third quarter of 2007 increased 16.2% quarter-over-quarter and 6.9% year-over-year to RMB82.2 million (US$10.9 million). The sequential increase in revenues from casual games was due to the release of new expansion packs for Maple Story, GetAmped, Crazy Kart and Tales Runner, as well as the seasonal revenue improvement related to students' summer holidays.
Gross Profit
Gross profit for the third quarter of 2007 was RMB457.9 million (US$61.0 million), an increase of 20.6% from RMB379.5 million in the second quarter of 2007 and 86.6% from RMB245.5 million in the third quarter of 2006. Gross margin was 69.8% in the third quarter of 2007, compared to 67.2% in the second quarter of 2007 and 56.2% in the third quarter of 2006. The sequential improvement in gross margin was primarily due to the consolidation of Korean software developer Actoz Soft Co., Ltd. ("Actoz") into Shanda's financial statements from the third quarter of 2007, which reduced the Company's licensing fees relating to Mir II.
Income from Operations
Operating income for the third quarter of 2007 was RMB257.9 million (US$34.3 million), an increase of 5.6% from RMB244.3 million in the second quarter of 2007 and 128.9% from RMB112.7 million in the third quarter of 2006. Operating margin was 39.3% in the third quarter of 2007, compared to 43.3% in the second quarter of 2007 and 25.8% in the third quarter of 2006. The quarter-over-quarter change in operating margin was primarily due to the increased operating expenses from the consolidation of Actoz, an increase in marketing expenses during the summer holidays, and the full-quarter increase in payroll costs as a result of employee salary raises commencing from June 2007.
Excluding the consolidation of Actoz and Aurora, gross margin and operating margin for the third quarter of 2007 would have been 65.9% and 40.4%, respectively.
Non-Operating Income
Net non-operating income for the third quarter of 2007 was RMB29.0 million (US$3.9 million), compared to RMB209.7 million in the second quarter of 2007 and RMB46.7 million in the third quarter of 2006. The major difference is investment income of RMB177.5 million recorded from the disposal of SINA shares in the second quarter of 2007. Non-operating income contributed from government financial incentives amounted to RMB14.9 million (US$2.0 million) in the third quarter of 2007, compared to RMB14.0 million in the second quarter of 2007 and RMB29.1 million in the third quarter of 2006.
Net Income
Net income for the third quarter of 2007 was RMB238.9 million (US$31.8 million), compared to adjusted net income of RMB238.4 million in the second quarter of 2007 (excluding the net gain of RMB177.5 million from the disposal of SINA shares), and net income of RMB143.5 million in the third quarter of 2006. Earnings per diluted ADS for the third quarter of 2007 were RMB3.26 (US$0.44), compared to adjusted earnings per diluted ADS of RMB3.28 in the second quarter of 2007 (excluding the net gain of RMB2.42 per diluted ADS from the disposal of SINA shares) and earnings per diluted ADS of RMB1.98 in the third quarter of 2006. Earnings per diluted ADS including the gain on the disposal of SINA shares were RMB5.70 per diluted ADS in the second quarter of 2007.
The conversion of Renminbi (RMB) into U.S. dollars in this release is based on RMB7.5108 to US$1.00 as published by the People's Bank of China on September 28, 2007. The percentages stated in this press release are calculated based on the RMB amounts.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principals in the United States, or GAAP, this press release includes non-GAAP financial measures of adjusted net income and adjusted earning per ADS, each of which is adjusted to exclude the net gain from disposal of the Company's stake in SINA. The Company believes these non- GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects, compare business trends among different reporting periods on a consistent basis and access the Company's core operating results. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial statements included with this press release.
Important Events & Announcements:
-- Shanda obtained an exclusive license to operate an online free-running
game FreeJack in mainland China, Hong Kong and Macao. (2007/09/04)
-- Shanda announced the appointment of Donald Chan as Senior Vice
President of Shanda's new in-game advertising ("IGA") business.
