On June 4, China Literature fell 5.49% in regular trading, trading at HKD 23.02 per share, with trading volume of HKD 52.24 million.

On the news front, the company announced on June 2 that its subsidiary Shanghai Hongwen agreed to acquire approximately 28.22% equity in Wuhan YHKT Entertainment from Linzhi Lichuang for RMB 400.8 million. Upon completion, China Literature will hold 59.70% of the target company, achieving controlling status. Since Linzhi Lichuang is ultimately controlled by Tencent, the controlling shareholder of China Literature, the transaction constitutes a related-party deal. Market participants have drawn parallels to the prior acquisition of New Classics Media, raising concerns over value transfer dynamics.

Additionally, the company disclosed that a subsidiary must pay approximately RMB 300 million in back corporate income taxes and late fees for 2020-2022 related to Horgos tax risks. This amount will be recognized in current-period profit and loss, reducing attributable net profit by approximately RMB 300 million. The dual headwinds suppressed stock price performance.

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