in Mobile Gaming

#CMGE: Forbes says Buy

AppstabletForbes Investor Team is out today pushing fast growing mobile gaming developer and publisher CMGE (http://www.forbes.com/sites/investor/2014/07/02/keep-it-simple-stock-strategy/?partner=yahoomag)

Here is what they have to say:

“Fast-growing China Mobile Games & Entertainment (CMGE, 16) is the largest publisher and a leading developer of mobile games in China. The company uses a “freemium” model, offering a basic version at no cost but charging for premium usage. To generate traffic CMGE has revenue-share agreements with telecom giant China Mobile; chip manufacturer Mediatek, which preinstalls CMGE’s platform for phones; and independent platforms such as Tencent and Qihoo 360.

Approximately 65% of CMGE’s sales comes from licensed games developed by others and 35% from its own games, including its blockbuster social poker game, Joyful Da Ying Jia. CMGE has a clear growth plan: ride the explosive wave of the China smartphone adoption and boom in mobile gaming. According to IDC, China’s smartphone-user base will exceed 700 million by the end of the year. Confusion surrounding a recent management shakeup drove down its share price. I don’t expect any long-term effects. I just met with management in China, and at a P/E of just 11 times my forward EPS estimate of $1.50, the stock is cheap.”

We agree.

Nordic Investor

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