Morgan Stanley Reiterates Overweight on Giant Interactive (GA)

Morgan Stanley reiterated its Overweight rating on Giant Interactive GA, following Giant's strong Q1 results. In a research report published today, Morgan Stanley states, "1Q11 sales increased 10% QoQ and 32% YoY to Rmb403mn, in line with our estimates. Excluding one off items, earnings per ADS (EPADS) of Rmb1.02 rose 18% QoQ, 12% above our estimates on cost control." Morgan Stanley also expressed some of its concerns. In the report, Morgan Stanley summed its concerns to: "1) ARPU (average revenue per gamer) declined 2% YoY due to lower ARPU for ZT Online II. 2) Average concurrent users (ACU) stayed flattish QoQ and YoY, accounting for 31% of PCU, the lowest in the past two years." In today's pre-market trading, Giant added 3.31% to close the day at $9.68.