Financial Performance - The company's revenue for the year ended December 31, 2024, reached RMB 8,121,081,000, a year-on-year increase of 15.8% compared to RMB 7,011,785,000 in 2023[3]. - Gross profit for the same period was RMB 3,921,940,000, reflecting a 16.3% increase from RMB 3,371,463,000 in the previous year[3]. - The company reported a net loss of RMB 209,595,000 for 2024, a decline of 126.1% compared to a profit of RMB 803,547,000 in 2023[3]. - Revenue increased by 15.8% year-on-year to RMB 8,121.1 million for the year ended December 31, 2024[20]. - The average revenue per paying user in the paid reading business decreased by 1.5% year-on-year to RMB 32.0, attributed to the lower contribution from newly added members[27]. - The total comprehensive loss for the year was RMB 147.5 million, a stark contrast to a comprehensive income of RMB 843.3 million in the previous year[55]. - The company reported a net loss of RMB 209,216 thousand for the year, contributing to a total comprehensive loss of RMB 147,109 thousand[60]. - The company recorded a net financial cost of RMB 1,836,000 for the year ending December 31, 2024, a decrease from RMB 12,891,000 in 2023[92]. User Metrics - The number of monthly paying users increased to 9.1 million, representing a 4.6% year-on-year growth[8]. - The average monthly active users decreased by 19.0% year-on-year to 166.6 million for the year ended December 31, 2024[25]. - The average monthly paying users on the company's own platform increased by 4.6% year-on-year to 9.1 million as of December 31, 2024, primarily due to the launch of more member content[27]. Cost and Expenses - The cost of revenue grew by 15.4% year-on-year to RMB 4,199.1 million, in line with revenue growth, primarily due to increased production costs from new films and hit series[26]. - Sales and marketing expenses rose by 31.5% year-on-year to RMB 2,261.0 million, representing 27.8% of total revenue, up from 24.5% the previous year[29]. - The company reported a significant increase in production costs for TV dramas, web series, animations, and films, which rose to RMB 968,762 from RMB 545,051, representing an increase of approximately 77.8%[88]. Assets and Liabilities - Total assets decreased from RMB 23,188.5 million as of December 31, 2023, to RMB 22,945.4 million as of December 31, 2024[41]. - Total liabilities increased from RMB 4,164.0 million as of December 31, 2023, to RMB 4,569.3 million as of December 31, 2024[41]. - The net cash position increased to RMB 9,935.7 million as of December 31, 2024, from RMB 8,101.4 million as of December 31, 2023[43]. Investments and Acquisitions - The company acquired assets from Tencent Animation, enhancing its IP portfolio and market presence[11]. - The company plans to expand its market presence through strategic acquisitions, including the acquisition of animation and comics business from Tencent, enhancing its content production capabilities[67]. Research and Development - Research and development expenses amounted to approximately RMB 520,638,000 for the year ending December 31, 2024, a decrease from RMB 561,576,000 in 2023[90]. Governance and Compliance - The company has complied with all applicable code provisions of the Corporate Governance Code as of December 31, 2024[159]. - The company has adopted the standard code of conduct for directors' securities transactions as per the listing rules[160]. Shareholder Information - The company did not declare or pay any dividends for the year ended December 31, 2024, consistent with the previous year[106]. - The weighted average number of ordinary shares issued was 1,012,686,000 for the year ended December 31, 2024, compared to 1,009,266,000 for the year ended December 31, 2023[103]. Future Outlook - The company anticipates an increase in overall production costs in the coming years due to longer development cycles for new projects, leading to a reduction in near-term profit expectations[112]. - The company plans to evaluate the impact of tax legislation on its consolidated financial statements moving forward[100].

