MCLC: China Literature shares plunge

[MCLC LIST]

MCLC LIST
China Literature shares plunge
Source: Reuters (8/13/18)
China Literature shares plunge after user numbers slide, news of $2.3 billion deal
By Kane Wu
HONG KONG (Reuters) - China Literature Ltd (0772.HK)’s shares slid as much as 14.6 percent on Tuesday, after it reported first-half results that showed a drop in the average number of monthly paying users and announced a $2.3 billion acquisition.
Shares in China Literature, an online literary reading and writing platform backed by Tencent Holdings (0700.HK), fell to HK$57.4 in morning trade, the lowest since China Literature’s initial public offering last November.
The firm said on Monday that first-half net profit jumped 139 percent to 506 million yuan but the average number of monthly paying users (MPU) slid 7 percent from the same period a year ago.
On that note, asset manager Bocom International lowered its target price for China Literature to HK$70 per share on Tuesday, saying the MPU was lower than expected. It noted that it takes one to three quarters to convert new users into paying users.
China Literature also announced a 15.5 billion yuan ($2.3 billion) acquisition of New Classics Media, a Chinese film and television production company.
China Literature Ltd52.6
0772.HKHONG KONG STOCK
-3.00(-5.40%)
The online literature platform will pay for the deal with 5.1 billion yuan in cash and 10.4 billion in stock, including an earn-out mechanism, it said.
New Classics Media is currently controlled by Tencent Mobility and a number of special purpose vehicles held by its executives. The company has produced hit films and television series across different genres, including adapting a number of titles from China Literature’s own portfolio.
Bocom said in a research note that the acquisition would enhance China Literature’s production capability and unlock its intellectual property value.
Reporting by Kane Wu; Editing by Edwina Gibbs and Eric Meijer
by denton.2 at osu.edu on August 16, 2018
You are subscribed to email updates from MCLC Resource Center
To stop receiving these emails, click here.

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.osu.edu/pipermail/mclc/attachments/20180816/24a8797a/attachment.html>