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4-Traders Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Tencent Holdings Ltd    0700   KYG875721634

TENCENT HOLDINGS LTD (0700)
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Tencent : Backed China Literature Plans $1 Billion Hong Kong Stock Listing

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10/23/2017 | 10:21am CET
By Alyssa Abkowitz 

China Literature Ltd., a unit of Chinese internet giant Tencent Holdings Ltd., is planning to sell around US$1 billion worth of shares in a Hong Kong listing.

The company, which also counts private-equity firm Carlyle Group as a shareholder, is selling 151.37 million shares that are likely to price between HK$48 and HK$55 (US$6.15 to US$7.05) each, according to a term sheet from one of the banks involved in the initial public offering. A pricing at the top of the range would give China Literature a market valuation of over $6 billion.

Tencent currently owns 62% of China Literature, while Carlyle has a 12.2% stake. The company was formed in 2014 through a combination of Tencent Literature, which was launched in 2013, and Cloudary, a business Tencent later acquired. The shares being offered amount to roughly 16.7% of China Literature's enlarged share capital, according to the term sheet.

China Literature maintains an online library with 9.6 million stories from more than six million writers and boasts nearly 200 million monthly active users. Most of those users read books on mobile devices. The company earns fees when users pay small amounts for books after sampling the first few chapters free. About 6% of its active users currently pay at least once a month to read online.

The company generates some content from readers' comments and tries to engage users by offering audio Q&As with writers. China Literature also makes money by adapting its popular content into films, TV series or online games.

China Literature eked out a profit last year after losing money previously. It reported net income of 30.4 million yuan (US$4.6 million) in 2016, versus a 354.2 million yuan loss in 2015, according to a draft prospectus filed in Hong Kong. Revenues last year jumped 59% to 2.56 billion yuan.

The stock sale is expected to wrap up on Oct. 31 and the shares could list on Nov. 8, according to an offering summary.

Write to Alyssa Abkowitz at [email protected]

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Financials ( CNY)
Sales 2017 241 B
EBIT 2017 79 721 M
Net income 2017 65 026 M
Finance 2017 59 838 M
Yield 2017 0,20%
P/E ratio 2017 52,69
P/E ratio 2018 41,67
EV / Sales 2017 14,0x
EV / Sales 2018 9,82x
Capitalization 3 444 B
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Mean consensus OUTPERFORM
Number of Analysts 38
Average target price 403  CNY
Spread / Average Target 11%
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Managers
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Hua Teng Ma Chairman & Chief Executive Officer
Chi Ping Lau President & Executive Director
Yu Xin Ren COO & President-Interactive Entertainment Group
Shek Hon Lo Chief Financial Officer & Senior Vice President
Zhi Dong Zhang Chief Technology Officer
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