Sector Snap: Chinese Web Gaming Rises

American Depositary Shares of NetEase.com Inc. rose 64 cents, or 3.6 percent, to $18.27.

In his note, Brean Murray analyst Andrey Glukhov said a recent decline in the share price "seems unjustified" and that he believes the company is headed toward a healthy quarter.

"Admittedly, 'TianXia II' is taking a while to come out of technical testing, but we believe the performance of NetEase's current games should be more than sufficient to execute on (first half of 2008) consensus expectations," he said.

Meanwhile, ADS of Perfect World Co. rose 38 cents to $24.20.

Glukhov reiterated his "Buy" rating for the stock, saying its game "Fantasy Westward Journey" kept its spot as the most frequently downloaded game and that research shows NetEase's first-quarter domestic and international revenue trends are strong.

Within China, the company's biggest game, "Zhu Xian" is doing well and its game "Chi Bi" is also catching on, he said.

Internationally, Glukhov said licensing revenue is "on track," and a major licensee, Softworld, which is based in Taiwan, indicated the game "Legend of Martial Arts" helped lead to record February revenues.

Meanwhile, ADS of Shanda Interactive Entertainment Ltd. rose $1.06, or 3.7 percent, to $29.68 while ADS of The9 Ltd. rose 75 cents, or 3.9 percent, to $19.95.

Glukhov said downloads of "World of Warcraft," which The9 licenses for play in China, were in line with the average number for the quarter to date.