Col Group Co.,Ltd. has submitted an application for a Hong Kong listing amidst growing activity in the Hong Kong IPO market. According to the application materials published on the Hong Kong Stock Exchange website, Col Group is an AI-driven leading digital entertainment platform, primarily providing online literature content domestically and short dramas overseas, with the goal of building a next-generation, full-industry-chain digital content ecosystem.
Citing data from Frost & Sullivan, the prospectus indicates that based on 2024 revenue, the company ranked third among copyright-driven content platforms in China's online literature market, with a market share of 1.6%. Among overseas short drama platforms, Col Group ranked eighth by revenue as of September 2025, and second by monthly active users during the first seven months after its platform launch.
Despite its notable overseas expansion, the company's financial performance has been inconsistent. Data from Tonghuashun iFinD shows that from 2021 to 2024, Col Group reported net profits attributable to shareholders of 98.79 million yuan, -362 million yuan, 89.44 million yuan, and -243 million yuan, respectively. Non-GAAP net profits, which exclude one-time gains or losses, were 23.44 million yuan, -393 million yuan, -38.34 million yuan, and -271 million yuan for the same years, with profitability achieved only in 2021.
According to the company's 2025 earnings forecast, Col Group expects a net loss attributable to shareholders of between 580 million yuan and 700 million yuan for the year. The projected non-GAAP net loss is between 579 million yuan and 699 million yuan. This marks the fourth consecutive year of losses on a non-GAAP basis.
In addition to its financial challenges, the company has faced frequent share reductions by major shareholders and senior management. On February 3, Col Group announced that directors Zhang Fan and Xie Guangcai, Vice President and Board Secretary Wang Jingjing, and COO Yang Ruizhi planned to collectively reduce their holdings by no more than 657,900 shares within three months starting 15 trading days after the announcement. Prior to this, related shareholders had already conducted multiple rounds of share reductions.
Notably, as of March 27, Col Group's share price closed at 25.94 yuan, representing a decline of approximately 40% from its recent high.
Founded in 2000, Col Group initially entered the original online literature sector by establishing the 17K小说网 platform. It listed on the Shenzhen Stock Exchange's ChiNext board in January 2015, becoming the first digital publishing enterprise to go public in the A-share market.
Since its listing, the company has expanded into new business areas, evolving from digital publishing into a content platform offering various formats including online literature, audiobooks, comics, AI-generated comic dramas, animations, and short dramas, while extending its operations from China to global markets.
According to the prospectus, as of the latest practicable date, Col Group's online literature and related business boasted over 5.6 million pieces of digital content, primarily comprising online literary works. This core business contributed revenue of 480 million yuan in the nine months ending September 30, 2025, accounting for 47.5% of the company's total revenue.
In the short drama and IP derivatives sector, Col Group was among the first Chinese companies to produce and distribute short dramas as early as 2021. By 2022, its short drama revenue reached the 100 million yuan milestone, and it began expanding into overseas short drama markets. Its overseas short drama app, FlareFlow, once ranked first on the U.S. daily free entertainment app charts in major mobile app stores and currently has over 33 million registered users, offering approximately 5,200 short drama episodes.
Furthermore, the company selects high-quality IP from its digital content library and IP reserve for subsequent development, adapting them into various formats such as comics, AI comic dramas, animations, short dramas, films, and merchandise, generating revenue from these IP derivatives.
Data shows that in the nine months ending September 30, 2025, short drama and IP derivative businesses contributed 474 million yuan to the company's total revenue of 1.011 billion yuan, representing 46.9% of total income.
However, the overseas short drama industry remains in a high-investment phase, with significant user acquisition costs. According to the company's financial report, for the first three quarters of 2025, Col Group reported revenue of 1.01 billion yuan, a 25% year-over-year increase, but a net loss attributable to shareholders of 520 million yuan, a 177% decrease year-over-year. The non-GAAP net loss was also 520 million yuan, down 149% year-over-year.
Soochow Securities analysis attributes the profit decline to rising operating costs impacting gross margins and losses from overseas operations. In the first three quarters of 2025, the company's sales expenses surged 94% to 660 million yuan, primarily due to increased overseas business promotion costs. R&D expenses grew 42% to 53 million yuan, reflecting greater investment in overseas business development. Asset impairment losses expanded by 496%, mainly due to increased inventory write-down provisions. The profit drop was primarily driven by intensified operational losses in overseas business, combined with reduced investment income from financial products and losses from property disposals.
On January 13, Col Group issued an earnings forecast projecting a net loss attributable to shareholders of 580-700 million yuan for 2025, with a non-GAAP net loss forecasted at 579-699 million yuan. The company cited increased promotional investment in its overseas short drama business as a primary reason for the losses, noting that the overseas segment remained in an investment phase throughout 2025. The company also estimated that non-recurring gains or losses would have a minimal impact of approximately -700,000 yuan on net profit.
Persistently high sales and marketing expenses are a significant factor affecting profitability. The latest prospectus shows that sales and marketing expenses accounted for 34.2%, 40.1%, and 65.3% of revenue in 2023, 2024, and the nine months ending September 30, 2025, respectively. The sharp increase from 2024 to the first nine months of 2025 is mainly attributed to the expansion of the FlareFlow business following aggressive marketing and user acquisition efforts.
To address the high costs associated with its overseas business, Col Group plans to improve the production and distribution efficiency of its overseas short dramas and control related sales and marketing expenses. For instance, the company expects to gradually increase the number of overseas short dramas produced at its Hengqin filming base in Zhuhai, China, which began trial operations in January 2026. Previously, most overseas short dramas were filmed in the United States. The company anticipates significantly lower production costs per drama filmed in Hengqin while maintaining comparable content quality.
Long-term, Col Group expects approximately 50% of its overseas short dramas to be produced at the Hengqin base, which should substantially reduce the proportion of production costs relative to revenue. Additionally, the company aims to leverage FlareFlow's rapidly expanding library of quality short dramas, partner with more leading KOL platforms, and increase the use of AI technology to improve the ratio of sales and marketing expenses to revenue, thereby enhancing overall profitability.
In the secondary market, new application formats like AI-generated comic dramas are creating novel business models and market opportunities in content production. Col Group's share price once surged, reaching a recent high of 43.8 yuan, partly driven by these trends. However, as the share price climbed to multi-year highs, company shareholders and executives began reducing their holdings.
Aside from the February 3 announcement, previous share reductions by directors and senior managers occurred in 2023, 2024, and 2025. For example, in August 2025, the company announced that several executives had completed share reduction plans, collectively selling 876,900 shares. Furthermore, in November 2025, major shareholders Shenzhen Litong Industrial Investment Fund Co., Ltd. and Shanghai Yuewen Information Technology Co., Ltd. completed their reduction plans, collectively reducing their shareholding from 8.98% to 6.991%. Tianyancha data shows that after ownership tracing, Ma Huateng is the ultimate controller of Shanghai Yuewen, holding a 60% stake.
Notably, after hitting a recent high of 43.8 yuan on February 11, Col Group's shares entered a downward trend, with the latest closing price of 25.94 yuan representing a decline of roughly 40% from that peak.
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