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Form 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August 2008
Commission File Number: 001-33759
GIANT INTERACTIVE GROUP INC.
2/F No. 29 Building, 396 Guilin Road
Shanghai 200233
People’s Republic of China
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F þ Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ¨ No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82- N/A
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Giant Interactive Group Inc.
Form 6-K
| Page | ||
| Signature | 3 | |
| Exhibit 99.1 — 2008 Second Quarter Results Presentation dated August 28, 2008 | 4 |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Giant Interactive Group Inc. | ||||
| By: | /s/ Eric He | |||
| Name: | Eric He | |||
| Title: | Chief Financial Officer | |||
| Date: August 29, 2008 | ||||
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2008 Second Quarter Results Presentation
August 28, 2008
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Safe Harbor Statement and Currency Convenience Translation
Safe Harbor Statement
Statements in this slide presentation contain “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 terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements and include, among others, statements regarding our continued efforts to increase shareholder value through strategic investments and expansion of game content and features. 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. The financial information contained in this slide presentation should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report filed with the Securities and Exchange Commission on June 18, 2008, and is available on the Securities and Exchange Commission’s website at www.sec.gov. For additional information on these and other important factors that could adversely affect our business, financial condition, results of operations and prospects, see “Risk Factors” beginning on page 7 of our annual report. Our actual results of operations for the second quarter of 2008 are not necessarily indicative of our operating results for any future periods. Any projections in this slide presentation are based on limited information currently available to us, which is subject to change. Although such projections and the factors influencing them will likely change, we undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this slide presentation. Such information speaks only as of the date of this slide presentation.
Currency Convenience Translation
This slide presentation contains translations of certain Renminbi (RMB) amounts into US dollars (US$) at the rate of US$1.00 to RMB6.859, which was the noon buying rate as of June 30, 2008 in the City of New York for cable transfers in Renminbi per US dollar as certified for customs purposes by the Federal Reserve Bank of New York. We make no representation that the Renminbi or US dollar amounts referred to in this slide presentation could have been, or could be, converted into US dollars at such rate or at all.
© 2008 Giant Interactive Group, Inc. All Rights Reserved 2
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Giant Interactive Group
A Leading Online Game Developer & Operator
© 2008 Giant Interactive Group, Inc. All Rights Reserved
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Giant: NYSE Listed
NYSE IPO: November 1, 2007
Ticker: GA
US$2.3B
Market Cap:
August 27, 2008
Outstanding Shares: Approximately 242M
About Giant:
Headquarters: Shanghai, China
Over 4,000
Employees: including 3,000+ liaison
personnel
Investor Information: www.ga-me.com
© 2008 Giant Interactive Group, Inc. All Rights Reserved 4
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Business Operation Updates
© 2008 Giant Interactive Group, Inc. All Rights Reserved
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Recent Business Highlights
| 1 |
ZT Online reached PCU of over 2.1 million, multiple new features implemented |
| 2 |
Giant Online reached PCU of over 344,000, optimizing game features |
| 3 |
Empire of Sports being localized for the Chinese market, closed beta |
testing in China expected to begin in first quarter 2009
| 4 |
King of Kings III undergoing graphics enhancement, adding community |
features, planning migration to China-based server engines
| 5 |
Conducted strategic investment into 51.com, leading Chinese online |
social networking service provider
© 2008 Giant Interactive Group, Inc. All Rights Reserved 6
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Key Quarterly Operating Metrics
Active Paying Accounts (APA)
1,760
1,800
1,600 1,447
Accounts in Thousands
1,405
1,400 1,318
1,248
1,200
986
1,000
800
600
400
200
0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Average Concurrent Users (ACU)
