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

Fundamentals

Excellent balance sheet with reasonable 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


Market Performance


7 Day Return

15.3%

772

6.8%

HK Media

3.3%

HK Market


1 Year Return

-31.2%

772

-27.6%

HK Media

1.6%

HK Market

Return vs Industry: 772 underperformed the Hong Kong Media industry which returned -27.6% over the past year.

Return vs Market: 772 underperformed the Hong Kong Market which returned 1.6% over the past year.


Shareholder returns

772IndustryMarket
7 Day15.3%6.8%3.3%
30 Day15.5%5.6%-0.009%
90 Day-18.0%-12.1%-5.1%
1 Year-31.2%-31.2%-26.3%-27.6%5.3%1.6%
3 Yearn/a-47.1%-53.9%16.1%4.4%
5 Yearn/a-56.1%-64.8%20.4%0.3%

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?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: 772 (HK$30.15) is trading below our estimate of fair value (HK$64.47)

Significantly Undervalued: 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 (32.8x) compared to the Media industry average (20x).

PE vs Market: 772 is poor value based on its PE Ratio (32.8x) compared to the Hong Kong market (10.4x).


Price to Earnings Growth Ratio

Low PEG Ratio: 772 is poor value based on its PEG Ratio (1.4x)


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 8 analysts?

24.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 772's forecast earnings growth (24.3% per year) is above the savings rate (2%).

Earnings vs Market: 772's earnings (24.3% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 772's revenue (12.9% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 772's revenue (12.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: 772's Return on Equity is forecast to be low in 3 years time (8.2%).


Next Steps

Past Performance

How has China Literature performed over the past 5 years?

56.0%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 772's earnings have grown significantly by 56% per year over the past 5 years.

Accelerating Growth: 772's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 772 had negative earnings growth (-6.2%) over the past year, making it difficult to compare to the Media industry average (-15.7%).


Return on Equity

High ROE: 772's Return on Equity (4.3%) is considered low.


Return on Assets

ROA vs Industry: 772's Return on Assets is below or equal to the Media industry average last year.


Return on Capital Employed

ROCE Improving: 772's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is China Literature's financial position?


Financial Position Analysis

Short Term Liabilities: 772's short term assets (CN¥12.3B) exceeds its short term liabilities (CN¥6.3B)

Long Term Liabilities: 772's short term assets (12.3B) exceeds its long term liabilities (1.2B)


Debt to Equity History and Analysis

Debt Level: 772's debt to equity ratio (8.9%) is considered satisfactory

Reducing Debt: Insufficient data to determine if 772's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 772's debt is well covered by operating cash flow (26.7%).

Interest Coverage: 772 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 772 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 772's debt is covered by short term assets (assets are 7.386790x debt).


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%2.3%markettop25%6.3%industryaverage5.8%forecastin3Years0%

Current dividend yield vs market & industry


Stability and Growth of Payments

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.

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

What is the CEO of China Literature's salary, the management and board of directors tenure and is there insider trading?

4.8yrs

Average management tenure


CEO

Wenhui Wu (41yo)

4.9yrs

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: Insufficient data to establish whether Wenhui's total compensation is reasonable compared to companies of similar size in the Hong Kong market.

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


Management Age and Tenure

4.8yrs

Average Tenure

42yo

Average Age

Experienced Management: 772's management team is considered experienced (4.8 years average tenure).


Board Age and Tenure

2.0yrs

Average Tenure

45yo

Average Age

Experienced Board: 772's board of directors are not considered experienced ( 2 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

BuyCN¥814,085,78904 Oct 19
X-Poem Limited
EntityCompany
Shares9,051,165
Max PriceCN¥89.94
BuyCN¥4,129,425,65704 Oct 19
Huayi Cao
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares45,911,762
Max PriceCN¥89.94
BuyCN¥3,958,09621 Aug 19
James Mitchell
EntityIndividual
Role
Chairman of the Board
Chairman of the Board
Shares160,000
Max PriceCN¥24.74
SellCN¥994,000,05929 Jul 19
Luxun Investment Limited
EntityCompany
Shares28,000,000
Max PriceCN¥35.50

Ownership Breakdown


Management Team

  • Wenhui Wu (41yo)

    Co-CEO & Executive Director

    • Tenure: 4.9yrs
    • Compensation: CN¥4.29m
  • Xuesong Shang (45yo)

    President

    • Tenure: 0yrs
  • Frank Liang (42yo)

    Co-CEO & Executive Director

    • Tenure: 4.9yrs
    • Compensation: CN¥6.87m
  • Siu Kuen Lai (43yo)

    Joint Company Secretary

    • Tenure: 2.3yrs
  • Jincheng Zhao

    Group GM of Investment & Joint Company Secretary

    • Tenure: 4.6yrs
  • Tingfeng Lin (42yo)

    Senior Vice President

    • Tenure: 0yrs
  • Rong Zhang (41yo)

    Senior Vice President

    • Tenure: 0yrs
  • Maggie Zhou

    Head of Capital Markets & Investor Relations

    • Tenure: 0yrs

Board Members

  • Carol Yu (57yo)

    Independent Non-Executive Director

    • Tenure: 2yrs
    • Compensation: CN¥657.00k
  • Junmin Liu (69yo)

    Independent Non-Executive Director

    • Tenure: 2yrs
    • Compensation: CN¥657.00k
  • James Mitchell (45yo)

    Chairman of the Board

    • Tenure: 0yrs
  • Wenhui Wu (41yo)

    Co-CEO & Executive Director

    • Tenure: 4.9yrs
    • Compensation: CN¥4.29m
  • Miranda Leung (51yo)

    Independent Non-Executive Director

    • Tenure: 2yrs
    • Compensation: CN¥876.00k
  • Frank Liang (42yo)

    Co-CEO & Executive Director

    • Tenure: 4.9yrs
    • Compensation: CN¥6.87m
  • Haifeng Lin (42yo)

    Non-Executive Director

    • Tenure: 4.9yrs
  • Huayi Cao (54yo)

    Non-Executive Director

    • Tenure: 0.4yrs
  • Fei Chen (41yo)

    Non-Executive Director

    • Tenure: 0.4yrs

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$29.216b
  • Shares outstanding: 1.01b
  • 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 agg ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/17 12:57
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.