CICC: Raises target price of CHINA LIT (00772) to HK$43.5, maintains "outperform" rating.
Zhongjin believes that the company is expected to further enhance the value of its intellectual property (IP) by accelerating the layout of self-operated businesses and expanding the category matrix of IP derivative products through investing in industry chain companies.
CICC released a research report stating that CHINA LIT (00772) is planning to announce its performance for the first half of this year in August, with an expected revenue of 3.126 billion RMB. The Non-IFRS net profit is estimated at 486 million RMB, maintaining a "outperform industry" rating. Considering the upward shift in industry valuation center, the target price has been raised by 20.8% to 43.5 Hong Kong dollars, corresponding to a Non-IFRS P/E ratio of 30 times and 26 times in 2025 and 2026 respectively, with an upside potential of 35.7% compared to the current price.
CICC stated that the online business of CHINA LIT is relatively stable, with an expected revenue of 1.957 billion RMB in the first half of the year, basically flat year-on-year. CICC also believes that the group's online business continues to play a role as an IP reservoir, maintaining a good ecological environment with writers and continuously incubating high-quality IPs.
In terms of copyright operations, CICC expects the revenue of this business in the first half of the year to be 1.169 billion RMB, and maintains a forecast of 380 million RMB for the full year profit of Xinli Media in 2025. CICC also believes that the company's advantage lies in the richness of its IP resources, and is expected to further enhance the value of IP by accelerating its self-operated layout and expanding the category matrix of IP derivative products through investments in the industry chain companies.
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