Everbright Securities released a research report stating that CHINA LIT (00772) is a rare leading company in the full IP industry chain, with stable online reading operations and continuous incubation of new IPs. Benefiting from strong performance in short dramas, IP derivatives, and future expansion into AI-powered comic dramas, the company's profitability is expected to improve steadily. For New Classics Media, its pipeline of reserved dramas is set to be released gradually, ensuring high certainty for full-year earnings growth. The firm maintains its adjusted net profit forecasts for 2025-2027 at RMB 1.35 billion, RMB 1.53 billion, and RMB 1.66 billion, respectively, and reiterates an "Overweight" rating.
Key insights from Everbright Securities include: 1. **Comic Drama Industry Growth**: Data shows the supply of comic dramas grew at an 83% compound rate in H1 2025, with over 3,000 works produced and a 12-fold increase in revenue. The annual market size is projected to exceed RMB 20 billion, with companies in the sector expanding exponentially, potentially surpassing hundreds of thousands. 2. **AI Boosts Efficiency**: AI has significantly enhanced production capacity—traditional dynamic comic production, which took 90 days, can now be completed in 10-13 days (a 90% reduction). Costs per AI comic drama are now controllable at RMB 100,000–300,000.
At the 2025 CHINA LIT Creation Conference, the company upgraded its "Creation Partner Program" and announced four initiatives to expand into comic dramas: - **IP Resources**: Opening 100,000 premium IPs, including top-tier works like *The National Forensic Doctor* and diverse genres. - **Creative Support**: Establishing a RMB 100 million fund to support writers and high-quality teams in cross-industry projects. - **Technology**: Launching AIGC tools like "Comic Drama Assistant" to improve adaptation efficiency. - **Industry Collaboration**: Building end-to-end support from production to IP monetization.
**Current Achievements**: By October 2025, 30 of CHINA LIT's comic dramas surpassed 10 million views, with hits like *The Ming Dynasty Son-in-Law* and *Invincible Simulation System* exceeding 100 million views. Soy Sauce Animation became the first team to receive investment from CHINA LIT, with plans to co-produce 400+ comic dramas annually (200+ adapted from CHINA LIT IPs).
**Derivatives Business Performance**: - H1 2025 GMV for derivatives rose to RMB 480 million, nearing the full-year 2024 total of RMB 500 million. Top IPs like *The King's Avatar*, *Lord of the Mysteries*, and *Fox Spirit Matchmaker* performed well. New product categories, such as vinyl plush toys, were introduced, including *The King's Avatar* collectible card series.
**New Classics Pipeline**: - *Anti-Drug Storm* aired in July 2025. Expected releases in H2 include TV dramas like *Young and Promising*, *Antique Shop*, and *Eliminating Evil*, as well as the movie *The Breakup Guru 3*.
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