NEW YORK (TheStreet) -- Shares of Perfect World Co. (PWRD) jumped 22.65% to $19.33 on heavy trading volume after the Beijing-based online game developer received a proposal from Chairman Michael Yufeng Chi to acquire the shares he doesn't already own, in a move that values the company at about $1 billion, the Wall Street Journal reports.
Chi offered $20 per ADR. The proposal is preliminary and nonbinding.
Perfect World specializes in multiplayer online games, including "Jade Dynasty" and "Battle of the Immortals," the Journal noted, adding it has units in the U.S., Europe and Japan.
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Additionally, the company said today that Yunfan Zhang will become chief operating officer.
About 1.29 million shares of Perfect World changed hands by 10:55 a.m. in New York, compared to the average of 445,015 shares.
Separately, TheStreet Ratings team rates PERFECT WORLD CO LTD as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PERFECT WORLD CO LTD (PWRD) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 26.4%. Since the same quarter one year prior, revenues rose by 18.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- PWRD's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PWRD has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for PERFECT WORLD CO LTD is rather high; currently it is at 69.02%. Regardless of PWRD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PWRD's net profit margin of 6.22% is significantly lower than the industry average.
- PERFECT WORLD CO LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PERFECT WORLD CO LTD reported lower earnings of $1.40 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($1.98 versus $1.40).
- You can view the full analysis from the report here: PWRD Ratings Report