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Filed under: Internet, China, Newsletters, Stocks to Buy

This post is part of a featured report on stocks in the Chinese online gaming sector.

"When it comes to numbers, Giant Interactive (NYSE: GA) is the kind of company that accountants can only dream about; with a profit margin above 70% and huge cash reserves, the stock is selling well below book value," says China expert Jim Trippon.

In his The China Stock Digest he explains, "Giant was founded in November 2004 and as become one of the fastest-growing and most profitable companies in the Chinese online game industry."

Today (July 31), all major Chinese internet media outlets are reporting that Giant Interactive (GA) will likely pay half a billion dollars to buy Shanghai-based online game company Nineyou International Limited (9you). Rumors indicate negotiations have entered the 'detail' phase.

GA and 9you both deny these reports. 9you published a formal announcement that it has no plans whatsoever to merge with another company. GA closed at $9.00 Wednesday, down 10%, while the Dow Jones Industrial Average gained 1.63% and the NASDAQ rose 0.44%. $9.00$ is the all-time closing low for GA.