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China Literature

SEHK:772
Snowflake Description

Flawless balance sheet with acceptable track record.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
772
SEHK
HK$31B
Market Cap
  1. Home
  2. HK
  3. Media
Company description

China Literature Limited, an investment holding company, operates an online literature platform in the People’s Republic of China. The last earnings update was 18 days ago. More info.


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  • China Literature has significant price volatility in the past 3 months.
772 Share Price and Events
7 Day Returns
2.8%
SEHK:772
2.1%
HK Media
0.2%
HK Market
1 Year Returns
-18.5%
SEHK:772
-28.6%
HK Media
-22%
HK Market
772 Shareholder Return
  7 Day 30 Day 90 Day 1 Year 3 Year 5 Year
China Literature (772) 2.8% -11.2% -12.2% -18.5% - -
HK Media 2.1% -7.6% -16% -28.6% -57.4% -66.5%
HK Market 0.2% -10.8% -16.5% -22% -13.4% -28.8%
1 Year Return vs Industry and Market
  • 772 outperformed the Media industry which returned -28.6% over the past year.
  • 772 outperformed the Market in Hong Kong which returned -22% over the past year.
Price Volatility
772
Industry
5yr Volatility vs Market

Value

 Is China Literature undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of China Literature to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for China Literature.

SEHK:772 Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 10 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 6.6%
Perpetual Growth Rate 10-Year HK Government Bond Rate 1.6%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for SEHK:772
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year HK Govt Bond Rate 1.6%
Equity Risk Premium S&P Global 6.3%
Media Unlevered Beta Simply Wall St/ S&P Global 0.64
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 0.637 (1 + (1- 25%) (4.85%))
0.772
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
0.8
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 1.55% + (0.8 * 6.33%)
6.61%

Discounted Cash Flow Calculation for SEHK:772 using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for China Literature is arrived at by discounting future cash flows to their present value using the 2 stage method. We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.

Note: Free cash flow to equity valuations ignore the company's cash or debt.

SEHK:772 DCF 1st Stage: Next 10 year cash flow forecast
Levered FCF (CNY, Millions) Source Present Value
Discounted (@ 6.61%)
2020 2,552.33 Analyst x3 2,393.99
2021 1,545.67 Analyst x3 1,359.84
2022 1,738.25 Analyst x2 1,434.40
2023 1,877.70 Est @ 8.02% 1,453.35
2024 1,991.89 Est @ 6.08% 1,446.08
2025 2,085.94 Est @ 4.72% 1,420.42
2026 2,164.58 Est @ 3.77% 1,382.53
2027 2,231.77 Est @ 3.1% 1,337.01
2028 2,290.65 Est @ 2.64% 1,287.15
2029 2,343.59 Est @ 2.31% 1,235.21
Present value of next 10 years cash flows CN¥14,749.00
SEHK:772 DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2029 × (1 + g) ÷ (Discount Rate – g)
= CN¥2,343.59 × (1 + 1.55%) ÷ (6.61% – 1.55%)
CN¥46,996.83
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
= CN¥46,996.83 ÷ (1 + 6.61%)10
CN¥24,770.01
SEHK:772 Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= CN¥14,749.00 + CN¥24,770.01
CN¥39,519.01
Equity Value per Share
(CNY)
= Total value / Shares Outstanding
= CN¥39,519.01 / 1,012.34
CN¥39.04
SEHK:772 Discount to Share Price
Calculation Result
Exchange Rate CNY/HKD
(Reporting currency to currency of SEHK:772)
1.093
Value per Share
(HKD)
= Value per Share in CNY x Exchange Rate (CNY/HKD)
= CN¥39.04 x 1.093
HK$42.68
Value per share (HKD) From above. HK$42.68
Current discount Discount to share price of HK$31.05
= -1 x (HK$31.05 - HK$42.68) / HK$42.68
27.3%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

Current Discount
Amount off the current price China Literature is available for.
Intrinsic value
27%
Share price is HK$31.05 vs Future cash flow value of HK$42.68
Current Discount Checks
For China Literature to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • China Literature's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • China Literature's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for China Literature's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are China Literature's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
SEHK:772 PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings (2019-12-31) in CNY CN¥1.10
SEHK:772 Share Price ** SEHK (2020-04-03) in HKD HK$31.05
SEHK:772 Share Price converted to CNY reporting currency Exchange rate (HKD/ CNY) 0.915 CN¥28.4
Hong Kong Media Industry PE Ratio Median Figure of 16 Publicly-Listed Media Companies 11.48x
Hong Kong Market PE Ratio Median Figure of 1,475 Publicly-Listed Companies 9.06x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of China Literature.

