This post is part of a featured report on stocks in the Chinese online gaming sector.

"When it comes to numbers, Giant Interactive (NYSE: GA) is the kind of company that accountants can only dream about; with a profit margin above 70% and huge cash reserves, the stock is selling well below book value," says China expert Jim Trippon.

In his The China Stock Digest he explains, "Giant was founded in November 2004 and as become one of the fastest-growing and most profitable companies in the Chinese online game industry."

"Despite constantly rising earnings as more and more Chinese log on to the Internet, Giant Interactive is reasonably valued with a P/E multiple of 12.5.

One month ago, we featured a special report featuring the favorite China-based stocks among financial newsletter advisors. Since then, the 14 stocks covered in the report have risen an average of more than 15%.

The performance of these stocks -- along with the overall China market -- has far exceeded the 3% gain in the S&P 500 index over the same time period. That report can be viewed here.

Despite these gains, many of the leading advisors remain bullish on China; in particular, several have recently focused on the online gaming sector in Asia. Indeed, Timothy Lutts notes that while the video game market in the U.S. is slowing, the video game market in China is expected to show 20%+ annual growth in coming year.

Analyst upgrades:

• Friedman Billings upgraded Synovus (NYSE: SNV) to Market Perform from Underperform on valuation following the recent weakness. BASF (OTC: BASFY) and Akzo Nobel (OTC: AKZOY) were upgraded to Buy from Neutral at UBS on valuation and believes cash flows can cover the company's dividend.
• JP Morgan upgraded H.B. Fuller (NYSE: FUL) to Overweight from Neutral citing benefits from lower raw material costs.
• CA, Inc (NASDAQ: CA) was added to Goldman's Conviction Buy List.
• Goldman removed Boeing (NYSE: BA) from the Conviction Sell List.
• WABCO Holdings (NYSE: WBC) was upgraded to Buy from Hold at KeyBanc.

• Oppenheimer downgraded Giant Interactive (NYSE: GA) to Perform from Outperform following the company's Q3 results as they believe a recovery of revenue from ZT Online will take longer than expected.
• Friedman Billings cut Walter Industries (NYSE: WLT) to Market Perform from Outperform as they believe the decline in steel demand will pressure met coal prices. The company's target was lowered to $30 from $53.
• Citigroup downgraded shares of Atlas Pipeline (NYSE: AHD) Holdings to Sell from Hold as they believe the company could potentially be in violation of its debt covenants as early as Q1. The company's target was lowered to $4 from $31.
• Oracle (NASDAQ: ORCL) was removed from Goldman's Conviction Buy List.
• Dover (NYSE: DOV) and Emerson Electric (NYSE: EMR) were downgraded to Underweight from Neutral at JP Morgan.

China has gone ga-ga over online gaming. In fact, IDC projects that the market will zoom from $815 million in 2006 to $3 billion by 2011. One of the leaders in the space is Giant Interactive. And, this week, the company filed to go public.

Giant's main game – ZT Online – was the most popular in China last year. The compound annual quarterly growth, in terms of users, has been 39.6%. As of the end of September, there were 481,054 average concurrent users.

Giant has a team of 140 game developers, which seem to have a eye for its target market (players between the ages of 18 and 40). What's more, the firm plans to launch a new game in the fourth quarter.

For the first six months of 2007, Giant's revenues were $90.3 million and net income was a juicy $67.3 million

The lead underwriters on the IPO include Merrill Lynch & Co., Inc. (NYSE: MER) and UBS AG (USA) (NYSE: UBS). The proposed ticker is "GA."

The prospectus is located at the SEC website. Also, if you want to check out other IPOs, click here.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.