China Literature (772) H1 2025 earnings summary

Executive summary

• Revenue declined 23.9% year-over-year to RMB3,190.6 million, mainly due to fewer and uneven TV/film release schedules, but operating profit surged 92.7% to RMB875.8 million and net profit attributable to shareholders rose 68.5% to RMB849.8 million, driven by lower costs and significant other gains.

• Online business revenue grew 2.3% year-over-year to RMB1,985.4 million, with monthly paying users up 4.5% to 9.2 million, while IP operations revenue fell 46.4%–48.4% due to lack of new TV/film releases.

• IP merchandise GMV reached RMB480 million, nearly matching last year's full-year total, and the short drama segment saw robust growth with record-breaking titles.

• AI initiatives drove a 38% year-over-year increase in international platform revenue from AI-translated titles, now over 35% of total novel revenue.

• The company leveraged its strong IP library and innovation to lead in content creation, adaptation, and commercialization.

Financial highlights

• Gross profit decreased 22.6% year-over-year to RMB1,612.4 million, with gross margin improving to 50.5% from 49.7% last year.

• Non-IFRS profit attributable to equity holders was RMB507.8 million, down 27.7% year-over-year; excluding New Classics Media, non-IFRS profit rose 35.7%.

• EBITDA was RMB318.2 million, and adjusted EBITDA RMB386.9 million (12.1% margin), both down year-over-year.

• Net other gains of RMB582.5 million, primarily from gains on deemed disposal of an associate.

• Basic EPS increased to RMB0.84 from RMB0.50 year-over-year.

Outlook and guidance

• Several premium drama projects and new animation series are planned for release in H2 2025, with a focus on leveraging the IP library, expanding short drama and merchandise segments, and deepening AI integration.

• The company expects continued growth in online business, IP licensing, and merchandise, with the market size projected to expand at a double-digit rate.

• Management highlighted risks and uncertainties in forward-looking statements, emphasizing that forecasts are subject to change.