SEHK:772 PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= SEHK:772 Share Price ÷ EPS (both in CNY)

= 28.4 ÷ 1.10

25.86x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • China Literature is overvalued based on earnings compared to the HK Media industry average.
  • China Literature is overvalued based on earnings compared to the Hong Kong market.
Price based on expected Growth
Does China Literature's expected growth come at a high price?
Raw Data
SEHK:772 PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section 25.86x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 10 Analysts
13.8%per year
Asia Media Industry PEG Ratio Median Figure of 81 Publicly-Listed Media Companies 0.98x
Hong Kong Market PEG Ratio Median Figure of 487 Publicly-Listed Companies 0.64x

*Line of best fit is calculated by linear regression .

SEHK:772 PEG (Price to Earnings to Growth) Ratio Calculation
Calculation Outcome
PEG Ratio

= PE Ratio ÷ Net Income Annual Growth Rate

= 25.86x ÷ 13.8%

1.88x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • China Literature is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on China Literature's assets?
Raw Data
SEHK:772 PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings (2019-12-31) in CNY CN¥19.48
SEHK:772 Share Price * SEHK (2020-04-03) in HKD HK$31.05
SEHK:772 Share Price converted to CNY reporting currency Exchange rate (HKD/ CNY) 0.915 CN¥28.4
Hong Kong Media Industry PB Ratio Median Figure of 43 Publicly-Listed Media Companies 0.68x
Hong Kong Market PB Ratio Median Figure of 2,250 Publicly-Listed Companies 0.71x
SEHK:772 PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= SEHK:772 Share Price ÷ Book Value per Share (both in CNY)

= 28.4 ÷ 19.48

1.46x

* Primary Listing of China Literature.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • China Literature is overvalued based on assets compared to the HK Media industry average.
X
Value checks
We assess China Literature's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Media industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Media industry average (and greater than 0)? (1 check)
  5. China Literature has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.

    Full details on the Value part of the Simply Wall St company analysis model.

Future Performance

 How is China Literature expected to perform in the next 1 to 3 years based on estimates from 10 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
13.8%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is China Literature expected to grow at an attractive rate?
  • China Literature's earnings growth is expected to exceed the low risk savings rate of 1.6%.
Growth vs Market Checks
  • China Literature's earnings growth is expected to exceed the Hong Kong market average.
  • China Literature's revenue growth is expected to exceed the Hong Kong market average.
Annual Growth Rates Comparison
Raw Data
SEHK:772 Future Growth Rates Data Sources
Data Point Source Value (per year)
SEHK:772 Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 10 Analysts 13.8%
SEHK:772 Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 10 Analysts 11.7%
Asia Media Industry Earnings Growth Rate Market Cap Weighted Average 17.5%
Hong Kong Media Industry Revenue Growth Rate Market Cap Weighted Average 12.6%
Hong Kong Market Earnings Growth Rate Market Cap Weighted Average 11.6%
Hong Kong Market Revenue Growth Rate Market Cap Weighted Average 9.9%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
SEHK:772 Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (3 months ago) See Below
Future Estimates Average of up to 10 Analyst Estimates (S&P Global) See Below
All numbers in CNY Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
SEHK:772 Future Estimates Data
Date (Data in CNY Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2022-12-31 12,086 1,580 1,676 6
2021-12-31 10,330 1,420 1,462 10
2020-12-31 9,448 2,294 1,292 10
2020-04-04
SEHK:772 Past Financials Data
Date (Data in CNY Millions) Revenue Cash Flow Net Income *
2019-12-31 8,348 783 1,096
2019-09-30 7,037 614 947
2019-06-30 5,726 445 798
2019-03-31 5,382 681 854
2018-12-31 5,038 918 911
2018-09-30 4,746 974 880
2018-06-30 4,454 1,031 850
2018-03-31 4,274 958 703
2017-12-31 4,095 886 556
2017-09-30 3,788 721 402
2017-06-30 3,481 557 249
2017-03-31 3,019 372 143

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • China Literature's earnings are expected to grow by 13.8% yearly, however this is not considered high growth (20% yearly).
  • China Literature's revenue is expected to grow by 11.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Raw Data
SEHK:772 Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (3 months ago) See Below
Future Estimates Average of up to 10 Analyst Estimates (S&P Global) See Below