(2007/10/23)
-- Shanda announced three new online games currently under development
for 2008 pipeline: Gui Chui Deng Online, Creation of the Gods and
World Hegemony. (2007/10/26)
-- Shanda and NCsoft announced a strategic alliance pursuant to which
Shanda will become a strategic investor of NCsoft's Chinese subsidiary,
NCsoft China. Shanda also obtained an exclusive license to operate
AION: The Tower of Eternity, NCsoft's highly-anticipated 3D MMORPG, in
mainland China. (2007/11/06)
-- Shanda's US$275 million Principal Amount of Zero Coupon Senior
Convertible Notes due 2014 have been fully redeemed. (2007/11/15)
-- Shanda announced the appointment of Grace Wu as the Company's Chief
Financial Officer. (2007/11/28)
* Please visit Shanda's website (http://www.snda.com) for details about
these and other announcements.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements in this announcement that are not historical facts, including but not limited to statements regarding the Company's pipeline of games and expectations of future growth, represent only the Company's current expectations, assumptions, estimates and projections and are forward-looking statements. These forward-looking statements involve various risks and uncertainties. Important risks and uncertainties that could cause the Company's actual results to be materially different from expectations include but are not limited to that the newly added titles in our pipeline may not be well received by the users and the risks set forth in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
About Shanda Interactive Entertainment Limited
Shanda Interactive Entertainment Limited (Nasdaq: SNDA - News) is a leading interactive entertainment media company in China. Shanda offers a portfolio of diversified entertainment content including some of the most popular massively multi-player online role-playing games (MMORPGs) and casual online games in China, as well as online chess and board games, network PC games and a variety of cartoons, literature works and music. Shanda's interactive entertainment platform attracts a large and loyal user base, of which more and more is coming from homes. Each user can interact with thousands of other users and enjoy the interactive entertainment content that Shanda provides. Interaction enriches your life. For more information about Shanda, please visit http://www.snda.com.
SHANDA INTERACTIVE ENTERTAINMENT LIMITED
CONSOLIDATED BALANCE SHEET
(in thousands)
As of December 31, As of September 30,
2006 2007
RMB RMB US$
(audited) (unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents 1,291,901 3,679,836 489,939
Short-term investment 407,399 437,836 58,294
Marketable securities 1,844,966 469,025 62,447
Accounts receivable 31,685 37,248 4,959
Inventories 8,972 2,873 383
Deferred licensing fees
and related costs 27,433 52,804 7,030
Prepayments and other
current assets 51,708 110,572 14,723
Deferred tax assets 17,421 66,909 8,908
Total current assets 3,681,485 4,857,103 646,683
Investments in affiliated
companies 334,693 3,704 493
Property, equipment and
software 349,153 332,223 44,233
Intangible assets 186,062 373,878 49,779
Goodwill 493,564 608,647 81,036
Long-term deposits -- 59,849 7,968
Long-term prepayments 100,160 124,148 16,529
Other long-term assets -- 187,641 24,983
Non-current deferred tax assets 72,578 9,663
Total assets 5,145,117 6,619,771 881,367
LIABILITIES
Current liabilities:
Accounts payable 91,184 44,234 5,890
Licensing fees payable 14,135 84,842 11,296
Taxes payable 80,253 164,914 21,957
Deferred revenue 201,650 417,452 55,580
Licensing fees payable to
a related party 46,090 -- --
Due to related parties 3,044 3,044 405
Acquisition related obligation 3,047 2,955 393
Convertible debt due
within one year 2,147,393 2,065,470 275,000
Other payables and accruals 138,017 207,497 27,627
Deferred tax liabilities 6,302 839
Total current liabilities 2,724,813 2,996,710 398,987
Other long term liabilities -- 7,528 1,002
Non-current deferred tax
