Zynga Inc (ZNGA), Giant Interactive Group Inc (ADR) (GA): Digital Gaming Investment Opportunities

Page 2 of 2

The company also licenses its games to online game operators in various countries, and to other Chinese companies for operation on their platforms. It markets and sells its prepaid game cards and game points through distributors and retail outlets, including Internet cafes, software stores, supermarkets, bookstores, newspaper stands, and convenience stores in China, as well as through its official game website. In June, Chairman Yuzhu Shi offered 11 million American depository shares at $7.25, which would have been a perfect entry level for smart investors. Right now shares are trading near $8.45.

Also, Giant Interactive Group Inc (ADR) (NYSE:GA) will release its financial results for the second quarter on Tuesday, August 6, after market close. The company has rarely let investors down, so stay tuned.

The last company worthy of a look is Shanda Games Limited(ADR) (NASDAQ:GAME) The company is a leading online game developer, operator and publisher in China. Just recently, the company announced that it has entered into a definitive agreements to acquire affiliates providing user and payment platform services from its parent company Shanda Games Limited(ADR) (NASDAQ:GAME) Interactive Entertainment Limited (“Shanda Interactive”).

The company expects to achieve the following through this transaction:

Facilitate the establishment of the company’s mobile platform

Improve the company’s cost structure and earnings per share

Improve the company’s use of cash

Eliminate recurring related-party transactions and settle related-party loans

Service fees paid to these affiliates represent approximately 21.3% of Shanda Games Limited(ADR) (NASDAQ:GAME)’ total net revenue.

The aggregate consideration for the transaction is $811.5 million, subject to closing adjustments and payable in a combination of cash, deferred payments and settlement of an outstanding loan receivable from Shanda Interactive.

Despite the fair transaction price, I think this is a great deal for investors going forward. The transaction removes two cost components from the company’s cost structure and is projected to improve EPS by approximately 40%-50%.

Final note

The three companies mentioned in this article will reap the fruits going forward. All three are doing what it takes to become a winner. Investors can still jump on the bandwagon and profit from it.

The article Digital Gaming Investment Opportunities originally appeared on Fool.com and is written by Johan Seijkens.

Johan Seijkens has a position in Zynga and Shanda Games. The Motley Fool recommends Giant Interactive Group. Johan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2