All data from China Literature Company Filings, last reported 3 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

SEHK:772 Future Estimates Data
Date (Data in CNY Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2022-12-31 1.62 2.02 1.38 4.00
2021-12-31 1.40 1.70 1.22 8.00
2020-12-31 1.26 1.57 1.02 9.00
2020-04-04
SEHK:772 Past Financials Data
Date (Data in CNY Millions) EPS *
2019-12-31 1.10
2019-09-30 0.97
2019-06-30 0.83
2019-03-31 0.92
2018-12-31 1.01
2018-09-30 1.02
2018-06-30 1.03
2018-03-31 0.89
2017-12-31 0.74
2017-09-30 0.55
2017-06-30 0.35
2017-03-31 0.20

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • China Literature is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
X
Future performance checks
We assess China Literature's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the Asia market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the Hong Kong market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
China Literature has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has China Literature performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare China Literature's growth in the last year to its industry (Media).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • China Literature has delivered over 20% year on year earnings growth in the past 5 years.
  • China Literature's 1-year earnings growth is less than its 5-year average (20.4% vs 48.9%)
  • China Literature's earnings growth has exceeded the HK Media industry average in the past year (20.4% vs -2.2%).
Earnings and Revenue History
China Literature's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from China Literature Company Filings, last reported 3 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

SEHK:772 Past Revenue, Cash Flow and Net Income Data
Date (Data in CNY Millions) Revenue Net Income * G+A Expenses R&D Expenses
2019-12-31 8,347.77 1,095.95 3,084.22
2019-09-30 7,037.03 946.75 2,846.76
2019-06-30 5,726.30 797.55 2,608.48
2019-03-31 5,382.28 854.09 2,314.03
2018-12-31 5,038.25 910.64 2,019.58
2018-09-30 4,746.01 880.28 1,869.22
2018-06-30 4,453.77 849.92 1,719.69
2018-03-31 4,274.42 703.02 1,684.53
2017-12-31 4,095.07 556.13 1,649.37
2017-09-30 3,788.27 402.47 1,540.71
2017-06-30 3,481.48 248.81 1,432.05
2017-03-31 3,019.17 142.75 1,293.75
2016-12-31 2,556.87 36.68 1,155.44
2015-12-31 1,606.64 -347.58 895.16
2014-12-31 466.21 -21.13 198.14

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • China Literature has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
  • China Literature used its assets less efficiently than the HK Media industry average last year based on Return on Assets.
  • China Literature has become profitable over the past 3 years. This is considered to be a significant improvement in its use of capital (Return on Capital Employed).
X
Past performance checks
We assess China Literature's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Media industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
China Literature has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is China Literature's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up China Literature's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • China Literature is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • China Literature's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of China Literature's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Debt is covered by short term assets, assets are 9.4x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from China Literature Company Filings, last reported 3 months ago.

SEHK:772 Past Debt and Equity Data
Date (Data in CNY Millions) Total Equity Total Debt Cash & Short Term Investments
2019-12-31 19,410.81 1,303.07 6,347.60
2019-09-30 19,410.81 1,303.07 6,347.60
2019-06-30 18,790.98 1,668.77 6,511.35
2019-03-31 18,790.98 1,668.77 6,511.35
2018-12-31 18,415.05 2,495.03 8,823.79
2018-09-30 18,415.05 2,495.03 8,823.79
2018-06-30 13,279.30 475.00 8,992.33
2018-03-31 13,279.30 475.00 8,992.33
2017-12-31 12,662.71 475.00 8,155.85
2017-09-30 12,662.71 475.00 8,155.85
2017-06-30 6,135.49 715.65 1,615.73
2017-03-31 6,135.49 715.65 1,615.73
2016-12-31 5,208.28 576.62 1,087.90
2015-12-31 4,457.96 878.18 933.44
2014-12-31 4,667.76 729.08 904.41
  • China Literature's level of debt (6.7%) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (15.6% vs 6.7% today).
  • Debt is well covered by operating cash flow (60.1%, greater than 20% of total debt).
  • Interest payments on debt are well covered by earnings (EBIT is 53.4x coverage).
X
Financial health checks
We assess China Literature's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. China Literature has a total score of 6/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is China Literature's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from China Literature dividends. Estimated to be 0% next year.
If you bought HK$2,000 of China Literature shares you are expected to receive HK$0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Unable to evaluate China Literature's dividend yield against the bottom 25% of dividend payers as the company has not reported any payouts.
  • Unable to evaluate China Literature's dividend against the top 25% market benchmark as the company has not reported any payouts.
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
SEHK:772 Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 10 Analyst Estimates (S&P Global) See Below
Hong Kong Media Industry Average Dividend Yield Market Cap Weighted Average of 8 Stocks 6.6%
Hong Kong Market Average Dividend Yield Market Cap Weighted Average of 951 Stocks 4.3%
Hong Kong Minimum Threshold Dividend Yield 10th Percentile 1.3%
Hong Kong Bottom 25% Dividend Yield 25th Percentile 2.6%
Hong Kong Top 25% Dividend Yield 75th Percentile 7.3%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

