Shanda Interactive Entertainment Ltd's (Shanda) 1Q 09 net revenues experienced healthy top-line and earnings growth. According to a report published by Niko Partners, an American market research group, online game revenues in China are expected to witness a CAGR of 29% from FY 2008-FY 2012. We expect this growth to be fueled by rising Internet penetration in China along with the quality of games available in China....

Although the Chinese economy like most others across the globe has slowed down, we do not expect the online gaming industry to be adversely impacted in the face of an economic downturn as it represents a cheaper mode of entertainment and believe it could present a viable alternative to more expensive social activities. According to the Chinese MMORPG Industry Development Report 2008- 2009, released by iResearch…

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Shanda Interactive Entertainment Limited (Shanda) ADR achieved our target price of US$27.56 derived in our 3Q 08 update report on 08 December 2008. We believe the appreciation in the ADR price is led by strong fundamentals, outlined in our previous update report. As the current ADR price no longer supports a BUY rating, we are downgrading the rating from a BUY to a HOLD. We reiterate the European ADR a BUY as we continue to anticipate…