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$26.49 -0.06 (-0.23%)
8/29/2008 4:00 PM

Shanda Interactive Entertainment Ltd ADR (SNDA)

CAPS Rating:
*****

The Company is an interactive entertainment media company and the an operator of online games in China.

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Avatar NetscribeGames (43.09) Submitted: 11/30/06 2:30 AM : Outperform Start Price: $19.05 SNDA Score: 47.33

For anyone who is a game enthusiast and is always looking for interesting interactive games, the only place to be is Shanda Interactive. Shanda is the third largest online gaming company in China. The company has captured around 16% of the mammoth Chinese gaming market, while facing stiff competition from market leader NetEase. Its core product online games are mainly segregated into massive multi player online role playing games (MMORPG’s) and casual games.

MMORPGs including the company’s in-house developed games like Magic Land and The Age, produce around 76% of the company’s overall revenue. On the other hand, casual games, targeted toward less-experienced online game players and home users, generate 18% of the company’s overall revenue. The casual games offer a range of games like Maple Story and Three kingdoms.

In the coming years, Shanda would reap the benefits of change in its revenue model from traditional subscription-base to Free-to-Play and Pay-for in-Game Value. This new model will assist in increasing the user base and will have a positive affect on Active paying Accounts, which is currently around the 2.14 million mark. Placed in an immensely attractive Chinese market where online gamers are set to increase to 80 million by 2010, out of which half of them are expected to be paying players, and backed by high penetration of broadband connection to 130 million households growth of Shanda looks promising.

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Avatar FoolishLav (62.28) Submitted: 2/18/07 3:44 PM

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Yes, and I like the ambitious, risk-taking CEO. He likes to model himself after Bill Gates, but, I would prefere that he learn a thing or two from Steve Jobs. Jobs seems a better fit to his ambitions.
When the cash starts coming in big-time again, I will look for management to diversify into other areas of the awesome Chinese economy.
We could have an emerging Chinese conglomerate here.

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Avatar NetscribeGames (43.09) Submitted: 4/16/07 4:11 AM

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Shanda continues its strong run, as is evident by its fourth quarter results. The revenues for the fourth quarter ended 31 December 2006 shot up by 30.5% to $60.3 million. The strong performance of online games, including Massive multi player online role playing games (MMORPG’s) and casual games acted as the main catalyst for the growth. While the hit titles like Woool and Mir 2 continue to attract more gamers. Net income also witnessed a strong upsurge primarily led by rise in active paying account for MMORPGs that grew to 2.29 million.

Shanda recently entered into an agreement with leading Korean online game developer Wemade Entertainment, to operate the much awaited MMORPG Changchun Online for mainland China. The game will further enhance Shanda’s already impressive MMORPG’s portfolio, while aiding the company to tap in new client base in the mainland. In addition the company appears more focused on its core business of online games and strides in achieving growth mainly by organic route.

Going ahead, the Chinese growth story is still looking strong. Though company’s stock has witnessed a massive bull run in the past year, there appears to be room for further growth. The come-stay-play revenue model is slowly getting accepted amongst Chinese gamers. While the expected line-up of impressive MMORPG’s and casual games are sure to drive in new active paying accounts. Adding to it, even though currently Shanda’s margin are quite exciting, with advent of launch of newer games the margins are likely to improve even further, due to synergies offered by inherent nature of Shanda’s business model. Thus aiding the company to deliver continued healthy performance for its shareholders, making Shanda a strong investment for 2007.

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