UPDATE: Morgan Stanley Reiterates on Perfect World Following 4Q13 Results

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In a report published Tuesday, Morgan Stanley analyst Timothy Chan reiterated an Equal-Weight rating on
Perfect World Co. Ltd.PWRD
, but removed the $19.70 price target. In the report, Morgan Stanley noted, “We retain our EW rating on PWRD after its 4Q13 results. Fueled by the encouraging performance of new mobile game, Return of the Condor Heroes, as well as client-based title, Zhu Xian, sales rose 10% QoQ and 34% YoY to Rmb914mn in 4Q (vs. guidance of +25-31% YoY). Mobile games contributed close to 10% of sales in 4Q13. However, Perfect World's non-GAAP operating margin was only 12% (vs. 16% last quarter and 10% a year ago), due to higher promotion and R&D expenses. "1Q14 revenues are guided by management to grow 36-43% YoY (down 3-8% QoQ due to seasonality). We would turn more positive on sustainable margin improvement. The company declared a cash dividend of US$0.48/ADS (+7% YoY) for FY13, amounting to 2% yield.” Perfect World Co. Ltd. closed on Monday at $23.39.
Posted In: Analyst ColorPrice TargetAnalyst RatingsMorgan StanleyTimothy Chan
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