The current situation of the company
Recently, we have investigated the cultural travel real estate projects of the company in Xiangyang and Wuhan, and the recent developments of the company are as follows.
Comment
Wuhan overseas Chinese Town project: since entering the Wuhan market in 2009, the company has completed the transformation from "East Lake era" to "High Speed Rail era" and then to "Yangtze River era", focusing on the development and construction of East Lake Scenic area (Happy Valley, Maya Water Park and supporting hotels), High Speed Rail Business District (Happy Skyline complex) and Castle Peak Hongfang area. The company's development in Wuhan for more than ten years has proved the feasibility and profitability of its comprehensive development model of culture and tourism real estate, and can constantly capture new business opportunities in line with the organic development of the city. Thanks to the business model of comprehensive development, the company used to be able to obtain a considerable level of profit margin on residential projects and rely on the cash flow of the development business to feed the cultural travel business. after entering the mature period, the Wenlu project will be able to obtain sustainable net cash income and even a certain amount of paper profit.
Xiangyang overseas Chinese Town Project: Xiangyang overseas Chinese Town is located in Dongjin New District, Xiangyang City, covering an area of 8.48 square kilometers. One area of the project is operated by the company, with 51% of its rights and interests. It is divided into two parts: culture, travel and housing: ① products mainly include theme parks represented by Fantasy Valley, interesting Childhood and fantastic Dream Beach, and hotels dominated by Yunhai Hotel, parent-Child Hotel and high-end resort hotel. ② residential products mainly include Pure Waterfront and Swan Castle two major brands. We believe that the Xiangyang project is one of the latest practices of the company's integrated development model of culture and travel real estate, and the smooth landing of the overall development project in a large area through cooperation with local state-owned enterprises. and is expected to achieve a reasonable product structure and development schedule to achieve the overall cash flow in a short period of time. In addition, thanks to the advantage of the piece-by-piece development model in land price, the overall rate of return of the project is expected to reach double digits.
Sales were under pressure in the first half of the year, and the land holding side remained cautious. 1H22's sales volume fell 38% year-on-year to 27.3 billion yuan, sales area decreased 42% year-on-year to 1.28 million square meters, and the corresponding average sales price increased 7% to 21280 yuan / square meter. Since the beginning of the year, the company has adhered to the "close and fixed investment" business strategy, obtaining only four plots in Chengdu, Nanchang and Dongguan, corresponding to a total land price of 2.4 billion yuan, equivalent to 9 per cent of the sales in the same period (37 per cent in 2021). Looking forward, we expect the company to actively sell and continue the investment strategy of "choosing the best among the best".
The passenger flow of cultural travel business has recovered to some extent, and pay attention to the progress of follow-up recovery. During the Spring Festival, Ching Ming Festival, May Day and Dragon Boat Festival in 2022, the company's culture and travel business section received a total of 198.8, 77.8, 166.6 and 1.344 million tourists. The number of visitors to the Dragon Boat Festival was 150% of that of the same period last year, and the recovery exceeded the industry average. We suggest that investors should actively pay attention to the pace and extent of the recovery of the follow-up company's cultural travel business.
Profit forecast and valuation
Keep the profit forecast for 2022amp 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 6.7 times 2023 / 4.7 times earnings. Maintain the outperform industry rating and target price 7.58 yuan unchanged, corresponding to 9.2 pound 6.3 times 2022 pound 2023 price-to-earnings ratio, 36% upside compared to the current stock price.
Risk
The real estate market continued to decline; the epidemic repeatedly had a negative impact on the company's literature and travel business.