Online reading, film and television, animation, manga, short dramas and other fields are developing comprehensively! Net profit of China Literature (00772) increased by more than 30% year-on-year in 2023.

On March 18, CHINA LIT (00772) announced its 2023 performance. The revenue was approximately RMB 7.012 billion, a decrease of 8% compared to the previous year; gross profit was about RMB 3.371 billion, a decrease of 16.3%; the net profit attributable to equity holders of the Company was approximately RMB 805 million, an increase of 32.3% compared to the previous year; the net profit attributable to equity holders of the Company under non-international financial reporting standards was approximately RMB 1.13 billion, a decrease of 16.2% compared to the previous year; and the basic earnings per share were RMB 0.8. Online reading continues to be popular, with new writers performing well In 2023, the online reading platform of China Literature added about 380,000 writers and 670,000 novels, with a total word count of over 39 billion. New writers have shown impressive performances, with a 60% increase in the number of new writers whose total income exceeded RMB 100,000 in 2023. Among the new books with income exceeding RMB 1 million in 2023, nearly one-third were from new writers. The number of works by writers born in the 2000s with more than 10,000 subscriptions increased by 230% year-on-year. China Literature pointed out that the expansion of works and the creator team has led to a continuous improvement in content quality. In 2023, there was a 125% year-on-year increase in the number of works with more than 100,000 subscriptions on the company's platform, and various subscription records were constantly broken. The recently launched "Writer's Assistant Miao Bi Edition" by CHINA LIT has been fully open to all contracted writers. This version incorporates the cutting-edge technology of the Wenwen Miao Bi model, which is considered the most advanced AI model tool in the industry that meets the needs of online literature creation, providing powerful support for writers. According to statistics, the weekly usage rate of AI functions in the Writer's Assistant has reached 30%, demonstrating the warm reception and high approval of the innovative tool by writers. In terms of interactive community building, CHINA LIT has also achieved significant results. The company successfully built a community environment closely connected to readers and intellectual property (IP). In the glorious year of 2023, the number of new books with over a million comments increased by 67% year-on-year, and the number of works receiving over 100,000 monthly votes also increased by 66%. It is worth mentioning that in the whole of 2023, CHINA LIT's monthly paying users (MPU) also achieved significant growth, with a 10.1% year-on-year increase to 8.7 million. This achievement not only demonstrates CHINA LIT's leading position in the industry but also reflects the deep trust and continued support of readers for the Wenwen platform. Strong development momentum in multiple content areas, high expectations for "Joy of Life 2" In 2023, CHINA LIT also achieved remarkable results in IP visualization and merchandising. In the field of film and television, following the release of "Ordinary Road" and "Even If There is a Strong Wind" in the first half of the year, the company launched several TV dramas in the second half of the year, such as "Sunshine with Me" and "Undercover." Among them, "Sunshine with Me" ranked first in the daily play volume list on Kuyun for 16 consecutive days; "Undercover" consistently ranked first in the prime time TV drama ratings on China Listening and Viewing Big Data during its broadcast. In the animation field, the company broadcast the sequels to classic IP adaptation animations such as "Battle Through the Heavens," "Stellar Transformation," "Full-Time Magister," and "Martial Universe," and introduced new series such as "Pride of Nine Heavens" and "God's Hidden Cave," continuously gaining popularity and acclaim. Among them, "Battle Through the Heavens" has remained popular, topping the list of the hottest Chinese animations on Weibo for 3 consecutive months and currently maintaining its position as the most popular animation on the entire internet. The company's animation works continue to lead the market in terms of quantity, quality, and hit rate. According to Cloud Merge data, six out of the top ten animated works on the entire internet in 2023 were adapted from China Literature's IP. In the field of comics, among the online comics adapted from China Literature's IP in 2023, 13 comics have exceeded one billion views. At the same time, the company announced the acquisition of Tencent Animation's assets, which will further enrich the company's top IP reserve, integrating well-known Chinese animations such as "Under One Person" and "Fox Spirit Matchmaker" into the company's copyright library, solidifying the company's collaboration pipeline between novels and comics and supplementing animation production capacity. In the future, the company plans to empower novel-to-animation adaptations with AI technology to accelerate the visualization of textual IP, further enhancing the efficiency of IP commercialization. In short videos, China Literature has also had several short videos with over ten million views. It is reported that the company's overseas business is also advancing, with the overseas reading platform WebNovel offering approximately 3,800 Chinese translated works and about 620,000 local original works. In 2024, China Literature will continue to expand its achievements in IP visualization. During the 2024 Spring Festival box office season, the film "Sizzling Hot" jointly produced by China Literature's Xinli Film and Wenwen Pictures won the box office champion, with a total box office exceeding RMB 3.4 billion, marking the beginning of a "hit year" for China Literature. Subsequently, China Literature will also enter a new cycle of IP business products. Currently, the number of reservations for the second season of "Joy of Life" has exceeded 12 million, becoming the first drama series on the entire internet with over 10 million reservations. In the Tencent Video Most Anticipated List, the company's "Joy of Life" 2nd season, "With Phoenix Walks," and "Dafeng Da Gengren" have already ranked in the top ten. The company believes that in the wave of industry upgrading, China Literature is well prepared in terms of high-quality content reserves, ecological collaboration, and technological innovation. The company will continue to adhere to the core values of "content, platform, and IP" and fulfill its mission of keeping good stories alive. The size of the online literary market has exceeded 300 billion, and institutions are bullish on China Literature in the long term The "2023 China Internet Literature Development Research Report" released by the Literature Research Institute of the Chinese Academy of Social Sciences recently showed that by the end of 2023, the market size of online literary IP had surged to RMB 260.5 billion, an increase of nearly RMB 100 billion compared to the previous year, surpassing the RMB 300 billion mark. A research report by Lyon stated that China Literature was given a "better than the market" rating because the company is a major beneficiary of generative artificial intelligence technology (AIGC) with good long-term prospects, but the target price was lowered by 12% from 33 HKD to 29 HKD. The group's performance in the second half of 2023 may be disappointing, with weak revenue and profits. Online reading competition remains fierce, and IP operations are affected by delays in large-scale dramas. In addition, investments in AIGC technology may affect the future 3...The profit margin is under pressure for the past 5 years.Citigroup indicated that it has started a 30-day downward catalyst observation on Yuewen, suggesting that its performance last year may have fallen below expectations, as its subsidiary New Classics Media delayed the release of the major drama "Walking with Phoenix" to this year; the online reading pipeline is continuously optimized; and investments in AI-related applications are being made. In addition, it is expected that the market has partially digested the upcoming weak performance, but potential disappointments or short-term investment sentiment may be dragged down. Yuewen's CEO and President Hou Xiaonan stated: "In 2023, Yuewen will continue to build a complete IP lifecycle development system across various content forms, empower creators with the latest AI technology, and continuously strengthen the content ecosystem. In the online business sector, we have promoted the continuous improvement of the competitive strength of high-quality content ecosystem through a series of measures such as optimizing product operations and channel structure. The growth of starting reading has reached a historical high, and we have announced the acquisition of Tencent comics assets, continuously enhancing the advantage of Yuewen IP incubation and reserve. In addition, in the field of IP visualization and commercialization, we have presented a series of high-quality works to users, and actively explored emerging content forms such as high-quality short dramas. We believe that in the wave of industry upgrades, whether in high-quality content reserve, ecological collaboration or technological innovation, Yuewen has made adequate preparations. We will continue to uphold the core values of 'content, platform, IP', fulfill our mission, and keep good stories alive and well."