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Giant Interactive Group, Inc. (GA)

Q1 2013 Earnings Conference Call

May 7, 2013 9:00 p.m. ET

Executives

Richard Chiang – IR Director

Jazy Zhang – CFO

Xuefeng Ji – President

Wei Liu – CEO

Analysts

Timothy Chan – Morgan Stanley

Eddie Leung – Merrill Lynch

Jiong Shao – Macquarie

Gloria Yu – Oppenheimer

William Huang – Barclays

Martin Bao – CICC

Mark Marostica – Piper Jaffray

Jialong Shi – CLSA

Thomas Chong – BOCI

Presentation

Operator

Good morning and good evening, ladies and gentlemen. I would like to welcome everyone to Giant Interactive Group’s First Quarter 2013 Earnings Conference Call.

Please note that all participants are currently in listen-only mode. After the presentation there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question.

Now I would like to transfer the call to the moderator, Mr. Rich Chiang, Giant Interactive's Investor Relations Director.

Richard Chiang

Good morning, ladies and gentlemen. Welcome to the first quarter 2013 earnings conference call for Giant Interactive Group. With me today are Ms. Wei Liu, Chief Executive Officer; Ms. Jazy Zhang, Chief Financial Officer; and Mr. Xuefeng Ji, President.

As we proceed through our prepared remarks, we will refer to our results presentation which can be downloaded from our website at www.ga-me.com. Following the remarks, Ms. Liu, Ms. Zhang and Mr. Ji will be happy to take your questions.

Before we continue, I would like to remind you that statements on this call that are not strictly historical in nature constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terminologies such as will, expects, anticipates, future, intends, plans, believes, estimates and similar statements and among others, include statements regarding the company’s expectations for sequential growth in the fourth quarter 2012, the ability of the company to release one big title each year, the ability of the talent of game developers and chief game designers to deliver a steady stream of innovative and fun games going forward, the ability of the company to implement its key strategic initiatives with respect to strengthening the company's game development capability and diversifying the company's game portfolio, the ability of the company to become a leader in new game segments such as web game and mobile game segments, the ability of the company to release at least one mobile game later this year, the ability of our game initiatives to carry top-line momentum throughout 2013, the ability of the company to continue to deliver results as designated, the ability of the company to deliver -- to continue to pay dividends based on future cash flows, and the timetable for testing and release of new games and expansion packs in the company's game pipeline.

These forward-looking statements are not historical facts but instead represent only our belief regarding future events, many of which by their nature are inherently uncertain and outside of our control. Our actual results and financial condition and other circumstances may differ possibly materially from the anticipated results and financial condition indicated in these forward-looking statements.

Among the factors that could cause the company's actual results to differ from what we currently anticipate may include a deterioration in the performance of ZT Online 1 series, and ZT Online 2, unexpected delays in developing expansion packs or in the timetable for testing and launching our games, our dependence on ZT Online franchise which currently account for the majority of our historical net revenues, failure of our web games, MMO pipeline games or other diversification or distribution efforts to grow as successful as expected, uncertainties with respect to the PRC legal and regulatory environments and the volatility of the markets in which the company operates.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of Giant to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include but are not limited to risks discussed in filings with the Securities and Exchange Commission including our Annual Report on Form 20-F for the fiscal year 2012 as filed with the Securities and Exchange Commission on April 18, 2013, which is available on the Securities and Exchange Commission's website at www.sec.gov. All forward-looking statements are qualified by this cautionary statement and Giant undertakes no obligation to revise or update this information to reflect events or circumstances after today.

In addition, please note that references in the presentation to dollars refer to US dollars.

Now I would like to turn the call over to our CFO, Jazy Zhang. Jazy?

Jazy Zhang

Thank you, Rich.

Good morning and good evening everyone. I will begin by reading the opening remarks from our CEO, Ms. Liu.

We have made a good solid start in the first quarter of 2013. Despite no new game launches and a weaker seasonality associated with the Chinese New Year holiday, we were able to deliver solid top-line figures driven by the strong performance of ZT Online 2 and its micro-client version. Similarly, our impressive bottom line also demonstrated our ability and commitment to constantly improve efficiency.

2013 is shaping up to be a promising year for Giant as we will also be seeing a good deal of transformation within the company. We will continue our implementation of key strategy initiatives to fortify our already formidable game development capability and further diversify our game portfolio. In anticipation, we have made key strategic moves over the past quarter to strengthen our R&D capability.

Read the rest of this transcript for free on seekingalpha.com