Investment Rating - The report assigns a "Neutral" investment rating to the company,阅文集团 (772 HK), with a target price adjusted to HKD 28.00, indicating a potential upside of 12.7% from the current price of HKD 24.85 [1][4][12]. Core Insights - The report highlights that the delay in the 新丽 project impacts the 2024 profit expectations, while growth is anticipated in short dramas and derivative IP businesses [2]. - The company is expected to face a net loss of RMB 150-250 million for 2024, primarily due to non-cash goodwill impairment related to the acquisition of 新丽传媒 [5]. - Revenue expectations for 2024 have been slightly reduced by 1% to RMB 7.7 billion, with online business remaining stable and core IP operations expected to grow by 34% [5][8]. - The report emphasizes the potential for growth in core IP operations, driven by the integration of 腾讯动漫 and the launch of short dramas [5][8]. Financial Overview - Revenue projections for the years 2023 to 2026 are as follows: RMB 7,012 million (2023), RMB 7,695 million (2024E), RMB 7,882 million (2025E), and RMB 8,220 million (2026E), with a projected growth rate of 9.8% in 2024 [3][8][13]. - Net profit is forecasted to be RMB 1,130 million (2023), RMB 1,139 million (2024E), RMB 1,445 million (2025E), and RMB 1,568 million (2026E), with a notable increase of 23.7% in 2025 [3][8][13]. - The report indicates a decrease in the adjusted net profit expectation for 2024 by 18% to RMB 1.1 billion, reflecting a profit margin of 15% [5][8]. Valuation - The valuation is based on a projected adjusted net profit of RMB 1.4 billion for 2025, with a reference to a price-to-earnings ratio of 18 times for comparable quality content and copyright companies [5][8]. - The target price has been slightly adjusted from HKD 29.00 to HKD 28.00, maintaining a neutral stance on the stock [5][12].

Investment Rating - The report assigns a "Neutral" investment rating to the company,阅文集团 (772 HK), with a target price adjusted to HKD 28.00, indicating a potential upside of 12.7% from the current price of HKD 24.85 [1][4][12]. Core Insights - The report highlights that the delay in the 新丽 project impacts the 2024 profit expectations, while growth is anticipated in short dramas and derivative IP businesses [2]. - The company is expected to face a net loss of RMB 150-250 million for 2024, primarily due to non-cash goodwill impairment related to the acquisition of 新丽传媒 [5]. - Revenue expectations for 2024 have been slightly reduced by 1% to RMB 7.7 billion, with online business remaining stable and core IP operations expected to grow by 34% [5][8]. - The report emphasizes the potential for growth in core IP operations and the impact of AI technology on cost reduction and efficiency [5][6]. Financial Overview - Revenue projections for the years 2023 to 2026 are as follows: - 2023: RMB 7,012 million - 2024E: RMB 7,695 million - 2025E: RMB 7,882 million - 2026E: RMB 8,220 million - The expected net profit for 2024 is RMB 1,139 million, with a projected increase to RMB 1,445 million in 2025 and RMB 1,568 million in 2026 [3][8][13]. - The report notes a decrease in the adjusted net profit forecast for 2024 by 18% to RMB 1 billion, reflecting a profit margin of 15% [5][8]. Valuation Metrics - The report adjusts the 2025 adjusted net profit expectation to RMB 14 billion, applying a price-to-earnings ratio of 18 times, leading to a target price of HKD 28 [5][8]. - The company’s earnings per share (EPS) is projected to be RMB 1.14 for 2024, increasing to RMB 1.41 in 2025 and RMB 1.54 in 2026 [3][8][13]. - The report indicates a price-to-earnings ratio of 20.4 for 2024, decreasing to 16.5 in 2025 and 15.2 in 2026 [3][8][13].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 33.8, representing a potential upside of 32.7% from the current price of HKD 24.45 [1][4][12]. Core Insights - The company's revenue for the first half of the year reached RMB 4.191 billion, a year-on-year increase of 28%, exceeding previous growth expectations. Operating profit and net profit also saw significant growth, increasing by 46% and 34% respectively [4][7]. - The copyright business has emerged as the main driver of growth, with revenue from copyright operations and other businesses increasing by 73.3% year-on-year, while online business revenue declined by 2.2% [4][10]. - The company is focusing on optimizing its cost and expense structure to enhance operational efficiency in 2024 [4][7]. Summary by Sections Revenue Performance - The company reported a revenue of RMB 4.191 billion in the first half of the year, with a 28% year-on-year growth, surpassing previous expectations. Operating profit and net profit increased by 46% and 34% respectively [4][7]. - Online business revenue decreased by 2.2%, while copyright operations and other businesses saw a 73.3% increase, becoming the main growth driver [4][10]. Market Position and Strategy - The company continues to invest in its online reading business, enhancing the efficiency and quantity of quality content. It maintains a competitive advantage in the industry due to its IP portfolio and AI technology [8][9]. - The internationalization of content is progressing positively, with AI translation technology facilitating rapid growth in translated works on overseas platforms [9][10]. IP Development and Future Prospects - The company has made significant progress in its IP visualization strategy, launching several successful projects. It plans to accelerate its development in the short drama sector, with over 100 short drama projects expected to be launched in the year [10][11]. - The report highlights the potential for maximizing commercial value through cross-product collaboration, indicating a strong growth momentum for the company [11][12].

