China Literature (772) H1 2024 earnings summary

Executive summary

• Achieved strong growth in the first half of 2024, driven by blockbuster IP releases such as Joy of Life 2 and YOLO, which set new records domestically and internationally, fueling engagement and monetization across platforms and merchandise.

• Revenue increased 27.7% year-over-year to RMB4,190.9 million, with IP operations revenue surging 75.7% year-over-year and operating margin improving to 10.8% from 9.5%.

• International expansion accelerated, supported by AI-driven translation and content adaptation, with 40% of top 100 WebNovel works AI-translated.

• Strengthened the content ecosystem with 170,000 new writers and 320,000 new works, and a 75% year-over-year increase in high-subscriber literary works.

• Completed the acquisition of Tencent Animation and Comics, adding top Chinese comic IPs to the portfolio.

Financial highlights

• Total revenues rose 27.7% year-over-year to RMB4,190.9 million in the first half of 2024.

• Gross profit increased 29.8% year-over-year to RMB2,083.2 million, with gross margin improving to 49.7%.

• Operating profit rose 46.1% year-over-year to RMB454.4 million; profit attributable to shareholders increased 33.9% to RMB504.3 million; non-IFRS profit attributable to shareholders up 16.4% to RMB702.1 million.

• EBITDA reached RMB501.5 million; adjusted EBITDA was RMB587.6 million.

• Net cash position improved to RMB9,208.1 million as of June 30, 2024.

Outlook and guidance

• Strong pipeline for the second half of 2024 and beyond, with multiple drama series, film projects, and over 100 short-form dramas in development.

• Continued focus on high-quality content, IP incubation, visualization, commercialization, and leveraging AI for productivity and international growth.

• Plans to expand global distribution of IP-based products and innovative formats such as interactive dramas.