GA  Giant Interactive Group Inc

Exchange

NYSE

Sector

Miscellaneous

Industry

Business Services

Market Cap.

2.868B

Vuru Grade

54.55/100

Current Price

$11.92
0.00 (0.00%)

Company Metrics

  • P/E 8.58
  • P/S 7.54
  • P/B 3.74
  • EPS 1.39
  • Cash ROIC -40.24%
  • Cash Ratio 0.00
  • Dividend 0.23 / 1.93%
  • Avg. Vol. 1.27M
  • Shares 133.51M
  • Market Cap. 2.868B

Company Description

Giant Interactive Group, Inc. develops and operates online games in the People's Republic of China. The company focuses on massively multiplayer online (MMO) games that are played through networked game servers in which thousands of players are able to simultaneously connect and interact. Its online games include ZT Online, a two-dimensional online role-playing game; ZT Online PTP, a pay-to-play g... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

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Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for GA to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate GA's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$11.92 Current Price

$-0.01 Growth Price (DCF)

Why is this negative?


Show Free Cash Flow numbers

Very Poor Cash Return on Invested Capital over the past 5 years

GA has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

GA has lost $40.24 of cash for every $100 invested.
Figures in CNY. Fiscal year ends in December
20102011201220132014
Free Cash Flow 1.01B 1.02B 1.36B 1.38B -1.64M
divided by
Invested Capital 377.53M 666.22M 612.52M -168.74M 6.51M
Cash ROIC 267.86% 152.97% 222.19% -819.07% -25.16%

Excellent Return on Equity over the past 5 years

Over the past 5 years, GA has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

GA has generated $23.70 of Earnings for every $100 of Shareholders' Equity.
Figures in CNY. Fiscal year ends in December
20102011201220132014
Net Income 811.19M 879.97M 1.07B 1.34B -
divided by
Stockholders' Equity 6.39B 2.50B 3.22B 3.59B -
Return on Equity 12.69% 35.26% 33.31% 37.26% -

Good Business Performance over the past 10 years

It's likely GA has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is GA has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

GA has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Free Cash Flow -22.03M 449.24M 1.35B 978.61M 730.79M 1.01B 1.02B 1.36B 1.38B -1.64M

Very Weak Balance Sheet

GA is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of GA's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Cash 15.15M 451.43M 7.30B 5.07B 4.90B 6.03B 1.87B 2.68B 3.82B 14,491.00
Current Assets 17.20M 466.72M 7.38B 5.24B 5.10B 6.30B 2.18B 3.10B 4.28B 3.14M
Total Assets 26.03M 504.87M 7.60B 6.00B 6.45B 7.11B 3.55B 4.32B 5.37B 3.15M
Current Liabilities 3.25M 238.90M 1.28B 603.61M 547.45M 700.31M 1.01B 1.03B 1.71B 9.67M
Total Liabilities 3.25M 254.97M 1.28B 629.29M 555.48M 715.28M 1.06B 1.10B 1.78B 9.67M
Stockholder' Equity 22.78M 249.89M 6.31B 5.37B 5.90B 6.39B 2.50B 3.22B 3.59B -
Current Ratio 5.30 1.95 5.75 8.67 9.32 9.00 2.15 3.02 2.50 0.32
TL-to-TA 0.12 0.51 0.17 0.10 0.09 0.10 0.30 0.26 0.33 3.07

Consistent Reinvestment of Profits over the past 10 years

GA has consistently retained profits. This may put GA in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, GA can greatly improve their long-term economic picture.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Retained Earnings -41.30M 159.44M 512.08M 1.63B 2.25B 2.74B 669.14M 1.09B 1.39B -29.94M
Retained Earnings Growth - 486.02% 221.17% 217.33% 38.50% 21.69% -75.57% 62.54% 27.64% -102.16%

Varying Competitive Advantage over the past 10 years

GA likely has a competitive advantage which prevents other companies from entering or competing in their industry. However, there is a substantial variation in their Net Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$48.65 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Net Income -40.53M 244.65M 1.14B 1.11B 859.31M 811.19M 879.97M 1.07B 1.34B -
divided by
Revenue - 408.55M 1.53B 1.59B 1.30B 1.33B 1.79B 2.15B 2.36B 850,809.00
Net Profit Margin - 59.88% 74.39% 69.83% 65.91% 60.86% 49.10% 49.81% 56.71% -

Erratic Gross Profit Margins over the past 10 years

GA has had highly erratic gross profit margins which are a great cause for concern. This company may operate in a highly volatile industry, or it may just have poor performance. Look at reasons for this inconsistency to understand if there is any reason to look past it.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Gross Profit - 363.35M 1.36B 1.38B 1.10B 1.13B 1.56B 1.86B 2.06B -271,107.00
divided by
Revenue - 408.55M 1.53B 1.59B 1.30B 1.33B 1.79B 2.15B 2.36B 850,809.00
Gross Margin - 88.94% 88.60% 86.34% 84.35% 85.06% 87.16% 86.60% 87.32% -31.86%

Low Capital Intensity over the past 10 years

GA has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that GA may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

10.36% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Capital Expenditure 7.44M 25.68M 129.25M 131.09M 20.97M 20.88M 255.57M 79.00M 104.77M 1.31M
divided by
Net Income -40.53M 244.65M 1.14B 1.11B 859.31M 811.19M 879.97M 1.07B 1.34B -
Capital Expenditure Ratio -18.35% 10.49% 11.36% 11.77% 2.44% 2.57% 29.04% 7.37% 7.84% -

Inconsistent Dividend History over the past 10 years

GA has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Dividend Paid - - 191.10M 593.50M 277.65M 268.39M 4.83B 539.40M 1.03B -
divided by
Shares Outstanding 160.62M 200.15M 216.26M 247.90M 233.96M 233.93M 232.00M 240.82M 246.84M 133.51M
Dividend Paid Per Share - - 0.13 0.36 0.18 0.17 3.16 0.34 0.63 -
Price at Year End - - 7.20 3.50 4.13 4.30 4.08 5.38 11.28 11.92
Dividend Yield - - 1.86% 10.38% 4.36% 4.05% 77.38% 6.32% 5.62% -

History of Stock Buybacks over the past 10 years

GA has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in CNY. Fiscal year ends in December
2005200620072008200920102011201220132014
Shares Outstanding 160.62M 200.15M 216.26M 247.90M 233.96M 233.93M 232.00M 240.82M 246.84M 133.51M
Stock Bought Back - -19.75% -7.45% -12.76% 5.96% 0.01% 0.83% -3.66% -2.44% 84.88%
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