Financial Performance - Total revenue for the first half of 2024 reached RMB 4,190,933 thousand, representing a year-on-year increase of 27.7% compared to RMB 3,283,026 thousand in 2023[10]. - Gross profit increased by 29.8% year-on-year, amounting to RMB 2,083,230 thousand, up from RMB 1,604,762 thousand in the previous year[10]. - Operating profit rose by 46.1% year-on-year to RMB 454,449 thousand, compared to RMB 310,948 thousand in the same period last year[10]. - The company’s non-IFRS profit attributable to equity holders increased by 16.4% year-on-year, reaching RMB 702,061 thousand compared to RMB 603,119 thousand in 2023[10]. - Net profit for the period was RMB 503,932 thousand, a rise of 33.9% compared to RMB 375,979 thousand in the prior year[160]. - Basic earnings per share for the period was RMB 0.50, compared to RMB 0.37 for the same period last year[160]. Revenue Streams - The company achieved a significant increase in copyright operation revenue, which surged by 75.7% year-on-year[15]. - Online business revenue decreased by 2.2% year-on-year to RMB 1,940.4 million, accounting for 46.3% of total revenue[37]. - Copyright operation revenue surged by 75.7% year-on-year to RMB 2,202.8 million, driven by increased production of popular series and films[42]. - The total GMV for IP card products reached approximately 100 million RMB in the first half of 2024[25]. User Engagement and Content Growth - The number of new authors on the online reading platform increased by approximately 170,000, with 320,000 new novels added, totaling over 21 billion new words[12]. - The number of new signed works with over 50,000 subscriptions increased by 75% year-on-year, while the number of new signed works generating over 2 million RMB in reading revenue grew by 33%[20]. - AI translation works accounted for about 40% of the top 100 bestsellers on the WebNovel platform in the first half of 2024[13]. Cost and Expenses - Cost of revenue increased by 25.6% year-on-year to RMB 2,107.7 million, aligned with revenue growth due to higher production costs[42]. - Sales and marketing expenses rose by 41.0% year-on-year to RMB 1,158.9 million, accounting for 27.7% of revenue compared to 25.0% in the same period last year[46]. - General and administrative expenses increased by 1.9% year-on-year to RMB 544.8 million, with the percentage of revenue decreasing from 16.3% to 13.0%[49]. Assets and Liabilities - Total assets increased from RMB 23,188.5 million as of December 31, 2023, to RMB 24,431.3 million as of June 30, 2024, while total liabilities rose from RMB 4,164.0 million to RMB 5,199.5 million[68]. - The company’s equity attributable to equity holders increased to RMB 19,232,665 thousand from RMB 19,024,945 thousand, representing a growth of about 1.09%[166]. - Total liabilities rose to RMB 5,199,506 thousand, compared to RMB 4,164,048 thousand, marking an increase of approximately 24.83%[164]. Cash Flow and Financial Health - Free cash flow for the six months ended June 30, 2024, was RMB 1,531.8 million, derived from net cash flow from operating activities of RMB 1,613.8 million, after deducting lease liabilities and capital expenditures[69]. - The net cash position increased to RMB 9,208.1 million as of June 30, 2024, up from RMB 8,101.4 million as of December 31, 2023, primarily due to cash generated from operating activities[69]. - The company reported a net cash outflow from investing activities of RMB 1,477,826 thousand for the six months ended June 30, 2024, compared to RMB 2,382,543 thousand in the same period of 2023, showing a reduction of about 38%[172]. Shareholder Information - The company did not recommend an interim dividend for the six months ended June 30, 2024, compared to zero in 2023[82]. - The company repurchased a total of 1,152,800 shares at a total cost of approximately HKD 29,001,120 during the six months ended June 30, 2024[84]. - Tencent Holdings Limited holds 577,643,604 shares, representing 56.32% of the company's equity[94]. Corporate Governance - The company confirmed compliance