Giant Interactive Group Inc (GA): Here’s Why You Can Be Bullish

I was never in doubt that Chinese online gaming company Giant Interactive Group Inc (NYSE:GA) would turn out to be one of the best investments that one could make in 2013, and the stock’s year-to-date appreciation of close to 50% tells me that I was right. But if you’ve missed this gravy train so far, then worry not, as Giant Interactive Group Inc (NYSE:GA) still has gigantic prospects going forward.

The streak continues

The company’s recently released first-quarter results prove that its business is going strong and it is well positioned to ride the growth of online gaming in China. Giant Interactive Group Inc (NYSE:GA) reported revenue of $92.2 million in the previous quarter, up almost 13% from the year-ago period and slightly ahead of analyst estimates. Non-GAAP net income also jumped 6.3% from last year to $55.2 million, or $0.22 per share, a penny ahead of Street estimates.

If you’re wondering why Giant Interactive Group Inc (NYSE:GA)’s revenue and earnings didn’t grow at a rapid pace as they did last quarter, then let me tell you that the company didn’t launch any new games in the quarter in view of the Chinese New Year, when most of the gamers are away from their computers. Despite this seasonal effect, Giant Interactive Group Inc (NYSE:GA) still managed to post growth in the metrics that matter.

Solid strategies

The company’s strongest title, ZT Online 2 and the game’s micro-client version held steady as always, resulting in the top-line jump. Giant Interactive Group Inc (NYSE:GA) revved up these games by pushing out expansion packs in the quarter, and the company’s strategy of making this game a long lasting one seems to be working just fine. Giant would be releasing another expansion pack for the game later in the year, and the most remarkable thing about it is that it is taking feedback from gamers to develop the next version.

Going forward, Giant expects to make further advances this year. Its next expected blockbuster, World of Xianxia, is now in closed beta testing and is performing ahead of the company’s expectations. The game is expected to accelerate Giant’s revenue growth and it seems to be on the right path. Thus, the company will have two solid catalysts in the form of ZT Online and World of Xianxia to push up its revenue this year.