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China Literature Ltd. (HK:0772)
:0772
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China Literature (0772) AI Stock Analysis

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HK:0772

China Literature

(OTC:0772)

Rating:60Neutral
Price Target:
HK$45.00
▲(11.44% Upside)
The overall stock score of 60 reflects strong financial performance in terms of revenue growth and cash flow, but significant challenges in profitability and valuation. The technical analysis shows bullish momentum, but the stock is overbought, indicating potential for a correction. The extremely high P/E ratio suggests overvaluation, which is a major concern.

China Literature (0772) vs. iShares MSCI Hong Kong ETF (EWH)

China Literature Business Overview & Revenue Model

Company DescriptionChina Literature Limited (0772) is a leading online literature platform in China, primarily engaged in online reading, intellectual property operations, and the adaptation of literary works into various entertainment formats. The company operates under the umbrella of Tencent Holdings and offers a vast and diverse library of digital literature through its flagship product, QQ Reading. China Literature aims to connect authors with readers, providing a platform for aspiring writers to monetize their content while offering readers a wide array of genres and stories.
How the Company Makes MoneyChina Literature makes money through multiple revenue streams, with the primary one being the monetization of its digital content. This includes subscription fees and advertising revenue from its online reading platforms. The company also generates income by licensing its intellectual properties for adaptation into films, television series, and games, leveraging the popularity of its stories to create profitable multimedia franchises. Additionally, China Literature benefits from strategic partnerships, particularly with Tencent, which helps in distributing content across a broader audience and integrating its services with Tencent's ecosystem, thus enhancing user engagement and revenue potential.

China Literature Financial Statement Overview

Summary
Despite a strong revenue growth of 15.8%, the company's financial performance is hindered by a net income loss in 2024. The balance sheet is strong with low leverage and high equity ratio, and cash flow remains robust with a significant increase in free cash flow, indicating good liquidity and operational flexibility.
Income Statement
58
Neutral
The company showed a significant decline in net income, turning from a profit of HKD 804.9 million in 2023 to a loss of HKD 209.2 million in 2024. Gross profit margin decreased slightly from 48.1% in 2023 to 48.3% in 2024. Revenue growth was strong at 15.8% from 2023 to 2024, but the negative net income and EBIT in 2024 are concerning.
Balance Sheet
70
Positive
The company maintains a strong equity position with an equity ratio of 80.1% in 2024. The debt-to-equity ratio is low at 0.009, indicating low leverage. However, return on equity turned negative in 2024, reflecting the net loss.
Cash Flow
82
Very Positive
Free cash flow increased significantly by 152.4% from 2023 to 2024, showing strong cash generation capability. The operating cash flow to net income ratio improved substantially, indicating better cash earnings quality. The company shows a robust cash flow position despite the net income loss.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue8.12B7.01B7.63B8.67B8.53B
Gross Profit3.92B3.37B4.03B4.60B4.23B
EBITDA748.35M1.22B1.20B1.75B-2.62B
Net Income-209.22M804.88M608.19M1.85B-4.50B
Balance Sheet
Total Assets22.95B23.19B22.73B23.30B21.32B
Cash, Cash Equivalents and Short-Term Investments7.62B6.28B7.51B7.21B6.26B
Total Debt166.21M238.10M617.98M1.45B1.33B
Total Liabilities4.57B4.16B4.78B6.11B6.22B
Stockholders Equity18.37B19.02B17.96B17.19B15.09B
Cash Flow
Free Cash Flow2.41B954.13M1.25B879.35M821.95M
Operating Cash Flow2.53B1.13B1.58B1.12B1.11B
Investing Cash Flow-1.76B-3.39B528.10M936.23M-4.19B
Financing Cash Flow-346.01M-510.82M-1.15B-349.99M-92.34M

China Literature Technical Analysis

Technical Analysis Sentiment
Positive
Last Price40.38
Price Trends
50DMA
31.79
Positive
100DMA
29.16
Positive
200DMA
28.13
Positive
Market Momentum
MACD
2.86
Negative
RSI
66.74
Neutral
STOCH
69.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0772, the sentiment is Positive. The current price of 40.38 is above the 20-day moving average (MA) of 34.24, above the 50-day MA of 31.79, and above the 200-day MA of 28.13, indicating a bullish trend. The MACD of 2.86 indicates Negative momentum. The RSI at 66.74 is Neutral, neither overbought nor oversold. The STOCH value of 69.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0772.

