As the last few years have proven, Chinese markets are on an upwards tear. The emerging international markets have consistently beaten more established markets over the last decade.
As it currently stands, one of the best investments in the Asian markets might be Chinese gaming companies. As China’s overall economy grows at 10% year over year, all of this prosperity is spent in luxury items. China might just be grabbing on to the electronic love that its neighbor, Japan, has had for years.
Investing in Shanda Interactive Entertainment Ltd. (SNDA) capitalizes upon China’s growing love for electronic gaming. The stock benefits from a growing Chinese market for gaming and other electronic applications.
SNDA – Understanding the company
Shanda Interactive produces many different entertainment products. The company has a portfolio of online games and offline games, including network PC and MMORPGs that have done very well in the electronic markets.
Shanda produces both very complicated and simplistic games, which opens the range for their target audience, including users who have large periods of time to play and the casual gamer.
The most important function of Shanda is its EZ platform that has online video games, movies, music, and various other types of entertainment options. Top on their lineup of products is a growing list of on-the-go gaming, including cell phone games. The growing base for cell phones has directly affected Shanda’s bottom line.
Why buy Shanda?
Shanda trades at a paltry .48 PEG ratio and only ten times next year’s earnings. The growth in cell phone technology and the overall Chinese economy will fuel Shanda for a prosperous run. The company has a market capitalization of just under $2 billion dollars, giving it plenty of room to grow with the demand for gaming and entertainment.
The Chinese internet market is noted for its signature Baidu , which looks overvalued. Shanda shows strong fundamentals and will profit from more investment in the Chinese markets and the growing market for its products