September 21, 2007
Investors Buy In On A Perfect World

Melanie Lindner

For gamers and investors around the globe, Beijing Perfect World is nearly living up to its namesake.

The company released a statement early Thursday announcing that it received a customer service certificate from the International Organization for Standardization (ISO) on August 24, 2007. ISO sets standards for industrial and commercial businesses and maintains close ties with governments in more than 90 countries around the world. In a press release Perfect World said the certificate was granted because it tries to ensure customer security via a code protection card, and what it called a "telephone-linked code guarantee."

After releasing the statement, shares of Perfect World (nasdaq: PWRD) jumped $2.62, or 10.4%, to $27.79. Richard Ji of Morgan Stanley considers Perfect World to be the innovative leader in China's online entertainment world. Ji believes the market for internet gaming is strong, especially with China's recent consumer activity. "We believe the internet industry, while in its early stages and risky, is among the fastest-growing industries in China and may offer investors one of the better ways to benefit from China’s strong consumer market growth."

In comparison to online gaming rivals like NetEase (nasdaq: NTES), Shanda (nasdaq: SNDA) and The9 (nasdaq: NCTY), Ji believes Perfect World is superior to the competition in stability and virus protection. Currently most of Perfect World's business is in China, with Chinese gamers, but it seeks to license some of its 3-D game technology outside of the country, said Citigroup analyst Jason Brueschke.

In 2006, Perfect World reported $13.2 million in sales, with a net income loss of $3.7 million. The company currently has a market cap of $7.76 billion.

Citigroup's Brueschke believes Perfect World's development team is the key to the company's success: "Looking across various well-established developers in China online gaming market, we strongly believe that Perfect World development team is truly the pioneer in 3-D game development in China. The bonding and the 10+ years experience accumulated by this team is the most valuable asset to the company."

Perfect World operates four 3-D online multiplayer games: Perfect World, Perfect World II, Legend of Martial Arts and Zhuxian. The company was founded in 2004, but only became publicly traded in July of 2007 and has increased its share price more than 32% in less than three months.

(Source: Forbes.com)