SEHK:772 Future Dividends Estimate Data
Date (Data in CN¥) Dividend per Share (annual) Avg. No. Analysts
2022-12-31 0.00 2.00
2021-12-31 0.00 3.00
2020-12-31 0.00 4.00
2020-04-04

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Unable to perform a dividend volatility check as China Literature has not reported any payouts.
  • Unable to verify if China Literature's dividend has been increasing as the company has not reported any payouts.
Current Payout to shareholders
What portion of China Literature's earnings are paid to the shareholders as a dividend.
  • Unable to calculate sustainability of dividends as China Literature has not reported any payouts.
Future Payout to shareholders
  • No need to calculate the sustainability of China Literature's dividends in 3 years as they are not expected to pay a notable one for Hong Kong.
X
Income/ dividend checks
We assess China Literature's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 1.3%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can China Literature afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. China Literature has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of China Literature's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Wenhui Wu
COMPENSATION CN¥4,288,000
AGE 41
TENURE AS CEO 5.4 years
CEO Bio

Mr. Wu Wenhui serves as Co-Chief Executive Officer and Executive Director of China Literature Limited since November 06, 2014. Mr. Wu has been the President of Cloudary Corporation at Shanda Interactive Entertainment Limited since July 2008. He is a Co-Founder of qidian.com and serves as its General Manager. From January 2014 to March 2015, Mr. Wu was the Chief Executive Officer of Tencent Literature. From October 2004 to March 2013, Mr. Wu served as the Chief Executive Officer of qidian.com. Mr. Wu served as President of Shanda Literature of Shanda Interactive Entertainment Ltd. since July 2008. He served as General Manager of Xuanting from October 2004 to June 2008. Prior to the establishment of Xuanting, Mr. Wu served as Software Engineer at Founder Technology Co., Ltd. from July 2000 to October 2001 and served as Project Manager at Chaohua Technology Co., Ltd. from July 2001 to September 2004. Mr. Wu holds a Bachelor's degree in Computer Science/software engineering from Peking University in July 2000.

CEO Compensation
  • Wenhui's compensation has been consistent with company performance over the past year, both up more than 20%.
  • Wenhui's remuneration is about average for companies of similar size in Hong Kong.
Management Team Tenure

Average tenure and age of the China Literature management team in years:

5.3
Average Tenure
42
Average Age
  • The average tenure for the China Literature management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Wenhui Wu

TITLE
Co-CEO & Executive Director
COMPENSATION
CN¥4M
AGE
41
TENURE
5.4 yrs

Frank Liang

TITLE
Co-CEO & Executive Director
COMPENSATION
CN¥7M
AGE
42
TENURE
5.4 yrs

Xuesong Shang

TITLE
President
AGE
45

Jincheng Zhao

TITLE
Group GM of Investment & Joint Company Secretary
TENURE
5.1 yrs

Maggie Zhou

TITLE
Head of Capital Markets & Investor Relations

Tingfeng Lin

TITLE
Senior Vice President
AGE
42

Rong Zhang

TITLE
Senior Vice President
AGE
41

Siu Kuen Lai

TITLE
Joint Company Secretary
AGE
43
TENURE
2.8 yrs
Board of Directors Tenure

Average tenure and age of the China Literature board of directors in years:

2.5
Average Tenure
49
Average Age
  • The average tenure for the China Literature board of directors is less than 3 years, this suggests a new board.
Board of Directors

James Mitchell

TITLE
Chairman of the Board
AGE
45

Wenhui Wu

TITLE
Co-CEO & Executive Director
COMPENSATION
CN¥4M
AGE
41
TENURE
5.4 yrs

Frank Liang

TITLE
Co-CEO & Executive Director
COMPENSATION
CN¥7M
AGE
42
TENURE
5.4 yrs

Carol Yu

TITLE
Independent Non-Executive Director
COMPENSATION
CN¥657K
AGE
57
TENURE
2.5 yrs

