Lyon: Downgrade CHINA LIT (00772) to "hold" rating and lower target price to 28.5 Hong Kong dollars.

Lyon released a research report stating that they have downgraded the rating of CHINA LIT (00772) to "hold" and lowered the target price from HK$32 to HK$28.5. The bank believes that the underperformance of CHINA LIT may be due to the delay in the release of New Classics Media TV dramas in the second half of 2024, as well as higher-than-expected expenses on content promotion and investment in generative artificial intelligence research. They have revised down the adjusted net profit forecast for CHINA LIT for the 2024 to 2026 fiscal years by 18% to 19%. The group had issued a profit warning earlier, expecting a net loss under IFRS (International Financial Reporting Standards) of between 150 million and 250 million RMB in 2024, compared to a net profit of 804 million RMB under IFRS in 2023; non-IFRS net profit is expected to be between 1.1 billion and 1.15 billion RMB, roughly in line with the 1.129 billion RMB in 2023, but lower than market expectations by 18% to 22%.