China Literature (772) investor relations material

Executive summary

• Revenue grew 10.7% year-over-year to RMB 3.53 billion in H1 2026, driven by strong IP operations, especially short dramas and AI-animated dramas, despite a decline in online business revenues.

• Net profit to shareholders dropped to RMB 135.4 million from RMB 849.8 million, mainly due to a RMB 300 million tax-related charge and a high base effect.

• Non-IFRS net profit to shareholders was RMB 258.8 million, down 49% year-over-year.

• Merchandise GMV reached RMB 780 million, up over 60% year-over-year, with strong product, channel, and ecosystem expansion.

• AI integration accelerated content production, with over 1,000 titles adapted into AI-animated dramas and 30,000+ AI-translated works on WebNovel, contributing 40% of novel revenue.

Financial highlights

• Online business revenue declined 7.3% year-over-year to RMB 1.84 billion, due to competitive pressure and a shift to free content.

• IP operations and other revenue rose 40.3% to RMB 1.69 billion; IP operations revenue up 41.9% to RMB 1.61 billion.

• Gross profit increased 11.1% to RMB 1.79 billion; gross margin stable at 50.7%.

• Operating profit fell 69.1% year-over-year to RMB 270.8 million.

• EBITDA was RMB 302.6 million, with an adjusted EBITDA margin of 10.9%.

Outlook and guidance

• Plans to produce at least 200 short dramas in 2026, a 70% year-over-year increase.

• Premium AI-animated drama production capacity exceeds 100 titles, with continued focus on high hit rates and international expansion.

• Overseas business to launch over 1,000 AI-animated drama titles and expand original local IP adaptations.

• Continued investment in original creators, technology, and merchandise to drive future growth and amplify IP value.

• Game licensing to contribute recurring revenue, with several major titles launching in H2 2026.