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Wu Wenhui, co-chief govt officer and govt director of China Literature, pauses throughout a information convention in Hong Kong, China, on Oct. 25, 2017.
Another purpose for the surge in share worth was the better willingness of buyers to put bets amid upbeat sentiment in Hong Kong markets, Wen mentioned.
In addition, ZhongAn Online P&C Insurance’s strong IPO efficiency in September doubtless made buyers optimistic about China Literature’s prospects, he added. ZhongAn Online, which drew parallels as a result of it was a comparatively mbadive tech agency, noticed its shares rise as a lot as 18 p.c on its first day of commerce.
While the web literature section is pretty aggressive, with gamers reminiscent of Alibaba Literature and Baidu Literature eager on getting a slice of the pie, China Literature’s share of the market is pretty sizable: The firm claimed it had a 48.four p.c share of the cellular digital literature market in its prospectus.
Still, whether or not or not the corporate’s enterprise mannequin in the end proves profitable stays to be seen.
“On one hand, people are genuinely convinced [about China Literature] as there are not many listed competitors,” mentioned Kevin Leung, director of world funding technique at Haitong International Securities Group.
The Chinese authorities often allowed for one main participant in every web business, Leung defined, pointing to Tencent, Alibaba, Baidu as examples. “[P]eople do see China Literature as the chosen one for the cultural and literature industry,” he mentioned.
Despite that, Leung identified that buyers on the opposite aspect of the spectrum had been anxious that China Literature’s enterprise mannequin may very well be simply replicated.
Leung added that despite the fact that the shares had been at the moment costly, excessive momentum shares have outperformed worth shares this yr. While he anticipated China Literature’s inventory to stay robust within the close to future, Leung mentioned accumulating shares can be higher when costs eased to round $80.