Interim results in 2018 are in line with expectations
Huangshan Tourism announced its mid-term results in 2018: operating income 682 million yuan, year-on-year-6.01%; net profit attributed to the parent company 219 million yuan, year-on-year + 17.03%, profit per share 0.29 yuan; deducting non-return net profit 161 million yuan, year-on-year-16.23%. Non-recurring gains and losses are mainly related to the operation of financial assets.
The decline in the number of receptions led to a decline in income. 1H18 received 1.4814 million tourists, year-on-year-9.94% 1) Garden development business realized revenue of 106 million yuan, year-on-year-2.3%, gross profit margin 85.9%, down 3.4ppt from the same period last year. The ticket revenue per tourist is + 9% to 72 yuan compared with the same period last year. 2) the revenue from the tourism service business was 134 million yuan,-0.9% year-on-year, and the gross profit margin was 9.46%, an increase in 3.8ppt over the same period last year, mainly due to a 4.9% drop in operating costs compared with the same period last year. 3) the revenue of the hotel business was 257 million yuan, + 0.9% year-on-year, and the gross profit margin was 32.5%, which decreased 4.5ppt over the same period last year, mainly because the operating cost increased by 8.2% year-on-year. 4) the income of high gross margin cableway business is 214 million yuan,-2.9% compared with the same period last year, and the gross profit margin is 85.6%, which is basically the same as that of the same period last year.
Other: 1) during the reporting period, the substantial increase in sales expenses was mainly due to the incentives and advertising fees paid to the airport for the development of medium-and long-distance markets; 2) the company continued to reduce its holdings of 8 million shares of Huaan Securities, which affected the profits of the current period by 45.064 million yuan. 3) the planned investment in the environmental renovation and renovation project of Beihai Hotel will be increased from 280 million yuan to 302 million yuan, and the project is expected to be postponed.
Trend of development
Taiping Lake has a great prospect of passenger flow growth, and the opening of Hangzhou-Yellow High-speed Railway has brought about a deterministic increase in passenger flow. 1) the company's extension expansion has progressed steadily, with the acquisition of 56% equity in Taiping Lake in June. In 2017, Taiping Lake Scenic spot received 1.07 million visitors, with ticket revenue of 20.204 million yuan. Taiping Lake Scenic spot is in a superior position and has great growth prospects in the future. 2) the Hangzhou-Huangshan high-speed railway is expected to open in October this year, and Huangshan will be included in the "four-hour traffic circle" in China's richest Yangtze River Delta region, bringing a deterministic increase in passenger flow to the company.
Profit forecast
Keep the company's home net profit forecast of 451 million / 513 million in 2018xue unchanged.
Valuation and suggestion
The company's share price is now trading at a nearly five-year low, corresponding to the price-to-earnings ratio of 19 times earnings in 2018 Universe. We maintain our recommended rating on Huangshan Tourism Aamp B shares, with A shares priced at 15.11 yuan (22 times 2019 earnings) and B shares priced at $1.67 (15 times 2019 earnings), with 35% and 40% upside space, respectively.
Risk.
The bad weather affects the passenger flow of the scenic spot, and the extension expansion project is not as fast as expected.