Miranda Leung

TITLE
Independent Non-Executive Director
COMPENSATION
CN¥876K
AGE
51
TENURE
2.5 yrs

Junmin Liu

TITLE
Independent Non-Executive Director
COMPENSATION
CN¥657K
AGE
69
TENURE
2.5 yrs

Huayi Cao

TITLE
Non-Executive Director
AGE
54
TENURE
0.9 yrs

Fei Chen

TITLE
Non-Executive Director
AGE
41
TENURE
0.9 yrs

Matthew Cheng

TITLE
Non-Executive Director
AGE
49
TENURE
0.4 yrs
Who owns this company?
Recent Insider Trading
  • More shares have been bought than sold by China Literature individual insiders in the past 3 months.
Recent Insider Transactions
Announced Type Name Entity Role Start End Shares Max Price (HK$) Value (HK$)
20. Mar 20 Buy James Mitchell Individual 18. Mar 20 18. Mar 20 120,000 HK$28.93 HK$3,471,624
21. Aug 19 Buy James Mitchell Individual 19. Aug 19 19. Aug 19 160,000 HK$24.74 HK$3,958,096
29. Jul 19 Sell Luxun Investment Limited Company 29. Jul 19 29. Jul 19 -28,000,000 HK$35.50 HK$-994,000,059
X
Management checks
We assess China Literature's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. China Literature has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

News

Simply Wall St News

Are Investors Undervaluing China Literature Limited (HKG:772) By 47%?

Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 10-year free cash flow (FCF) estimate 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Levered FCF (CN¥, Millions) CN¥1.9b CN¥1.7b CN¥2.1b CN¥2.5b CN¥2.7b CN¥2.8b CN¥3.0b CN¥3.1b CN¥3.2b CN¥3.3b Growth Rate Estimate Source Analyst x4 Analyst x3 Analyst x1 Analyst x1 Est @ 7.32% Est @ 5.73% Est @ 4.61% Est @ 3.83% Est @ 3.28% Est @ 2.9% Present Value (CN¥, Millions) Discounted @ 7.18% CN¥1.8k CN¥1.5k CN¥1.7k CN¥1.9k CN¥1.9k CN¥1.9k CN¥1.8k CN¥1.8k CN¥1.7k CN¥1.6k ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF)= CN¥17.5b After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. … In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.2%. … SEHK:772 Intrinsic value, August 6th 2019 The assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.

Simply Wall St -

Examining China Literature Limited’s (HKG:772) Weak Return On Capital Employed

Analysts use this formula to calculate return on capital employed: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) Or for China Literature: 0.027 = CN¥577m ÷ (CN¥28b - CN¥6.6b) (Based on the trailing twelve months to December 2018.) Therefore, China Literature has an ROCE of 2.7%. … The ROCE equation subtracts current liabilities from capital employed, so a company with a lot of current liabilities appears to have less capital employed, and a higher ROCE than otherwise. … Our Take On China Literature's ROCE China Literature has a poor ROCE, and there may be better investment prospects out there.

Simply Wall St -

What Should You Know About China Literature Limited's (HKG:772) Future?

Investors may find it useful to understand how market analysts perceive China Literature's earnings growth outlook over the next few years and whether the future looks even brighter than the past. … Check out our latest analysis for China Literature Analysts' outlook for next year seems buoyant, with earnings rising by a robust 44%. … SEHK:772 Past and Future Earnings, July 16th 2019 Although it is useful to understand the growth rate each year relative to today’s value, it may be more insightful determining the rate at which the earnings are growing on average every year.

Simply Wall St -

Volatility 101: Should China Literature (HKG:772) Shares Have Dropped 49%?

China Literature Limited (HKG:772) shareholders should be happy to see the share price up 28% in the last month. … During the unfortunate twelve months during which the China Literature share price fell, it actually saw its earnings per share (EPS) improve by 37%. … Before deciding if you like the current share price, check how China Literature scores on these 3 valuation metrics.

Simply Wall St -

China Literature Limited (HKG:772): Will The Growth Last?

Looking at China Literature Limited's (HKG:772) earnings update in December 2018, analysts seem cautiously optimistic, with profits predicted to increase by 44% next year, though this is comparatively lower than the past 5-year average earnings growth of 68%. … I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 772's earnings growth over these next few years. … SEHK:772 Past and Future Earnings, June 17th 2019 By 2022, 772's earnings should reach CN¥2.1b, from current levels of CN¥911m, resulting in an annual growth rate of 26%.

