China Literature drops most in 14 months on seeing lower profit amid unit's taxes

China Literature

04/06/2026 07:06

** Shares of China Literature 0772.HK drop 8.7% to HK$22.62, on track for the biggest one-day pct drop since April 2025 
** Chinese online literature and intellectual property incubation platform said its subsidiary has completed payment of taxes, comprising of a supplementary payment of enterprise income tax and late payment surcharges for years 2020 to 2022, totalling 300 mln yuan ($44.27 mln) 
** The taxes will be recognised in the company's profit or loss for 2026 and are expected to reduce the profit attributable to equity holders by 300 mln yuan, and the matter will not have a material impact on normal operations - Co
** Citi keeps "buy" rating saying FY2026E profit to be lower due to taxation matters
** "We expect this one-off impact will lead consensus to be revised down," Citi wrote. "From a fundamental perspective, we continue to see China Lit as a key beneficiary of AI technology in unlocking its IP value through short dramas/AI dramas"
** YTD, stock down 29.8%, while Hang Seng TECH Index .HSTECH down 9.7%

($1 = 6.7764 Chinese yuan renminbi)

 (Reporting by Donny Kwok)
 ((donny.kwok@thomsonreuters.com))