Shanda Games Limited (NASDAQ:GAME)

Eventhough GAME is terribly cheap, the stock is going nowhere. They are obviously a legit company proven by their games that can be found on the internet and their special cash dividend of 1$ (!) per share in Q1 2012.I dont own it but if the valuation doesnt go up, we are approaching a situation where the net cash equals the market cap in Q1 2014 which is an interesting prospect given the fact that the company already showed that they are willing to reard shareholders.

Access cashflow will be used to pay dividends, which will beneficial for the stock price. It has some catching up to do with the major competitors, such as Giant Interactive (GA)

gaming

Current Parameters
LT Debt-to-Equity Ratio
0.00 - 0.00
Return on Equity (TTM)
25.00 - 7078.00
Market Capitalization
1B - 10B
Gross Margin
60.00 - 100.00
CAPS Rating
All on 2011-11-04

value screen

China

Long term trend shifting upward, breakout this week

games

run!

Well managed and what the people want. As China grows so does investments in these virtual games. Once China growth comes you will see lots of reckless spending on gaming.

ADRsPEROE10

CURRENT assets are almost twice TOTAL liabilities. Long-term big winner.

I'll take a ride on this one.

bull

Seems undervalued.

Good history and P/E ratio

Shanda's game AION has high subscriptions:

http://users.telenet.be/mmodata/Charts/1m-12m.png
(source: http://www.mmodata.net/ )

I just looked at the years earnings estimates and fy/2010 diluted eps is .75, which with a PE of 10 is 7.50 share value. That fy/2010 estimate is taking into account lower earnings for the remainder of the year at .17 eps. The industry average is over 15 PE, so 7.50 would be a very conservative fare share value for GAME to hold this year. Hopefully the stock rises soon and stabilizes resistance at 7.00. Next year earnings estimate is .83 for 2011, and if growth prospects remain promissing, anticpated 30% in 2011. It would be acceptable for this stock to begin to trade with peer valuation of around 15 PE, which would put it in the ball park of 12.45 fair value per share by the end of 2011. The PEG ratio is still below 1 (.66) and as it is a fast groth company tracking the PEG ratio is an appropriate valuation method. If mochi media pans out, and they gain international immersion, a PE much higher than 15 would be appropriate, and higher earnings of course would be expected to follow in the comming years.

Chinese gaming market is HUGE. Will do extremely well as there are no real competitors.