liabilities 37,197 4,952
Total liabilities 2,724,813 3,041,435 404,941
Minority interests 2,910 225,109 29,972
Shareholders' equity
Ordinary shares 11,849 11,931 1,589
Additional paid-in capital 1,468,825 1,593,283 212,132
Statutory reserves 142,019 146,869 19,554
Deferred share-based
compensation --
Accumulated other
comprehensive gain 205,082 21,372 2,845
Retained earnings 589,619 1,579,772 210,334
Total shareholders' equity 2,417,394 3,353,227 446,454
Total liabilities and
shareholders' equity 5,145,117 6,619,771 881,367
SHANDA INTERACTIVE ENTERTAINMENT LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
For the three month periods ended,
September 30, June 30, September 30,
2006 2007 2007
RMB RMB RMB US$
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenues
MMORPG 332,292 472,869 551,483 73,425
Casual game 76,845 70,701 82,177 10,941
Others 27,632 20,879 22,656 3,017
Total net
revenues 436,769 564,449 656,316 87,383
Cost of services
Ongoing
licensing fees
for online
games (82,242) (104,012) (86,154) (11,471)
Amortization of
upfront
licensing fees (13,310) (15,063) (31,649) (4,214)
Server leasing
and maintenance
fees (24,273) (19,931) (23,136) (3,080)
Salary and
benefits (13,441) (14,028) (19,106) (2,544)
Depreciation of
property,
equipment
and software (13,310) (13,092) (13,845) (1,843)
Others (44,741) (18,779) (24,510) (3,263)
Total cost of
services (191,317) (184,905) (198,400) (26,415)
Gross profit 245,452 379,544 457,916 60,968
Operating
expenses
Product
development (35,965) (30,678) (49,923) (6,647)
Sales and
marketing (31,860) (38,011) (60,749) (8,088)
General and
administrative (64,953) (66,577) (89,339) (11,895)
Total operating
expenses (132,778) (135,266) (200,011) (26,630)
Income from
operations 112,674 244,278 257,905 34,338
Interest income 5,863 13,046 19,403 2,583
Amortization of
convertible
debt issuance
cost (4,402) (4,511) (4,138) (551)
Investment
income 141 189,765 14,864 1,979
Other income,
net 47,832 11,152 5,695 759
Income before
income tax
expenses,
equity in loss
of affiliates
and minority
interests 162,108 453,730 293,729 39,108
Income tax
expenses (15,877) (38,141) (48,028) (6,394)
Equity in (loss)
gain of
affiliates (2,909) 189 (510) (69)
Minority
interests 203 86 (6,315) (841)
Net income 143,525 415,864 238,876 31,804
Earnings per
share:
Basic 1.00 2.92 1.67 0.22
Diluted 0.99 2.85 1.63 0.22
Earnings per
ADS:
Basic 2.00 5.84 3.34 0.44
Diluted 1.98 5.70 3.26 0.44
Weighted average
ordinary shares
outstanding:
Basic 142,903,595 142,397,374 143,358,691 143,358,691
Diluted 144,732,342 145,689,850 146,389,982 146,389,982
Weighted average
ADS
outstanding:
Basic 71,451,798 71,198,687 71,679,346 71,679,346
Diluted 72,366,171 72,844,925 73,194,991 73,194,991
Reconciliation
from Non-GAAP
measures to
GAAP measures:
Non-GAAP income 143,525 238,356 238,876 31,804
Net gain from
disposal of
Sina's Stake -- 177,508 -- --
Net income 143,525 415,864 238,876 31,804
Non-GAAP diluted
earnings per
ADS 1.98 3.28 3.26 0.44
Net gain from
disposal of
Sina's Stake
per ADS -- 2.42 -- --
Diluted earnings
per ADS 1.98 5.7 3.26 0.44
For more information, please contact:
Shanda Interactive Entertainment Limited
Maggie Yun Zhou
Investor Relations Manager
Shanda Interactive Entertainment Limited
Phone: +86-21-5050-4740 (Shanghai)
Email:
[email protected] CCG Elite
Crocker Coulson (investors)
Phone: +1-310-231-8600 (USA)
Email:
[email protected] Elaine Ketchmere (media)
Phone: +1-310-231-8600 (USA)
Email:
[email protected]
:o
SNDA used to be trading within an ascending channel, but not anymore. Now it seems range bound, with $25 and change as support and $35 as resistance.
I just want to register if there were news out in points 1 and 2, since in these points the stock gapped up:
1 - Shanda Reports Fourth Quarter and Full Year 2007 Unaudited Results (http://biz.yahoo.com/prnews/080225/cnm031.html?.v=10)
PR Newswire (Mon, Feb 25)
2 - Sector Snap: Chinese Web Gaming Rises (http://biz.yahoo.com/ap/080325/sector_snap_internet.html?.v=1)
AP (Tue, Mar 25)