China Literature (0772) AI Stock Analysis

• Market Cap: $39.98B
• Dividend Yield: N/A
• Average Volume (3M): 4.19M
• Price to Earnings (P/E): 277.2
• Beta (1Y): 1.36
• Revenue Growth: -10.26%
• EPS Growth: -85.75%
• Country: HK
• Employees: 1,740
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.91
• Shares Outstanding: 1,021,471,600
• 10 Day Avg. Volume: 4,011,075
• 30 Day Avg. Volume: 4,186,547
• PEG Ratio: 0.89
• Price to Book (P/B): 1.28
• Price to Sales (P/S): 2.90
• P/FCF Ratio: 9.79
• Enterprise Value/Market Cap: 0.57
• Enterprise Value/Revenue: 3.22
• Enterprise Value/Gross Profit: 6.65
• Enterprise Value/Ebitda: 39.60
• 1Y Price Target: $40.00
• Price Target Upside: -2.90% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

• Rating: 61 Neutral
• Price Target: HK$43.00 ▲(4.37% Upside)

The overall stock score of 61 reflects strong cash flow and a solid balance sheet, which are offset by profitability challenges and a high P/E ratio suggesting overvaluation. Technical indicators show mixed signals, with short-term bullish momentum but potential bearish pressure. The absence of earnings call data and corporate events means these factors do not influence the score.

China Literature Business Overview & Revenue Model

Company Description

China Literature Limited, an investment holding company, operates an online literature platform in the People's Republic of China. The company promotes intellectual properties primarily through its online literature platforms, such as QQ Reading and Qidian; and New Classics Media, a film and TV drama series production house. It is also involved in the self-operated channels business on partner distribution platforms. In addition, the company licenses the content to third-party partners for distribution, as well as offers online paid reading and content adaptations into various entertainment formats. Further, it provides reading, copyright commercialization, and writer cultivation and brokerage services; and operates text work reading and related open platform through technology methods and digital media, including personal computers, Internet, and mobile network. Additionally, the company engages in the production and distribution of television series, web series, and films; licensing and distribution of film and television properties; licensing copyrights; sale of physical books; and operation of in-house online games, etc. The company was founded in 2002 and is headquartered in Shanghai, the People's Republic of China. China Literature Limited is a subsidiary of Tencent Holdings Limited.

How the Company Makes Money

China 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

China Literature experienced strong revenue growth but faced profitability challenges with a net loss in 2024. The balance sheet is solid with low leverage and a strong equity position. Cash flow performance is strong, supporting the company's liquidity and operational flexibility despite the income loss. The company should focus on improving profitability to leverage its strong cash flow and balance sheet.

Income Statement

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.12B	8.12B	7.01B	7.63B	8.67B	8.53B
Gross Profit	3.45B	3.92B	3.37B	4.03B	4.60B	4.23B
EBITDA	579.28M	748.35M	1.22B	1.20B	1.12B	1.06B
Net Income	136.24M	-209.22M	804.88M	608.19M	1.85B	-4.50B
Balance Sheet
Total Assets	23.20B	22.95B	23.19B	22.73B	23.30B	21.32B
Cash, Cash Equivalents and Short-Term Investments	7.05B	7.62B	6.28B	7.51B	7.21B	6.26B
Total Debt	206.47M	166.21M	238.10M	617.98M	1.45B	1.33B
Total Liabilities	4.04B	4.57B	4.16B	4.78B	6.11B	6.22B
Stockholders Equity	19.16B	18.37B	19.02B	17.96B	17.19B	15.09B
Cash Flow
Free Cash Flow	667.33M	2.41B	954.13M	1.25B	879.35M	821.95M
Operating Cash Flow	840.47M	2.53B	1.13B	1.58B	1.12B	1.11B
Investing Cash Flow	-1.26B	-1.76B	-3.39B	528.10M	936.23M	-4.19B
Financing Cash Flow	-471.75M	-346.01M	-510.82M	-1.15B	-349.99M	-92.34M

China Literature Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 41.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 41.2 is above the 20-day moving average (MA) of 38.29, above the 50-day MA of 40.12, and above the 200-day MA of 30.99, indicating a bullish trend. The MACD of -0.32 indicates Negative momentum. The RSI at 60.09 is Neutral, neither overbought nor oversold. The STOCH value of 85.20 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0772.

China Literature Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1357	―	$37.58B	38.53	19.44%	2.54%	15.57%	94.36%
2518	―	€26.47B	15.78	6.22%	6.64%	-7.41%	-20.99%
9898	―	HK$21.85B	8.14	10.70%	7.19%	0.99%	14.41%
0772	―	$39.98B	277.20	0.67%	―	-10.26%	-85.75%
Sector *	―	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
2390	―	HK$2.83B	18.63	3.26%	―	-22.45%	―
1896	―	HK$7.96B	97.03	0.82%	4.67%	-7.61%	-90.51%

China Literature Corporate Events

China Literature Grants Over 4.5 Million RSUs to Key Personnel

China Literature Limited has announced the grant of 4,531,609 restricted share units (RSUs) under its 2020 RSU Scheme to certain directors and employees, including executive director Huang Yan and non-executive director Cao Huayi. The RSUs, which do not have performance targets, are part of the company’s strategy to align the interests of its key personnel with those of the company and its shareholders, reinforcing their commitment to the group’s long-term growth. The vesting of these RSUs will occur in tranches over four years, with a clawback provision in place for cases of misconduct or financial misstatement.

The most recent analyst rating on (HK:0772) stock is a Hold with a HK$45.00 price target. To see the full list of analyst forecasts on China Literature stock, see the HK:0772 Stock Forecast page.

China Literature Limited Reports Strong Profit Growth

China Literature Limited, a leading player in China’s intellectual property (IP) industry, specializes in online literature and the commercialization of literary content through various media formats. The company operates in the digital entertainment sector, leveraging its extensive IP library to produce TV series, films, animations, and merchandise.

China Literature Renews Key Agreements with Tencent

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

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.