Giant Interactive Q1 Profit Surges On Gains - Update

(RTTNews) - Online games operator Giant Interactive Group Inc. (GA), Wednesday reported a surge in profit for the first quarter, largely reflecting gains from sale of interest in Yunfeng E-Commerce Funds.

Shanghai, China-based Giant's first-quarter profit rose to 1.21 billion yuan or 4.84 yuan per share from 326.0 million yuan or 1.32 yuan per share a year ago. In U.S dollars, earnings for the quarter were $194.0 million or $0.78 per share.

Results for the quarter included investment income from the sale of Yunfeng E-Commerce Funds of 899.8 million yuan or $144.7 million. Excluding special items, adjusted earnings for the quarter were 1.38 yuan or $0.22 per share.

Giant Interactive, which develops and operates online games, said revenues inched up 0.4 percent to 575.14 million yuan from 572.85 million yuan last year. In U.S. dollar terms, revenue was $92.52 million.

Revenue from online games inched up 0.5 percent to 560.2 million yuan or $90.1 million.

Giant Interactive has been able to improve its profit in the past quarters as the online gaming company launched several online multiplayer games and diversified into production of mobile games

However, the revenue growth for the first quarter was slowed down by the Chinese New Year Holiday as gamers went on holiday.

Chief Executive Wei Liu said, "We began 2014 with a sound quarter despite weaker seasonality and lack of new game launches during the first quarter. In-game spending declined sequentially as gamers traveled more during the Chinese New Year holiday. However, the high engagement and playing time demonstrate the enjoyment and loyalty our users experience in our games."

Gross margin for the fourth quarter advanced to 88.6 percent from 85.6 percent last year, while operating costs increased 3.7 percent to 134.3 million yuan.

GA closed Wednesday's trading at $11.77, up $0.01 or 0.09%, on the NYSE.