Perfect World Co., Ltd. (ADR) (PWRD): Is This Company’s Business About to Turnaround?

However, the market for mobile games is quite crowded and monetization isn’t as great as MMOs. For instance, Giant Interactive is already testing the waters in mobile, and if it ports its successful online games onto the platform, then competition would become even stiffer. Similarly, NetEase, Inc (ADR) (NASDAQ:NTES), which is among the biggest players in the industry, is much more serious about its mobile ideas.

Like Perfect World, even NetEase is going to launch quite a few mobile games this year, but it already has a strong foothold in the arena as it saw 75 million installations of its mobile games in the previous quarter. More importantly, NetEase boasted of 29 million daily active users, which is certainly impressive. Throw in other players such as Glu Mobile Inc. (NASDAQ:GLUU), and it becomes clear that Perfect World will have to bring it’s A game to have a chance in the market for mobile games.

Also, the company touts its MMO pipeline with games such as Swordsman Online, DOTA 2, and Holy King set to be launched going forward. Hopefully, its moves on all these fronts will bring the much needed revenue growth and enable the company to profit from the booming Chinese online gaming market.

The takeaway

Apart from these moves, Perfect World is continuing its expansion in Europe and Korea, which should strengthen the company’s overseas business further. Thus, the company’s important metrics might start picking up if it executes on all these fronts. And given the fact that Perfect World is still trading at a cheap 8.37 times trailing earnings despite being close to its 52-week high is indeed tempting as you wouldn’t be paying a lot for this probable turnaround story.

But then, this is not a stock you can buy and forget, because if Perfect World’s turnaround isn’t forthcoming over the next quarter or two, it would be prudent to book profits and move on.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Giant Interactive Group (NYSE:GA) and NetEase.com.

The article Is This Company’s Business About to Turnaround? originally appeared on Fool.com and is written by Harsh Chauhan.

Harsh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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