Shanda Games is a pure-play online gaming company and was spun-off by the consumer portal Shanda (SNDA). It has an extensive range of 46 games with 38 MMORPGs and 8 other games, but the top three games account for 40%, 18% and 17% of the total game revenue. Its most successful games are Dragon Nest, Mir II, Maple Story. Relatively new launches are AION & Hades Realm II.
The company is launching a series of games in 2011 with major ones being Legends of Immortal, Final Fantasy XIV & Dragon Ball Online.
Legend of Immortals has been built around a social network platform that fully integrated this game with a full set of social features to allow gamers to share their status and achievements with their friends on a real time basis. Players can enjoy social network games (SNGs) and other applications provided by third party in this platform. In addition, the platform also has links to third-party social network service (SNS) sites such as Facebook and Renren so that gamers can share their information with their friends outside of the game. At the end of the first open test day in May, the registered accounts of the SNS of "Legend of Immortals" exceeded 3.5 million, reflecting the prospects for this unique approach.
Catalyst: News flow on performance of AION, Hades Realm II and most importantly Legends of Immortal.
Like most Chinese online games GAME has a low valuation i.e. 9.5x NTM PE and a Cash adjusted NTM PE of 8x. The company has 12% FCF yield. The target buy / sell range currently is estimated at $6-6.5 and $8-8.5.
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