Simply Wall St -

How Much Of China Literature Limited (HKG:772) Do Insiders Own?

Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. … See our latest analysis for China Literature SEHK:772 Ownership Summary, June 3rd 2019 What Does The Institutional Ownership Tell Us About China Literature? … Insider Ownership Of China Literature While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders.

Simply Wall St -

Read This Before Judging China Literature Limited's (HKG:772) ROE

The formula for return on equity is: Return on Equity = Net Profit ÷ Shareholders' Equity Or for China Literature: 5.0% = CN¥911m ÷ CN¥18b (Based on the trailing twelve months to December 2018.) Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. … Does China Literature Have A Good Return On Equity? … In my book the highest quality companies have high return on equity, despite low debt.

Simply Wall St -

Why China Literature Limited's (HKG:772) High P/E Ratio Isn't Necessarily A Bad Thing

View our latest analysis for China Literature How Do I Calculate China Literature's Price To Earnings Ratio? … The formula for P/E is: Price to Earnings Ratio = Price per Share (in the reporting currency) ÷ Earnings per Share (EPS) Or for China Literature: P/E of 29.56 = CN¥29.96 (Note: this is the share price in the reporting currency, namely, CNY ) ÷ CN¥1.01 (Based on the year to December 2018.) Is A High Price-to-Earnings Ratio Good? … SEHK:772 Price Estimation Relative to Market, May 10th 2019 Its relatively high P/E ratio indicates that China Literature shareholders think it will perform better than other companies in its industry classification.

Simply Wall St -

Should You Be Holding China Literature Limited (HKG:772)?

China Literature Limited (HKG:772) is a stock with outstanding fundamental characteristics. … When we build an investment case, we need to look at the stock with a holistic perspective. … In the case of 772, it

Simply Wall St -

Is China Literature Limited (HKG:772) Trading At A 27% Discount?

I will use the Discounted Cash Flow (DCF) model! … If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. … The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.

Simply Wall St -

Company Info

Description

China Literature Limited, an investment holding company, operates an online literature platform in the People’s Republic of China. The company’s flagship product is QQ Reading, a unified mobile content aggregation and distribution platform. As of December 31, 2018, its library featured 7.7 million writers and 11.2 million works of literature, including 10.7 million original literary works created by writers on its platform, 350 thousand works that are sourced from third-party platforms, and 200 thousand e-books. It is also involved in the self-operated channels business on partner distribution platforms. In addition, the company licenses the content to third-party partners, such as Baidu, Sogou, JD.com, and Xiaomi Duokan for distribution, as well as offers online paid reading and content adaptations into various entertainment formats. Further, it provides reading, copyright commercialization, and writer cultivation and brokerage services; and operates text work reading and related open platform through technology methods and digital media, including personal computers, Internet, and mobile network. Additionally, the company engages in the production and distribution of television series, Web series, and films; licensing and distribution of film and television properties; licensing copyrights; sale of physical books; and operation of in-house online games, etc. The company was founded in 2002 and is headquartered in Shanghai, the People’s Republic of China. China Literature Limited is a subsidiary of Tencent Holdings Limited.

Details
Name: China Literature Limited
772
Exchange: SEHK
Founded: 2002
HK$31,433,059,068
1,012,336,846
Website: http://ir.yuewen.com
Address: China Literature Limited
No. 690 Bi Bo Road,
Block 6,
Shanghai,
China
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
SEHK 772 Ordinary Shares The Stock Exchange of Hong Kong Ltd. HK HKD 08. Nov 2017
OTCPK CHLL.F Ordinary Shares Pink Sheets LLC US USD 08. Nov 2017
DB C2X Ordinary Shares Deutsche Boerse AG DE EUR 08. Nov 2017
SHSC 772 Ordinary Shares Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect HK HKD 08. Nov 2017
SZSC 772 Ordinary Shares The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect HK HKD 08. Nov 2017
Number of employees
Current staff
Staff numbers
2,000
China Literature employees.
Industry
Publishing
Media
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2020/04/04 14:33
End of day share price update: 2020/04/03 00:00
Last estimates confirmation: 2020/04/01
Last earnings filing: 2020/03/17
Last earnings reported: 2019/12/31
Last annual earnings reported: 2019/12/31


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.