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Shanda Interactive Entertainment Ltd 8 July 2008

Company News Alert

Significant decline in ADR price

ADR BUY Despite the significant decline in the ADR price, we remain optimistic regarding Shanda Interactive
Direct access
Entertainment to theonfull
Ltd (Shanda) report
account of its free of charge
diversified at coupled with its dominant
gaming portfolio
position in the Chinese online gaming market. In addition, due to the increasing Internet penetration
Fundamental Stock inhttp://www.iirgroup.com/researchoracle/viewreport/show/20226
China coupled with Shanda’s strong portfolio of online games, we maintain our positive outlook for
Ticker: SNDA the ADR.
Target price: US$36.00
Current price: US$24.77
Price change We will reassess the ADR rating and target price in our next update report after the release of the
(20.05%)
since last report company’s 2Q 08 results.

European BUY As we now anticipate a positive currency impact on the ADR over the next 6–24 months, we
maintain our BUY rating on the European ADR at current levels, until we fully reassess the
ADR1 company2.
Ticker: SNDAy.F
Target price: €21.43
Current price: €15.66
Price change (24.50%)
since last report We will reassess the rating and target price for the European ADR in our next update report.

Supervisor: Meera Patil

Analyst: Prateet Champawat
Editor: Shem Pennant
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com

Next news due:

2Q 08 results, August 2008
We rated the Shanda ADR a BUY in our previous update report dated 9 June 2008 with an upside of
16%. Since then the stock has declined 20.1% compared to a 9.3% decline witnessed in the NASDAQ
Composite Index. We believe the majority of the decline in the ADR is attributable to global weakness
across major equity indices due to increasing oil prices coupled with the recessionary trends
witnessed in the US economy. However, considering the fast paced growth of the Chinese online
advertising market, burgeoning Internet penetration in China as well as the company’s rich and
diversified game portfolio, we view Shanda as a positive investment opportunity at current levels.

Footnotes

1 The SNDAy.F stock has low average daily trading volume of below US$1 mn over the last 12 months.

2 On 16 June 2008, we revised our forecast for EUR/USD. We now expect the euro to depreciate against the US dollar over the coming 12

months to trade at 1.5, after which it is expected to decline to 1.35 over a 24 month horizon. Therefore, we expect to take a 6-24 month
horizon to value this stock in our next update report.

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