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<h3 style="margin-top:0;"><a style="font-weight: 500; font-size: 21px;line-height: 30px; margin-top:25px; margin-bottom: 10px;" href="http://u.osu.edu/mclc/2018/08/16/china-literature-shares-plunge/" target="_blank">China Literature shares plunge</a></h3>
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<p>Source: Reuters (8/13/18)<br />
<a href="https://www.reuters.com/article/us-china-literature-new-classics-m-a/china-literature-shares-plunge-after-user-numbers-slide-news-of-23-billion-deal-idUSKBN1KZ068">China Literature shares plunge after user numbers slide, news of $2.3 billion deal</a><br />
By Kane Wu</p>
<p>HONG KONG (Reuters) - China Literature Ltd (<span id="”symbol_0772.HK_0”"><a href="https://www.reuters.com/finance/stocks/overview?symbol=0772.HK">0772.HK</a></span>)’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.</p>
<p>Shares in China Literature, an online literary reading and writing platform backed by Tencent Holdings (<span id="”symbol_0700.HK_1”"><a href="https://www.reuters.com/finance/stocks/overview?symbol=0700.HK">0700.HK</a></span>), fell to HK$57.4 in morning trade, the lowest since China Literature’s initial public offering last November.</p>
<p>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.</p>
<p>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.</p>
<p>China Literature also announced a 15.5 billion yuan ($2.3 billion) acquisition of New Classics Media, a Chinese film and television production company.</p>
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<div class="StockChart_row StockChart_top"><span class="StockChart_name"><a href="https://www.reuters.com/finance/stocks/overview?symbol=0772.HK">China Literature Ltd</a></span><span class="StockChart_quote">52.6</span></div>
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<div class="StockChart_info"><span class="StockChart_ric">0772.HK</span><span class="StockChart_exchange">HONG KONG STOCK</span></div>
<div class="StockChart_change"><span class="StockChart_net-change StockChart_neg">-3.00</span><span class="StockChart_net-change StockChart_neg">(-5.40%)</span></div>
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<div class="StockChart_chart"><img style="max-width:100%" class="" src="https://www.reuters.wallst.com/reuters/next/chart/chartsgen2?symbols=0772.HK&numberOfDays=90&&&realtime=0&scaleFactor=2&ChartsGen2=true" alt="0772.HK" /></div>
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<p>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.</p>
<p>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.</p>
<p>Bocom said in a research note that the acquisition would enhance China Literature’s production capability and unlock its intellectual property value.</p>
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<p class="Attribution_content">Reporting by Kane Wu; Editing by Edwina Gibbs and Eric Meijer</p>
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by <a href="mailto:denton.2@osu.edu">denton.2@osu.edu</a> on August 16, 2018 </div>
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