with all applicable corporate governance code provisions for the six months ended June 30, 2024[80]. - The audit committee reviewed the interim report and found the risk management and internal control systems effective and adequate[83]. Restricted Share Unit Plan - The Restricted Share Unit Plan was adopted on December 23, 2014, and is valid for 10 years[97]. - A total of 40,409,091 shares have been issued under the Restricted Share Unit Plan, representing 1% of the total issued shares[99]. - The vesting period for certain Restricted Share Units is five years, with specific annual vesting dates[108]. Financial Instruments and Risks - The group faces various financial risks, including market risk, credit risk, and liquidity risk, which are detailed in the annual financial statements[190]. - The valuation techniques used for financial instruments include market quotes for similar instruments and discounted cash flow analysis, with no changes in valuation techniques noted for the reporting periods[197][198].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's revenue and profit exceeded expectations, driven by successful IP launches and a focus on the release schedule of new productions [1] - The financial overview for the first half of 2024 shows total revenue of 41.9 billion, surpassing Bloomberg consensus of 37.2 billion, with a year-on-year increase of 27.7% [1] - The company is expected to maintain a strong content ecosystem and diverse business expansion capabilities, which will help build barriers and steadily improve profitability [1] Financial Overview - Total revenue for the first half of 2024 was 41.9 billion, exceeding Bloomberg consensus of 37.2 billion, with a year-on-year increase of 27.7% [1] - Gross margin was 49.7%, below Bloomberg consensus of 51.8%, with a year-on-year increase of 0.8 percentage points [1] - Operating profit was 4.5 billion, below Bloomberg consensus of 5.0 billion, with a year-on-year increase of 46.1% [1] - Non-IFRS net profit attributable to shareholders was 7.0 billion, exceeding Bloomberg consensus of 6.5 billion, with a year-on-year increase of 16.4% [1] Revenue Breakdown - Online business revenue was 19.4 billion, a year-on-year decrease of 2.2% [1] - Revenue from the company's own platform was 16.9 billion, a year-on-year decrease of 0.9% [1] - Revenue from Tencent product channels was 1.3 billion, a year-on-year decrease of 26.2% [1] - Third-party platform revenue was 1.2 billion, a year-on-year increase of 18.2% [1] - IP operation and other revenue was 22.5 billion, a year-on-year increase of 73.3% [1] IP Development and Performance - The successful sequel of a top IP, "Qing Yu Nian Season 2," achieved high ratings and viewership, demonstrating the effectiveness of the company's full industry chain operation mechanism [1] - The company has launched various merchandise and promotional activities related to its IP, significantly increasing engagement and sales [1] - The online reading content ecosystem continues to grow, with a significant increase in new authors and works [1] Future Outlook - The company has a rich pipeline of upcoming projects, including several anticipated dramas and films set to be released in the next two years [1] - The company is actively exploring new technologies and business models, including AI integration and short drama production [1] - The forecast for Non-IFRS net profit for 2024E-2026E is 12.6 billion, 15.3 billion, and 18.7 billion respectively, maintaining a "Buy" rating [1]

