Kong Zhong released their financial reports last week. The profit dropped to 3.7 M USD and the stock tubmbled well below 7$. The main reason was China Mobile's new regulation.Kong Zhong also invested 2M $ in the new mobile portal - Kong.net, an attempt to by pass China Mobile.
Since the current market cap of Kong Zhong is about 230M$ and they have 131M$ in cash the total evaluation of their cash flow is estimated at about 99M$. Since the current annual cash flow is about 11M$ and used to be around 32M$ before the new regulation, it reflects a current 9 P/E ratio and a 3 P/E ratio if the company will recover and maintain previous levels of profitability withing 2 years.
This seems like a good stock to invest according to my favorite approach the value approach.
I have decided to increase my position in Kong Zhong due to the latest decrease in the company performance and stock value.
Time will tell if i was right.
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