China Literature (772) H2 2024 earnings summary

Executive summary

• Revenues grew 15.8% year-over-year to RMB8,121.1 million, driven by blockbuster IP releases, rapid expansion in IP commercialization and merchandise, and strong content commercialization.

• Strengthened industry leadership with three of the top five most valuable cultural IPs and dominance in drama and animation adaptations.

• Integrated AI technologies, notably DeepSeek-R1, across content creation, translation, and user experience, resulting in significant efficiency gains and global reach.

• Net loss to shareholders was RMB209.2 million, mainly due to a RMB1.1 billion non-cash goodwill impairment in the TV and film business.

• Non-IFRS net profit to shareholders reached RMB1,141.7 million, up 1.0% year-over-year.

Financial highlights

• Gross profit increased 16.3% to RMB3,921.9 million; gross margin stable at 48.3%.

• Online business revenue rose 2.1% to RMB4,030.6 million; self-owned platform revenue up 3.4% to RMB3.5 billion.

• IP operations and other revenues surged 33.5% to RMB4,090.5 million, with IP operations alone up 34.2% to RMB3,991.2 million.

• Adjusted EBITDA was RMB923.1 million, with an adjusted EBITDA margin of 11.4%.

• Selling and marketing expenses rose to 27.8% of revenue (up from 24.5%).

Outlook and guidance

• Plans to expand IP merchandise categories and omnichannel distribution, targeting higher GMV and profit growth in 2025.

• Rich pipeline for New Classic Media with over 10 drama series and multiple films slated for release in 2025 and beyond.

• Continued investment in AI and content innovation to drive efficiency, cost optimization, and global expansion.

• Anticipates continued growth in IP operations, short dramas, and merchandise, with AI integration expected to drive efficiency and user engagement.

• Focus remains on quality IP creation, commercialization, and leveraging AI for content innovation and global expansion.