China Literature Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$46.67B47.8519.44%1.67%15.57%94.36%
71
Outperform
HK$22.64B8.4410.70%7.23%0.99%14.41%
71
Outperform
€27.40B16.776.22%6.07%-7.41%-20.99%
60
Neutral
$42.79B1.96-13.01%4.01%1.89%-41.77%
60
Neutral
$43.98B298.300.67%-10.26%-85.75%
57
Neutral
HK$3.79B-0.40%-19.99%98.97%
56
Neutral
HK$9.43B47.592.01%3.91%-15.71%-80.38%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HK:0772
China Literature
40.38
16.78
71.10%
HK:2390
Zhihu, Inc. Class A
13.08
5.25
67.05%
HK:1896
Maoyan Entertainment
7.91
1.37
20.95%
HK:9898
Weibo Corp Class A
88.90
34.29
62.79%
HK:1357
Meitu
10.56
8.41
390.93%
HK:2518
Autohome Inc Class A
55.50
9.83
21.52%

China Literature Corporate Events

China Literature Renews Key Agreements with Tencent
Aug 12, 2025

China Literature Limited has announced the renewal of its existing cooperation agreements with Tencent Computer, extending their collaboration until 2026. These agreements cover promotion, payment services, and cloud and technical services, which are crucial for the company’s operations and market positioning. The transactions are classified as continuing connected transactions under Hong Kong’s Listing Rules, subject to certain reporting and review requirements but exempt from independent shareholder approval.

The most recent analyst rating on (HK:0772) stock is a Buy with a HK$32.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

China Literature Limited Sees Profit Surge Amidst IP Industry Transformation
Aug 12, 2025

China Literature Limited reported a significant financial performance for the first half of 2025, with a notable increase in operating profit and profit before income tax, despite a decline in revenues and gross profit. The company is well-positioned to leverage the rapid growth and transformation in China’s IP industry, driven by the increasing value of premium IP, the rise of short dramas, and the popularity of IP merchandise. The company’s online reading platform continues to thrive, with substantial growth in the number of writers and literary works, contributing to a modest increase in revenue from its online business.

The most recent analyst rating on (HK:0772) stock is a Buy with a HK$32.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

China Literature Schedules Board Meeting to Review Interim Results
Jun 26, 2025

China Literature Limited has announced a board meeting scheduled for August 12, 2025, to discuss and approve the interim results for the first half of the year ending June 30, 2025. The meeting will also consider the payment of an interim dividend, reflecting the company’s ongoing financial strategies and potential shareholder returns.

The most recent analyst rating on (HK:0772) stock is a Buy with a HK$32.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

China Literature Expands Stake in Target Company with Strategic Acquisition
May 30, 2025

China Literature Limited has announced a significant acquisition, where its PRC operating entity, Shanghai Hongwen, has agreed to acquire a 26.67% equity interest in a target company for approximately RMB324.80 million. This acquisition will increase China Literature’s stake in the target company to 31.48%, although the target will not become a subsidiary, and its financials will remain separate. This transaction is classified as a connected transaction under Hong Kong’s Listing Rules due to Tencent’s involvement, a major shareholder in both China Literature and the target company.

The most recent analyst rating on (HK:0772) stock is a Buy with a HK$32.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

China Literature Limited Successfully Passes All Resolutions at 2025 AGM
May 30, 2025

China Literature Limited held its Annual General Meeting (AGM) on May 30, 2025, where all proposed resolutions were passed by poll. The resolutions included the re-election of directors, authorization of director remuneration, re-appointment of auditors, and granting of mandates to the directors for share issuance and buyback. The successful passing of these resolutions indicates strong shareholder support and positions the company for continued operational stability and strategic growth.

The most recent analyst rating on (HK:0772) stock is a Buy with a HK$32.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025