China Literature (SEHK:772) - Share price, News & Analysis

772 fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	2/6
Financial Health	6/6
Dividends	0/6

772 Stock Overview

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

Rewards

Trading at 71.1% below our estimate of its fair value

Earnings are forecast to grow 2.4% per year

Became profitable this year

Risk Analysis

Large one-off items impacting financial results

China Literature Competitors

Price History & Performance

Summary of all time highs, changes and price drops for China Literature
Historical stock prices
Current Share Price	HK$36.80
52 Week High	HK$89.30
52 Week Low	HK$23.00
Beta	0.53
1 Month Change	19.87%
3 Month Change	18.52%
1 Year Change	-57.94%
3 Year Change	0%
5 Year Change	n/a
Change since IPO	-64.06%

Recent News & Updates

Jun 22

We Like These Underlying Return On Capital Trends At China Literature (HKG:772)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

Jun 01

We Think China Literature (HKG:772) Can Stay On Top Of Its Debt

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Mar 29

China Literature's (HKG:772) Solid Profits Have Weak Fundamentals

Despite posting some strong earnings, the market for China Literature Limited's ( HKG:772 ) stock hasn't moved much...

Mar 05

Returns Are Gaining Momentum At China Literature (HKG:772)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

Shareholder Returns

	772	HK Media	HK Market
7D	7.0%	3.8%	2.1%
1Y	-57.9%	-47.7%	-23.3%

Return vs Industry: 772 underperformed the Hong Kong Media industry which returned -47.7% over the past year.

Return vs Market: 772 underperformed the Hong Kong Market which returned -23.3% over the past year.

Price Volatility

Is 772's price volatile compared to industry and market?
772 volatility
772 Average Weekly Movement	8.2%
Media Industry Average Movement	10.6%
Market Average Movement	7.0%
10% most volatile stocks in HK Market	13.8%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 772 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: 772's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2002	1,975	Edward Cheng	https://ir.yuewen.com

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.

China Literature Fundamentals Summary

How do China Literature's earnings and revenue compare to its market cap?
772 fundamental statistics
Market Cap	CN¥32.08b
Earnings (TTM)	CN¥1.85b
Revenue (TTM)	CN¥8.67b

17.4x

P/E Ratio

3.7x

P/S Ratio

Is 772 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
772 income statement (TTM)
Revenue	CN¥8.67b
Cost of Revenue	CN¥4.06b
Gross Profit	CN¥4.60b
Other Expenses	CN¥2.76b
Earnings	CN¥1.85b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	1.81
Gross Margin	53.11%
Net Profit Margin	21.30%
Debt/Equity Ratio	6.8%

How did 772 perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is 772 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 772?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 772. This is calculated by dividing 772's market cap by their current preferred multiple.
What is 772's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥32.08b

772 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	3x
Enterprise Value/EBITDA	23.3x
PEG Ratio	7.2x

Price to Earnings Ratio vs Peers

How does 772's PE Ratio compare to its peers?

772 PE Ratio vs Peers

The above table shows the PE ratio for 772 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	57.7x

Forward PE

Price-To-Earnings vs Peers: 772 is good value based on its Price-To-Earnings Ratio (17.4x) compared to the peer average (57.7x).

Price to Earnings Ratio vs Industry

How does 772's PE Ratio compare vs other companies in the Media Industry?

Price-To-Earnings vs Industry: 772 is expensive based on its Price-To-Earnings Ratio (17.4x) compared to the Hong Kong Media industry average (13x)

Price to Earnings Ratio vs Fair Ratio

What is 772's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

772 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.4x
Fair PE Ratio	10.4x

Price-To-Earnings vs Fair Ratio: 772 is expensive based on its Price-To-Earnings Ratio (17.4x) compared to the estimated Fair Price-To-Earnings Ratio (10.4x).

Share Price vs Fair Value

What is the Fair Price of 772 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 772 (HK$36.8) is trading below our estimate of fair value (HK$127.4)

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

Price to Earnings Growth Ratio

PEG Ratio: 772 is poor value based on its PEG Ratio (7.2x)

Discover undervalued companies

Future Growth

How is China Literature forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

2.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 772's forecast earnings growth (2.4% per year) is above the savings rate (1.5%).

Earnings vs Market: 772's earnings (2.4% per year) are forecast to grow slower than the Hong Kong market (17% per year).

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

Revenue vs Market: 772's revenue (10.4% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 772's revenue (10.4% 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 (8.5%).

Discover growth companies

Past Performance

How has China Literature performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-29.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 772 has a large one-off gain of CN¥1.3B impacting its December 31 2021 financial results.

Growing Profit Margin: 772 became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: 772 has become profitable over the past 5 years, growing earnings by -29.2% per year.

Accelerating Growth: 772 has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: 772 has become profitable in the last year, making it difficult to compare its past year earnings growth to the Media industry (76.4%).

Return on Equity

High ROE: 772's Return on Equity (10.7%) is considered low.

Discover strong past performing companies

Financial Health

How is China Literature's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 772's short term assets (CN¥12.7B) exceed its short term liabilities (CN¥4.5B).

Long Term Liabilities: 772's short term assets (CN¥12.7B) exceed its long term liabilities (CN¥1.6B).

Debt to Equity History and Analysis

Debt Level: 772 has more cash than its total debt.

Reducing Debt: 772's debt to equity ratio has reduced from 11.1% to 6.8% over the past 5 years.

Debt Coverage: 772's debt is well covered by operating cash flow (95.2%).

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

Balance Sheet

Discover healthy companies

Dividend

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

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

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 recent payouts.

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

Earnings Payout to Shareholders

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

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as 772 has not reported any payouts.

Discover strong dividend paying companies

Management

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

2.2yrs

Average management tenure

CEO

Edward Cheng (46 yo)

2.17yrs

Tenure

CN¥28,769,000

Compensation

Mr. Wu Cheng, also known as Edward, serves as Non-Executive Director at Maoyan Entertainment since June 9, 2020. He serves as the Chief Executive Officer & Executive Director of China Literature Limited si...

Leadership Team

Experienced Management: 772's management team is considered experienced (2.2 years average tenure).

Board Members

Experienced Board: 772's board of directors are considered experienced (3.1 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/25 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31