One month after Nomura Securities started its coverage of China Mobile Games & Entertainment (CMGE) with a bullish buy, the mobile game publisher fired nine executives due to allegations of bribery. Shares of CMGE tumbled 22.6% that day and is still down 18%.
Nomura Securities analysts Melvyn Boey and Jay Chandrasekharan spoke with CMGE’s management lately, and said the following:
Eight of the nine suspended mangers were not as senior as we believed
and have been reinstated in different functions pending the report of the
independent committee appointed by the company.
Mr. Ying Shuling, the former president, remains employed by the
company pending assignment of a new role.
The company clarifies that, notwithstanding market speculation about the involvement of the nine managers in illegal activity, it will await the report of the independent committee before making any conclusion and that it has not reached any conclusion.
The analysts continue to stand by their $32 price target. CMGE opened 3.8% higher today trading at $14.9