700
620
Users in Thousands
600 546
515 512
481
500 450
400
300
200
100
0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Average Revenue per User (ARPU)
400
350 325
320
305 309
295
300 286
250
RMB 200
150
100
50
0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Peak Concurrent Users (PCU)
2,500 2,339
2,000
1,646
1,500
1,073
983
Users in Thousands
1,000 874 888
500
0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Q407 figures onward include ZT Online, ZT Online PTP and Giant Online; before Q407, all figures are ZT Online only
© 2008 Giant Interactive Group, Inc. All Rights Reserved 7
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Strategic Investment – 51.com
US$51 million
Giant Interactive Group 51.com 25% stake
Leading online game developer Leading online social networking and operator service provider with large community
PCU of 2.3 million and ACU of 620 thousand 120 million registered users
RMB285.9 ARPU with 1.8 million 31.5 million monthly unique APA visitors
Proven revenue model with high 350 million average daily page profitability views
Long-term Strategic Goals Broaden Player Base Expand Community Size Reinforce User Stickiness Extend Game Lifecycles
© 2008 Giant Interactive Group, Inc. All Rights Reserved 8
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Key Financial Highlights
© 2008 Giant Interactive Group, Inc. All Rights Reserved
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Profitable Growth and High Margins
Net Revenue Gross Profit Margin
80 73.6 millions
67.3 70 59.6
60 54.1 in 48.6 50
Dollars 41.7 40 30
US 20 10 0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
95%
91.20%
89.60%
90% 88.80% 89.20% 88.60%
85.70% 85%
80%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Net Income
60
51.1 millions 50 48.3 45.8
40 32.6 38.7 34.7 in Dollars 30
20
US 10 0
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Net Income Margin
80%
78.20%
76.80%
75%
71.40% 71.60% 71.80%
69.50% 70%
65%
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
© 2008 Giant Interactive Group, Inc. All Rights Reserved 10
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Q2 2008 Key Financial Highlights
Q2 2008 Q2 2008 Q1 2008 Q-o-Q Q2 2007 Y-o-Y
(In millions, except EPS data) US$ RMB RMB % RMB %
Total Net Revenue 73.6 504.8 471.6 7.0% 370.2 36.3% Cost of Services 8.4 57.8 50.8 13.7% 38.6 49.6% Gross Profit 65.2 447.0 420.8 6.2% 331.6 34.8% Operating Expenses 17.3 118.8 99.8 19.0% 67.9 75.0% Income from Operations 47.8 328.2 321.0 2.2% 263.7 24.5% Net Income 51.1 350.6 338.7 3.5% 264.2 32.7% Basic EPS (RMB) 1.45 1.38 5.1% 1.32 9.8% Diluted EPS (RMB) 1.40 1.33 5.3% 1.32 6.1%
Q2 2008 Q2 2008 Q1 2008 Q-o-Q Q2 2007 Y-o-Y
US$ RMB US$ % US$ %
Basic EPS (US$) 0.21 0.20 5.0% 0.17 23.5% Diluted EPS (US$) 0.20 0.19 5.3% 0.17 17.6%
© 2008 Giant Interactive Group, Inc. All Rights Reserved 11
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Solid Balance Sheet
June 30, June 30, March 31, December 2008 2008 2008 31, 2007
(In millions)
US$ RMB RMB RMB
Cash 267.4 1,834.2 5,835.0 7,295.5 Current Assets 864.8 5,932.1 6,150.2 7,373.5 Total Assets 903.9 6,200.2 6,376.1 7,587.7 Current Liabilities 107.2 735.4 1,201.0 1,282.2 Total Liabilities 107.2 735.4 1,201.0 1,282.2 Shareholders’ Equity 796.7 5,464.8 5,175.1 6,305.5 Total Liability and Shareholders’ Equity 903.9 6,200.2 6,376.1 7,587.7
© 2008 Giant Interactive Group, Inc. All Rights Reserved 12
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Recent Development and Business Outlook
© 2008 Giant Interactive Group, Inc. All Rights Reserved
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Enhanced Monetization Structure
Revised Monetization Structure in ZT Online
Rationale:
Optimize pricing structure and extend game lifecycle Action:
Rebalance in-game promotional activities and daily tasks
Enabled various players of different spending behavior to better achieve their respective game experiences and goals Expected Long-Term Outcome:
Reduced ARPU
Increased APA
May Have Short-Term Variability within Online Game Revenue, but the Long-Term Benefits Include Expanded Player Base and Enhanced Player Loyalties
© 2008 Giant Interactive Group, Inc. All Rights Reserved 14
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Market Segmentation Strategy
Launched ZT Online Classic Edition
Targeting former players who preferred monetization characteristics of ZT Online in 2006
• Eliminate in-game promotional activities
• Restores in-game monetization features from 2006
• Operates concurrently and independently of ZT Online
• Further segment ZT Online’s user base
© 2008 Giant Interactive Group, Inc. All Rights Reserved 15
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NYSE: GA Thank you
www.ga-me.com