Overall revenue fell by 13.5% due to a decline in travel agency revenue, and net profit declined due to a decline in financial revenue.
The company announced its 2017 semi-annual report, achieving operating income of 312 million yuan, a decrease of 13.5% from last year; net profit loss for Gimu was 7.2673 million yuan, a year-on-year decrease of 296.33%. On a quarterly basis, Q1 and Q2 achieved revenue of 119 million yuan (-1.38% yoy) and 193 million (-19.61% yoy), respectively; net profit losses for Q1 and Q2 were 0.5 million (+40.88% yoy) and 0.03 million (-122.82% yoy), respectively. The decline in company revenue during the reporting period was mainly due to the 11.94% decrease in travel agency revenue compared to the same period last year. The sharp decline in net profit was mainly due to a decrease of 108.89 million yuan in wealth management income compared to last year, a decrease of 53.87%.
By business, hotel revenue has declined. Among them, Guanzhong Inn shed its dependence on group guests and transformed into a special theme hotel that mainly hosts individual guests. The turnover rate has increased by 6%. We believe that in the future, as the proportion of individual visitors increases, and the unit price increases, it will help increase hotel revenue. The revenue of travel agencies declined, and the number of visitors received increased by 16.95%. In the first half of the year, travel agencies received 129,000 visitors, an increase of 16.95% over the previous year. It was mainly due to Xi'an China Travel Service, Xi'an adding 1002 overseas travel routes in the first half of the year, adding 31 new stores, and setting up a “niche service” studio to focus on personalized products such as personalized products.
The increase in hotel gross profit led to a 1.32% increase in gross margin, and the cost ratio increased by 1.32% due to an increase in all three fees. The gross margin during the reporting period was 7.48%, up 1.32 percentage points from the previous year. The increase in gross margin was mainly due to a 12.62% increase in gross margin in the hotel business. The fee rate for the period was 12.03%, up 2.15 percentage points from the previous year, mainly due to the increase in all three fee rates compared to the previous year. Among them, the sales expense ratio was 5.47%, up 1.55 percentage points from the previous year, mainly because the company increased its online marketing promotion efforts and launched 20 themed marketing activities in the current period, which led to an increase in sales expenses of 1,334 million (+8.47% yoy); the financial expense ratio was 1.99%, up 0.33 percentage points from the previous year, mainly due to the increase in interest expenses due to the year-on-year increase in current bank loans; the management expense rate was 4.57%, a slight increase of 0.65 percentage points over the previous year, mainly due to the increase in amortization of intangible assets in the current period of 1,045,000 (+95.37) %yoy), resulting in a 0.9% increase in management expenses compared to last year.
The main business continues to be under pressure, and epitaxial expansion is still an important focus for the company. Currently, the company's business includes two major segments: travel agencies and hotels, and growth is relatively weak. On the travel agency side, companies are actively exploring new travel agency management models and cooperating with Donkey Mama, hoping to improve the travel agency's current management model by using Donkey Mama's online and offline management experience. The Ole Town project is being actively promoted, and performance is expected to increase in the future. The 68,000 square meter commercial+real estate+tourism complex of the company's outlet project was capped during the reporting period, and revenue is expected to be confirmed in 2017. Actively exploring new directions in the main business is the focus of long-term development. Although the previous two restructurings failed, extended expansion is the company's long-term development strategy, and expectations still exist. It is not ruled out that in the future, new development directions will be explored through capital management.
Maintain profit forecasts and maintain the “increase in holdings” rating. Tourism in Shaanxi Province continues to grow. Xi'an is a key area for the construction of the Shaanxi Free Trade Zone, and the market will show a trend of both supply and demand; the company's frequent financial investments buy time to explore new directions in its main business, and expectations of external expansion are still strong, and it is not ruled out that it will be further expanded and strengthened through capital management methods. It is estimated that the company's EPS in 17-19 will be 0.06/0.07/0.08 yuan, and the corresponding PE will be 209x/170x/143x respectively, maintaining the “increase in holdings” rating.
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