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Insights - The company's revenue for the first half of 2024 reached 4.19 billion yuan, representing a year-on-year growth of 27.7%, with significant contributions from copyright operations, which grew by 75.7% [1][5] - The gross profit margin improved to 49.7%, up by 0.8 percentage points year-on-year, while the operating profit margin increased to 10.8%, up by 1.3 percentage points [1] - The adjusted net profit attributable to the parent company for the first half of 2024 was 700 million yuan, reflecting a year-on-year increase of 16.4% [1] Summary by Sections Financial Performance - The company achieved a revenue of 7.02 billion yuan in 2023, with a projected increase to 7.65 billion yuan in 2024, representing a year-on-year growth of 9.0% [4][9] - The net profit for 2023 was 1.13 billion yuan, expected to rise to 1.34 billion yuan in 2024, indicating a growth of 18.11% [4][9] - The comprehensive gross margin is projected to improve from 48.08% in 2023 to 50.48% in 2024 [7][9] Business Segments - Online business revenue is expected to decline slightly from 39.48 billion yuan in 2024E to 38.49 billion yuan in 2025E, with a year-on-year decrease of 9.53% [6] - Copyright operations and other revenues are projected to grow from 30.64 billion yuan in 2024E to 38.05 billion yuan in 2025E, with a year-on-year increase of 24.20% [6] IP Development - The company has seen a strong performance in its IP operations, with copyright revenue reaching 2.203 billion yuan in the first half of 2024, a 75.7% increase year-on-year [1][5] - The company is actively exploring AI technologies to enhance content production efficiency, with AI-translated works making up 40% of the top 100 bestsellers on WebNovel [5][6] Valuation - The estimated adjusted net profits for 2024-2026 are projected to be 1.335 billion yuan, 1.531 billion yuan, and 1.834 billion yuan respectively [5] - The company is assigned a PE valuation range of 25-28 times for 2024, translating to a reasonable value range of 35.2-39.5 HKD per share [5]

Investment Rating - The report maintains a "Buy" rating for the company [1][19][20] Core Views - The company's online business remains stable, and the release of quality IP has driven performance beyond expectations [1][3] - In H1 2024, the company achieved revenue of 4.191 billion yuan, a year-on-year increase of 28%, with operating profit rising by 46% to 454 million yuan, and net profit increasing by 34% to 504 million yuan [2][9] - The company is expected to continue strengthening its IP construction across the entire industry chain and explore the integration of AI technology with various IP content forms [16][17] Summary by Sections Operating Performance - The average monthly active users (MAU) for the platform in H1 2024 was 17.6 million, a decrease of 16.9% year-on-year, while the number of paying users increased by 0.4% to 8.8 million [3][8] - The average monthly revenue per paying user decreased by 1.9% to 31.7 yuan due to changes in the revenue mix of different products [8] Overall Performance - The company achieved revenue of 4.191 billion yuan in H1 2024, driven mainly by copyright operations and other business income [9][10] - Non-IFRS net profit increased by 16.4% to 702 million yuan, exceeding market expectations [9][10] Online Business - Online business revenue in H1 2024 was 1.94 billion yuan, a decline of 2.2% year-on-year, accounting for 46.3% of total revenue [9][15] - The company continues to invest in high-quality content, with a steady increase in the number of writers and works [15] Copyright Operations and Other Businesses - Revenue from copyright operations and other businesses reached 2.251 billion yuan, a year-on-year increase of 73.3%, driven by the success of popular IP adaptations [9][16] - The company plans to enhance its IP visualization and commercialization efforts, with significant breakthroughs expected in the future [16][17] Earnings Forecast and Valuation - The report slightly raises revenue and profit forecasts, expecting revenues of 7.6 billion, 7.9 billion, and 8.2 billion yuan for FY2024-2026, with adjusted net profits of 1.41 billion, 1.62 billion, and 1.78 billion yuan respectively [19][20] - The target market capitalization for 2024 is estimated at 28.3 billion yuan, with a target price of 28 yuan or 30 HKD [19][20]

