Giant Interactive Soars on $200M Repurchase

Shares of China's largest online game company Giant Interactive (GA) jumped more than 17% to above $12 Monday after the company announced a share repurchase program that could see it buying back up to $200 million of its outstanding American Depositary Shares (ADSs) over the next 12 months. The company plans to fund the repurchases with available cash. "Our board of directors' approval of the share repurchase program reflects our strong commitment to increase shareholder value and confidence that the current ADS price levels do not reflect our current potential value," CEO Yuzhu Shi said. "Furthermore, we firmly believe that our available cash resources will allow us to implement a share repurchase program while continuing to pursue growth opportunities."

Shares of Giant Interactive had lost about 44% since the company went public on Oct. 31.

In a pre-IPO note, Pali Research analyst Tian Hou said the $12 to $14 planned issue "presents huge upside potential for investors." "The effectiveness of Giant’s sales and marketing is well known in China. The CEO, Mr. Shi, is considered a genius in marketing and sales," it said. Recently-listed Perfect World (PWRD) is a GA competitor; its shares are up 1.7% Monday.

Seeking Alpha contributor Cabeza Howe published a presciently bullish article on Giant Interactive this morning: China Gaming: Giant Interactive Cannot Be Ignored.

Sources: Press release
Additional Reading: China Online Search vs. MMO Game Market

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