The 9 is a very well-known video game company that has done a great job of licensing, implementing, and managing the world-famous World of Warcraft in China. They have reaped massive profits from this highly addictive country-wide phenomenon but have until recently been much too dependent on this source of revenue (over 90%).
A whole slew of highly anticipated games will be deployed in near future and will help increase + diversify this company's sources of revenue. The 9 has very strong partnerships with well known game developers such as NCSoft, HanbitSoft, and Electronic Arts (which invested $167 million for a 15% stake earlier this year).
In addition, this stock has been recently beat down and oversold due to some delays in the new expansion of World of Warcraft. Things are now running smoothly and WOW is expected to bring in record-breaking profit in the upcoming quarters. In fact, WOW achieved record peak concurrency of 800,000 users recently after launching its new expansion pack, "The Burning Crusade".
Being based in Shanghai China,i have also talked to a wide variety of people regarding this company's products, have noticed some recent new advertisements for some of their new games. In addition, i have even been surprised to find out some of my local female friends (who don't seem to be video game type people) have also joined into the addictive realm of WOW.
Analysis of forward P/E ratio (15) and predicted 5-year annual growth rate (23.33%) gives a PEG ratio of 0.64. These estimates on future earnings as well as 5-year growth rate predictions are too conservative in my opinion but help provide solid evidence of this stock already being significantly undervalued. I am in on this stock at average of $31 and expect it to go past it's previous 52-week high of $52.44 within 6 months.
$30.44 (11/10/07)
