【New Stock Watch】Chinese Online Hong Kong IPO: Performance Under Pressure During New Business Expansion Period, Multiple Executives Plan to Reduce Holdings

Source: Xinhua Finance

Xinhua Finance Beijing, March 24 — Recently, China Online Group Co., Ltd. submitted its prospectus, planning to list on the Main Board of the Hong Kong Stock Exchange, with Citigroup serving as its sole sponsor.

China Online is the first digital publishing company listed on the A-share market. Its businesses include online literature and related services, short dramas, and IPO derivative products. According to the latest earnings forecast, the company expects a net profit attributable to shareholders of listed companies between a loss of 580 million and 700 million yuan in 2025, representing an increase in losses compared to the same period last year.

For this Hong Kong IPO, China Online plans to raise funds to develop and improve AI technology, repay some bank and other loans, among other uses.

Performance Under Pressure During Business Expansion

Founded in 2000, China Online was listed on the Shenzhen Stock Exchange’s Growth Enterprise Market in January 2015, becoming the first digital publishing company listed on the A-share market. The company is a leading AI-driven digital entertainment platform, mainly providing online literature content domestically and short dramas overseas.

According to Frost & Sullivan data, based on 2024 revenue, China Online ranks third in China’s online literature copyright-driven content platforms, with a market share of 1.6%. In overseas short drama platforms, the company ranks eighth based on September 2025 revenue, and second based on monthly active users during the first seven months after launch.

Figure 1: China Online Financial Data

According to the prospectus, the company’s recent performance has been under pressure. In 2023, 2024, and the first nine months of 2025, China Online’s revenue was approximately 1.409 billion yuan, 1.159 billion yuan, and 1.011 billion yuan, respectively. During the same period, net profit attributable to equity shareholders was 89.44 million yuan, -243 million yuan, and -520 million yuan.

Based on the 2025 earnings forecast, China Online expects a net loss of 580 million to 700 million yuan attributable to shareholders, a decrease of 139% to 188% compared to the previous year. The company states that it is in a critical phase of expanding overseas business, and to maintain its competitive edge, it has significantly increased promotional investments. Since these businesses are still in the investment phase, costs cannot be fully offset by income in the short term, resulting in substantial losses in 2025.

Short Drama and IP Derivative Revenue Grows Over 60% Year-over-Year

China Online’s core businesses include online literature and related services, short dramas, and IPO derivative products.

According to the prospectus, in the first three quarters of 2025, revenue from China Online’s online literature and related services was about 480 million yuan, a slight decrease year-over-year, accounting for approximately 47.5% of total revenue.

Figure 2: China Online Revenue Structure

Due to intense domestic market competition and a strategic shift toward high-end domestic short dramas, revenue from short dramas and IP derivative products declined from 2023 to 2024. Benefiting from growth in overseas short drama business, higher revenue sharing from high-end short dramas in cooperation with Hongguo, and increased income from “Luo Xiaohei” related IP derivatives, revenue from this segment reached 474 million yuan in the first three quarters of 2025, a year-over-year increase of 62.9%, with its proportion rising to 46.9%.

As of September 30, 2025, China Online’s digital content reached users in over 177 countries and regions worldwide. In 2023, 2024, and the nine months ending September 2024 and 2025, overseas market revenue accounted for 9%, 25.9%, 25.9%, and 40% of total revenue, respectively.

Several Executives Plan to Reduce Holdings

The largest shareholder group of China Online includes founder Tong Zhilei and the Xuan Yuan Yuan Ding No. 6 Fund. As of the last practical date, this group holds approximately 13.69% of the voting rights.

Figure 3: China Online Shareholding Structure

Ahead of the IPO, several senior executives announced plans to reduce holdings. On February 3, China Online issued a pre-disclosure announcement regarding share reduction plans for directors and senior management. According to the announcement, Director Zhang Fan, Executive Vice President Xie Guangcai, COO Yang Ruizhi, Vice President, Board Secretary, and CFO Wang Jingjing plan to reduce their holdings through centralized bidding or block trades due to personal funding needs, each intending to reduce their shares by 25% of their total holdings.

Previously, in November 2025, China Online announced that the combined shareholding of major shareholders Shenzhen Litong and Shanghai Yuewen decreased from 8.98% to 6.991%, completing the reduction plan.

For this Hong Kong IPO, China Online intends to raise funds to develop and improve AI technology to enhance content creation and distribution, build an overseas short drama ecosystem, strengthen the content ecosystem, repay some bank and other loans over the next year, and for working capital and general corporate purposes.

【New Stock Watch】is a column jointly produced by Xinhua Finance and Bread Finance, focusing on new and recent IPO analysis. Xinhua Finance is a national financial information platform built by Xinhua News Agency, covering global stock markets, forex markets, bond markets, and providing authoritative, professional, and comprehensive financial information services.

Editor: Wang Yuanyuan