Investment Rating - The report maintains a "Buy" rating for the company [1]. Core Views - The company achieved a revenue of 4.19 billion RMB in H1 2024, representing a year-on-year increase of 27.7%. Gross profit reached 2.08 billion RMB, up 29.8%, while Non-IFRS net profit was 700 million RMB, an increase of 16.4%. The profit attributable to equity holders was 500 million RMB, up 33.9% [2]. - The revenue growth was primarily driven by the release of popular TV series. The revenue from New Classics Media surged to 1.05 billion RMB in H1 2024, a 93.2% increase compared to H1 2023, supported by the concentrated airing of several series [2]. - The company faced some profit pressure due to impairment losses on certain film and television projects amounting to 190 million RMB in H1 2024, which was not present in the same period of 2023 [2]. - The reading business saw a slight decline in revenue by 2.2% year-on-year, while copyright operations revenue increased by 73.3% [2]. - The company has a rich pipeline of TV series for 2025-2026, with over 10 series planned, including titles like "The Drug Storm" and "The Independent Woman" [2]. Financial Summary - The company is projected to achieve Non-IFRS net profits of 1.4 billion RMB, 1.5 billion RMB, and 1.6 billion RMB for the years 2024, 2025, and 2026 respectively, with growth rates of 23.97%, 7.45%, and 6.30% [3]. - The expected revenue for 2024 is 7.01 billion RMB, with a growth rate of 17.03% [3]. - The company's gross margin is expected to improve to 50.73% in 2024, with a net margin of 12.18% [3]. Business Developments - The company has seen a rise in paid user numbers from 7.9 million in 2022 to 8.8 million in H1 2024, with the payment rate increasing from 3.2% in 2022 to 5.0% in H1 2024 [2]. - The company is actively expanding its overseas web literature offerings, with approximately 5,000 Chinese translated works and 650,000 local original works available as of June 2024 [2]. - The integration of AI in translation has significantly improved efficiency, reducing costs by 90% and increasing output by 100 times compared to manual translation efforts [2].

Investment Rating - The report maintains a "Buy" rating for the company [3][5] Core Views - The company reported a revenue of 4.19 billion yuan for the first half of 2024, representing a year-on-year growth of 28%, with adjusted net profit reaching 700 million yuan, up 16%, slightly exceeding Bloomberg consensus expectations [3][4] - The decline in online reading revenue has narrowed, with online business revenue at 1.94 billion yuan, a year-on-year decrease of 2%, compared to a 12% decline in the same period last year [4] - New projects from New Classics Media have been launched, generating 1.05 billion yuan in revenue, but profits were impacted by impairment losses totaling 185 million yuan [4] - Other copyright operations, including animation and licensing, have shown significant growth, with revenue reaching a historical high of 1.2 billion yuan in the first half of 2024 [4][5] Summary by Sections Financial Performance - For the first half of 2024, the company achieved a revenue of 4.19 billion yuan and an adjusted net profit of 700 million yuan, with both figures showing positive growth compared to the previous year [3][4] - The online reading segment saw a revenue of 1.94 billion yuan, with a decline of 2%, while third-party platform revenue grew by 18% [4] Project Developments - New Classics Media launched several key projects, including the film "Hot and Spicy" and series such as "With the Phoenix" and "Celebrating the New Year 2," contributing to a revenue of 1.05 billion yuan [4] - The company is focusing on the performance of its upcoming projects, particularly those with strong IP potential [4] Other Operations - Excluding New Classics Media, the company generated 1.2 billion yuan from other copyright operations, marking a historical high [4] - The company has completed the acquisition of Tencent Animation, which is expected to contribute to revenue growth in the second half of 2024 [4][5] Profitability and Costs - The report indicates an increase in sales and marketing expenses due to promotional activities for film projects, while general and administrative expenses saw a slight year-on-year increase [4]