SEHK:772

Stock Analysis Report

China Literature

Executive Summary

China Literature Limited, an investment holding company, operates an online literature platform in the People’s Republic of China.


Snowflake Analysis

Flawless balance sheet with moderate growth potential.


Similar Companies

Share Price & News

How has China Literature's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 772's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.5%

772

-2.6%

HK Media

2.7%

HK Market


1 Year Return

-18.5%

772

-28.8%

HK Media

-19.8%

HK Market

Return vs Industry: 772 exceeded the Hong Kong Media industry which returned -27.7% over the past year.

Return vs Market: 772 exceeded the Hong Kong Market which returned -21.6% over the past year.


Shareholder returns

772IndustryMarket
7 Day1.5%-2.6%2.7%
30 Day-9.4%-7.3%-7.2%
90 Day-15.8%-17.2%-12.1%
1 Year-18.5%-18.5%-27.2%-28.8%-16.9%-19.8%
3 Yearn/a-55.0%-60.7%0.9%-9.3%
5 Yearn/a-66.6%-69.8%-12.6%-26.7%

Price Volatility Vs. Market

How volatile is China Literature's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is China Literature undervalued compared to its fair value and its price relative to the market?

26.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 772 (HK$31.05) is trading below our estimate of fair value (HK$42.7)

Significantly Below Fair Value: 772 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 772 is poor value based on its PE Ratio (25.8x) compared to the Media industry average (11.5x).

PE vs Market: 772 is poor value based on its PE Ratio (25.8x) compared to the Hong Kong market (9.1x).


Price to Earnings Growth Ratio

PEG Ratio: 772 is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: 772 is overvalued based on its PB Ratio (1.5x) compared to the HK Media industry average (0.7x).


Next Steps

Future Growth

How is China Literature forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

13.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 772's forecast earnings growth (13.8% per year) is above the savings rate (1.6%).

Earnings vs Market: 772's earnings (13.8% per year) are forecast to grow faster than the Hong Kong market (11.5% per year).

High Growth Earnings: 772's earnings are forecast to grow, but not significantly.

Revenue vs Market: 772's revenue (11.7% per year) is forecast to grow faster than the Hong Kong market (10% per year).

High Growth Revenue: 772's revenue (11.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 772's Return on Equity is forecast to be low in 3 years time (7.2%).


Next Steps

Past Performance

How has China Literature performed over the past 5 years?

48.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 772 has a large one-off gain of CN¥300.3M impacting its December 31 2019 financial results.

Growing Profit Margin: 772's current net profit margins (13.1%) are lower than last year (18.1%).


Past Earnings Growth Analysis

Earnings Trend: 772 has become profitable over the past 5 years, growing earnings by 48.9% per year.

Accelerating Growth: 772's earnings growth over the past year (20.4%) is below its 5-year average (48.9% per year).

Earnings vs Industry: 772 earnings growth over the past year (20.4%) exceeded the Media industry -2.2%.


Return on Equity

High ROE: 772's Return on Equity (5.7%) is considered low.


Next Steps

Financial Health

How is China Literature's financial position?


Financial Position Analysis

Short Term Liabilities: 772's short term assets (CN¥12.2B) exceed its short term liabilities (CN¥5.9B).

Long Term Liabilities: 772's short term assets (CN¥12.2B) exceed its long term liabilities (CN¥925.5M).


Debt to Equity History and Analysis

Debt Level: 772's debt to equity ratio (6.7%) is considered satisfactory.

Reducing Debt: 772's debt to equity ratio has reduced from 15.6% to 6.7% over the past 5 years.

Debt Coverage: 772's debt is well covered by operating cash flow (60.1%).

Interest Coverage: 772's interest payments on its debt are well covered by EBIT (53.4x coverage).


Balance Sheet


Next Steps

Dividend

What is China Literature's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate 772's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate 772's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 772's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 772's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 772's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.3yrs

Average management tenure


CEO

Wenhui Wu (41yo)

5.42s

Tenure

CN¥4,288,000

Compensation

Mr. Wu Wenhui serves as Co-Chief Executive Officer and Executive Director of China Literature Limited since November 06, 2014. Mr. Wu has been the President of Cloudary Corporation at Shanda Interactive En ...


CEO Compensation Analysis

Compensation vs Market: Wenhui's total compensation ($USD605.11K) is about average for companies of similar size in the Hong Kong market ($USD501.84K).

Compensation vs Earnings: Wenhui's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Wenhui Wu
Co-CEO & Executive Director5.42yrsCN¥4.29m2.68% CN¥849.8m
Xiaodong Liang
Co-CEO & Executive Director5.42yrsCN¥6.87mno data
Xuesong Shang
Presidentno datano datano data
Jincheng Zhao
Group GM of Investment & Joint Company Secretary5.08yrsno datano data
Maggie Zhou
Head of Capital Markets & Investor Relationsno datano datano data
Tingfeng Lin
Senior Vice Presidentno datano datano data
Rong Zhang
Senior Vice Presidentno datano datano data
Siu Kuen Lai
Joint Company Secretary2.83yrsno datano data

5.3yrs

Average Tenure

42yo

Average Age

Experienced Management: 772's management team is seasoned and experienced (5.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Wenhui Wu
Co-CEO & Executive Director5.42yrsCN¥4.29m2.68% CN¥849.8m
Xiaodong Liang
Co-CEO & Executive Director5.42yrsCN¥6.87mno data
Yun Cheng
Non-Executive Director0.42yrno data0.00031% CN¥98.4k
Chor Woon Yu
Independent Non-Executive Director2.5yrsCN¥657.00kno data
Junmin Liu
Independent Non-Executive Director2.5yrsCN¥657.00kno data
James Mitchell
Chairman of the Boardno datano data0.028% CN¥8.8m
Sau Ting Leung
Independent Non-Executive Director2.5yrsCN¥876.00kno data
Huayi Cao
Non-Executive Director0.92yrno data4.08% CN¥1.3b
Fei Chen
Non-Executive Director0.92yrno datano data

2.5yrs

Average Tenure

49yo

Average Age

Experienced Board: 772's board of directors are not considered experienced ( 2.5 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: 772 insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 11.1%.


Top Shareholders

Company Information

China Literature Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: China Literature Limited
  • Ticker: 772
  • Exchange: SEHK
  • Founded: 2002
  • Industry: Publishing
  • Sector: Media
  • Market Cap: HK$31.743b
  • Shares outstanding: 1.02b
  • Website: https://ir.yuewen.com

Number of Employees


Location

  • China Literature Limited
  • No. 690 Bi Bo Road
  • Block 6
  • Shanghai
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
772SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDNov 2017
C2XDB (Deutsche Boerse AG)YesOrdinary SharesDEEURNov 2017
CHLL.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDNov 2017
772SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDNov 2017
772SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDNov 2017

Biography

China Literature Limited, an investment holding company, operates an online literature platform in the People’s Republic of China. The company’s flagship product is QQ Reading, a unified mobile content aggregation and distribution platform. As of December 31, 2018, its library featured 7.7 million writers and 11.2 million works of literature, including 10.7 million original literary works created by writers on its platform, 350 thousand works that are sourced from third-party platforms, and 200 thousand e-books. 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, such as Baidu, Sogou, JD.com, and Xiaomi Duokan 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. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/07 14:49
End of Day Share Price2020/04/07 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.