CICC has issued a research report maintaining its "Outperform" rating and HK$29 target price on China Literature (00772), corresponding to 2026 and 2027 Non-IFRS P/E ratios of 30x and 19x respectively, implying 31.5% upside from the current share price.
The brokerage maintains its Non-IFRS net profit attributable to shareholders forecasts of RMB 850 million and RMB 1.311 billion for 2026 and 2027 respectively. Amid rising investor interest in AI-powered film and television content, the company held its 2026 China Literature Creation Conference in Hangzhou on October 16, where CEO Hou Xiaonan stated that China Literature plans to deepen its "IP+AI" strategic layout, focusing on an AI premium video matrix, an OPC one-stop platform, and full-chain IP operations.
CICC's key takeaways are as follows:
Building an AI Premium Video Matrix and Launching the OPC One-Stop Platform
At the 2026 China Literature Creation Conference, the company announced plans to build an AI premium video matrix covering all formats including comic dramas, animation, "live-action + AI" short dramas, and medium-to-long-form dramas, and officially unveiled its first batch of AI premium animation projects, including Cyber Hero Chronicles, Unscientific Beast Taming, The Verdict, and Demon-Suppressing Museum.
In the first half of 2026, China Literature's short drama and comic drama businesses generated revenue exceeding RMB 430 million, representing a year-on-year growth of 230%. At the conference, the company upgraded its DramaBuddy comic drama assistant to the OPC (One-Person Company) one-stop platform, providing a complete pipeline from IP sourcing to AI production and全网 distribution.
Pudong New Area partnered with the company to co-build an AI content industry base, leveraging China Literature's IP assets and AIGC infrastructure, equipped with high-standard motion capture exhibition halls and AIGC production black-box studios. Through a model of pre-drawing foundational materials by hand and batch AI generation, the brokerage believes this is expected to significantly compress labor, time, and production costs. CICC believes China Literature's abundant IP resource reserves are poised to achieve capacity expansion for IP visualization projects by combining AI and industrial chain layout advantages.
Deepening Full-Chain IP Operations with Rich Key Drama Pipeline for 2027
At the 2026 China Literature Creation Conference, the company introduced the "IP Committee" model and officially announced its first new project under this model, Defending Nanshan Park (a collaboration between China Literature and The Three-Body Universe), integrating full-chain operations across animation, live-action film and television, and offline derivatives.
Over the next three years, the company plans to launch more than 20 games adapted from China Literature IPs, with key titles including Under One Person (December 2026), the IP electronic trading card game Stars Comic Cards (already open for platform-wide reservations), and the interactive film-game Mysterious Revival. According to the latest Tencent Video 2027 slate, the company has a rich pipeline of key dramas, including Sword of Coming, A Thousand Miles of Rivers and Mountains, General's Gate Alone, and Joy of Life 3.
Risk factors: uncertainty in content projects; core business underperformance exceeding expectations; and copyright operations progressing slower than anticipated.
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