Although we are now in a time when fundamentals mean nothing, I'm still following along to see how companies are doing so when an era of rationality returns and the casino action abates we know what stocks we want to be back in. I sold both
Perfect World (PWRD) and
Energy Conversion Devices (ENER) in the early September purge, before the real crash. PWRD was
sold Sept 8th at mid $23s; it's now in the mid $18s after trading as low as $14s.
ENER was
sold Sept 10th near $56; it's now in the $37s after trading as low as $25s. There was no great skill on my part by selling these - effectively if you sold anything in early September you looked brilliant.
Both charts are poor and not something we'd be buying in a bull or sideways market. But I continue to find good stories behind both names; however as one precondition for me to return to "investing" in this market we need to see companies executing treated differently than ones that do not. Not "student body left" trading - if you look at Perfect World's chart it might as well be a US subprime lender - no differentiation.
Perfect World (PWRD) appears to making a run at best of breed among the cadre of Chinese video game makers... they also have a recently announced share repurchase program so management is responsive to the withering stock price (
Oct 15: Perfect World Announces Share Repurchase Program) A quick glance at
the numbers keeping in mind analysts were in at
$54.5M revenue and $0.45 EPS. Revenue grew 78% year over year with some overseas licensing helping; gross margin holding well in the 87% range; net income up 67% and EPS up 53%. No major debt and again, a share repurchase on the way. All this and a bag of chips for just over a 10 PE.
- Total revenues were RMB381.8 million (USD56.2 million) in 3Q08, an increase of 14.2%, or RMB47.4 million, from RMB334.4 million in 2Q08 and an increase of 78.5%, or RMB167.9 million, from RMB213.9 million in 3Q07.
- Online game operation revenues were RMB324.5 million (USD 47.8 million) in 3Q08, an increase of 8.4%, or RMB 25.1 million, from RMB299.4 million in 2Q08 and an increase of 64.3%, or RMB127.0 million, from RMB197.4 million in 3Q07.
