Tencent's China Literature Dives After Profit Drops 6% in First Half
Lv Qian
DATE:  Aug 16 2022
/ SOURCE:  Yicai
Tencent's China Literature Dives After Profit Drops 6% in First Half Tencent's China Literature Dives After Profit Drops 6% in First Half

(Yicai Global) Aug. 16 -- Shares of China Literature slumped after the e-book platform owned by Tencent Holdings said its operating profit fell in the first half. Going forward, the firm will focus on turning its intellectual property visual.

China Literature's stock price [HK: 0772] declined by as much as 12.7 percent to HKD27.80 (USD3.60) intraday as of 2.04 p.m. The shares have tanked by more than 40 percent this year.

The online literature platform logged a 6 percent decrease in operating income to CNY4.1 billion (USD602.2 million) in the first six months of this year from a year ago, the Shanghai-based company said in its earnings report published yesterday.

But if not conforming to the International Financial Reporting Standards, operating profit climbed 8 percent to CNY693.8 million (USD102.1 million).

Online revenue decreased by 9 percent to CNY2.3 billion in the six months ended June, accounting for more than half of the total. However, income from copyright management and others jumped 14 percent to CNY1.8 billion from the second half of last year.

China’s creative industries should use the unique business model of turning online literature into popular IP similar to Marvel and Disney, Chief Executive Cheng Wu said. The focus of the company is on visualizing IP now, he added.

The Chinese firm's content should be seen in video games. Some games based on China Literature's IP are almost ready, said Hou Xiaonan, president of the company. Domestic game license issuance was getting back to normal in the first half, which is good for the game industry and IP development, he added.

More users were drawn to the company's free content. In the first half, the average number of monthly active users increased to 260 million from 230 million logged a year ago. That of daily active users rose to 14 million from 13 million.

Subscribers of paid content slid by 13 percent to 8.1 million MAUs. Still, they paid more as revenue per user climbed to CNY38.8 from CNY36.4 (to USD5.70).

China Literature is also eyeing overseas markets. Its e-book brand WebNovel provided about 2,600 Chinese translations and about 420,000 original works for users abroad.

Editors: Shi Yi, Emmi Laine, Xiao Yi 

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Keywords:   China Literature