Nomura Securities maintains a 'Neutral' on Shanda Interactive (SNDA); Thoughts on Going Private
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Price: $39.15 -0.2%
Rating Summary:
4 Buy, 8 Hold, 1 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
4 Buy, 8 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities maintains a 'Neutral' on Shanda Interactive (NASDAQ: SNDA) price target of $47.00.
Nomura analyst, Jinkyu Yoon, said, "SNDA announced that its Chairman and CEO, Mr. Tianqiao Chen intends to privatize the company, acquiring all the outstanding shares that are not currently owned by him, his wife Ms. Qianqian Luo (non-executive director of Shanda) and his brother Mr. Danian Chen (COO and director of Shanda), for US$41.35 per ADS, or US$20.675 per ordinary share."
Our Take: "Management team has always wanted to evolve the company to more than just a gaming company - with new ventures into online literature, social platform, online video and music, etc. Given the company is cash flow positive and with more than $1.28bn in cash on the balance sheet- the company can achieve its goal without the need for being a public equity and the scrutiny that comes with it...We believe that Shanda’s move is purely a financial decision in view of the company’s depressed market prices and valuations. The valuation of $41.35 implies a P/E ex cash multiple of only 9x for 2012, which is in line with the historical range...Furthermore, in the past year Chinese internet and media companies have repeatedly been hit by news of potential government intervention on overseas business structure as well as speculation on accounting methods."
For more ratings news on Shanda Interactive click here and for the rating history of Shanda Interactive click here.
Shares of Shanda Interactive closed at $38.33 yesterday.
Nomura analyst, Jinkyu Yoon, said, "SNDA announced that its Chairman and CEO, Mr. Tianqiao Chen intends to privatize the company, acquiring all the outstanding shares that are not currently owned by him, his wife Ms. Qianqian Luo (non-executive director of Shanda) and his brother Mr. Danian Chen (COO and director of Shanda), for US$41.35 per ADS, or US$20.675 per ordinary share."
Our Take: "Management team has always wanted to evolve the company to more than just a gaming company - with new ventures into online literature, social platform, online video and music, etc. Given the company is cash flow positive and with more than $1.28bn in cash on the balance sheet- the company can achieve its goal without the need for being a public equity and the scrutiny that comes with it...We believe that Shanda’s move is purely a financial decision in view of the company’s depressed market prices and valuations. The valuation of $41.35 implies a P/E ex cash multiple of only 9x for 2012, which is in line with the historical range...Furthermore, in the past year Chinese internet and media companies have repeatedly been hit by news of potential government intervention on overseas business structure as well as speculation on accounting methods."
For more ratings news on Shanda Interactive click here and for the rating history of Shanda Interactive click here.
Shares of Shanda Interactive closed at $38.33 yesterday.
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