An earnings call for DUIBA (01753) convened on the evening of August 31st, drawing analysts and investors organized by securities firms, with founder and Chairman Chen Xiaoliang and other management in attendance. The company had just released its 2026 interim results, revealing robust growth.

Total revenue reached RMB 435 million, a 24.3% increase year-over-year. Gross profit climbed 30.2% to RMB 74.54 million, with the gross margin expanding from 16.4% to 17.1%. In a notable development, the AI short drama business, launched just six months prior, contributed RMB 223 million in revenue, accounting for 51.2% of total group revenue and emerging as the primary growth engine.

These figures are striking for the Hong Kong-listed internet sector. A tech firm, with over a decade in user operations SaaS and internet advertising, has, within half a year, transformed a nascent venture into a major revenue pillar for the group. Following a voluntary announcement on AI short dramas on August 24th, the company's stock has been notably active.

By August 31st, the share price closed at HKD 0.38, up 5.63%, contributing to a remarkable 173.72% gain for the month of August. Despite this surge, the stock trades at a significant discount to its net asset value per share of RMB 1.09. From an initial announcement to interim results validation, DUIBA has provided answers to the market's core question: how did it achieve a number two industry ranking in AI short dramas within just six months?

With AI short dramas generating RMB 223 million—51.2% of total revenue—the company's revenue focus has decisively shifted within half a year. Management described the business as displaying "strong growth momentum since its launch in January 2026." CEO and AI short drama business head Zhu Jiangbo outlined four phases of development.

Following market explosion in October, the company spent November and December on research, adopting a "single-producer model" where one person oversees everything from IP selection to final production. From January to April, content production workflows and a full-platform distribution team were established. Efficiency workflows were built between February and June, and the team rapidly expanded from April to June, targeting a "3% hit rate, 5-6 times higher than the market."

Zhu noted that 80% of production now utilizes one-click workflows. AI script tools have boosted screenwriting efficiency by 5-8 times compared to traditional methods, where typically only 1-2 adaptations are completed monthly. The choice of the single-producer model over team collaboration was a strategic bet, predicated on the belief that as model capabilities improve, production complexity will decrease, making this model more efficient and better for talent development.

Third-party data indicates DUIBA's AI short drama views are among the industry's top, trailing only unlisted Jiuzhou Culture. Interim results confirm the strategy's effectiveness: as of June 30th, cumulative views across platforms exceeded 5 billion. The company has produced 13 dramas with over 100 million views, including the top performer "Shine, Translator" with 1.04 billion views, and 74 dramas with over 10 million views. June revenue saw month-over-month growth exceeding 100%.

Understanding the cost structure is crucial. Zhu disclosed that "labor costs account for 40% of production costs, while token costs make up 60%." Token costs from Volcano Engine have been decreasing monthly since May, which is expected to lower future production costs and bolster gross margins. This structure implies that capacity expansion relies more on computing power than headcount, smoothing the marginal cost curve compared to traditional film. The declining token costs offer structural upside for gross margins, as evidenced by the increase to 17.1% in the first half.

On the production front, third-party data through August shows DUIBA has accumulated over 30 dramas with more than 100 million views and over 200 with more than 10 million views. In the first half of 2026, the industry released 221,900 new AI dramas, with a break-even rate of only 0.48%, and about 90% of production teams are incurring losses. Achieving 13 blockbusters against this backdrop demonstrates a production system's replicability, not mere luck.

The core signal from the call is that competition in AI short dramas favors players who understand traffic and leverage industrialization with AI, over those solely focused on content creation. Chen emphasized that the traditional business, excluding AI short dramas, contributed nearly RMB 70 million in gross profit during the first half. The SaaS business, serving enterprise clients in banking and insurance, has been profitable since 2025.

This paints a picture of a dual-engine approach: the traditional business provides cash flow support while new ventures attack for growth. Management anticipates the traditional segment will continue to offer solid profit support, and as scale benefits emerge, overall profitability in the second half should improve significantly.

Chen also detailed an innovative business model—an alliance-style distributed theater. Leveraging over 10,000 app media partners accumulated over a decade, the company plans to integrate short drama content, products, operations, and commercialization into an SDK solution. This would create a distributed theater network across partner apps, transforming DUIBA from a content creator into an infrastructure provider and channel. Overseas expansion is also planned for the second half, capitalizing on a market projected to exceed USD 4 billion in 2026, a 390% year-over-year increase.

The discussion inevitably turned to valuation. With the stock at HKD 0.38 and a market cap of about HKD 400 million, the price stands in stark contrast to net assets of RMB 1.175 billion, or over RMB 1 per share. The company holds deposits and short-term wealth management products totaling approximately RMB 400 million, with another RMB 345 million in prepayments providing liquidity flexibility, bringing total liquid reserves to over RMB 700 million—approaching its entire market capitalization.

Management reiterated confidence that market value will ultimately be supported by intrinsic value. Comparisons with listed peers highlight a common industry trend: rapid short drama growth often leads to losses. For instance, on the A-share market, 昆仑万维 saw short drama revenue of RMB 1.617 billion in 2025 but recorded a net loss of RMB 1.593 billion. DUIBA's narrowing loss by 5.25% represents marginal improvement.

While A-share counterparts receive significant valuation premiums, the market may still be pricing DUIBA as a traditional SaaS company, despite AI short dramas now generating over half its revenue. The August 31st call marked a transition in identity from "points SaaS company" to "AI content tech company." In an industry where over 90% of teams are losing money, DUIBA's combination of advertising DNA and full-chain AI industrialization proves its capability.

With new regulations taking effect September 1st, industry compliance standards will rise, strengthening the position of leading players. As a unique AI short drama entity on the Hong Kong exchange, DUIBA's story may be just beginning. The second half holds three potential catalysts: overseas market launch, media alliance SDK implementation, and domestic profitability. These will determine if the "first AI short drama stock" label leads to valuation restructuring or remains a fleeting moment. The sentiment from the call was confident: "We expect to form a very significant ecological position in the overall industry."