Performance summary: The company released the 2018 annual report. The company achieved revenue of 4.7 billion yuan, a year-on-year decrease of 14.8%, net profit of 26.40.4 million yuan, a year-on-year decrease of 60.8%, and a net profit of 211.79 million yuan, a year-on-year increase of 4112%; of these, Q4 achieved revenue of 100 million yuan, a year-on-year decrease of 17%, and net profit loss of 28.366 million yuan, a year-on-year decrease of 767%. In 2019, the company plans to receive 7.158,000 visitors (yoy + 19.99%); it plans to complete revenue of 54,0016,700 yuan (yoy +15.29%). Passenger flow has picked up slightly, and the policy is affecting the decline in revenue. 1) In terms of passenger traffic, the company achieved a total of 5.965 million (YoY +0.25%) of ticket purchasers (YoY +0.25%) for all scenic spots in 2018. Among them, the number of people who purchased tickets for the Green Passenger Transport/Ten Mile Gallery/Baofeng Lake/Yangjiajie Ropeway was 3,355,000, respectively, with year-on-year changes of -3.9%/+8.3%/+12.7%/-11.7%. The number of visitors to the Yangjiajie Ropeway continued to decline during the 11th Golden Week. Wulingyuan The Wulingyuan Avenue Scenic Area section of the express lane connecting the core scenic area to the outside world was officially opened, driving the number of visitors to the Yangjiajie Ropeway in Q4 to resume positive growth in the Q4 season (yoy +3.3%). 2) Although overall passenger flow is picking up, the reduction in environmentally friendly passenger transport prices due to the Wulingyuan core scenic spot ticket policy affected a year-on-year decrease of 303.82 million yuan in revenue from the environmentally friendly passenger service industry, corresponding to a reduction in ticket prices of about 15%. Furthermore, due to policy closures and implementation, the fragmentation of retail business operations in Zhangjiajie China Travel affected industry revenue by 55,6237 million yuan, dragging down the overall revenue decline. Non-recurring profit and loss decreased year-on-year, reducing costs and increasing efficiency to optimize profitability. 1) The net profit of the consolidated equity impact statement of companies such as the Visitor Center for the same period last year was about 42.6698 million yuan, and the asset disposal income generated by Zhang International Hotel received compensation for land use rights recovery decreased by 22.924 million yuan over the same period last year; the loss of related companies decreased by 13.33 million yuan in the current period after disposal of shares in 5 subsidiaries including the Visitor Center at the end of 2017. 2) In addition to the decline in gross margin of eco-friendly vehicles by 9.8 pp to 40.4%, the gross margin of the travel agency/Baofeng Lake/Shili Gallery tram increased by 2.8 pp/9.4 pp/9.6pp, respectively, driving the overall gross margin increase of about 0.5 pp to 31.5%. Strict control of management expenses and sales expenses, capitalization of interest on loans for the Dayong Ancient City project, and the decline in loan scale reduced the company's financial expenses by a total of 24.6978 million yuan. Sales/management/finance expense ratios decreased by 76.35%, 18.38%, and 28.56% respectively. The overall period fee rate improved significantly by 4pp to 22.9%. As future ticket price trends stabilize and operations continue to improve, it is expected that there will be room for improvement in profitability. The Dayong Ancient City project is about to be implemented, and favorable transportation is expected to drive an increase in passenger flow. The Dayong Ancient City project is expected to open within 2019. As a cultural and leisure attraction resource different from natural tourist attractions, with reference to the growth of scenic spots such as Wuzhen and Gushui North Town, it is expected to start a new profit growth engine for the company in the future; Wulingshan Avenue has been opened to traffic, and the number of people entering the Wulingyuan core scenic area at one time during the 11th Golden Week in 2018 (YOY +11.5%); in addition, in 2019-2021, the Qianzhangchang Express Railway and Zhang Jihuai High Speed Rail will also be built and opened to traffic one after another. The transportation networks surrounding the scenic area are gradually improved and optimized, and on the one hand, it is expected to catalyze the growth of tourist traffic in the scenic area. On the other hand, it is beneficial for the company to integrate its rich tourism resources to form collaborative development. It is hoped that traffic will improve and passenger flow will pick up. Earnings forecasts and ratings. There is some uncertainty in terms of favorable transportation, the opening of the Dayong Ancient City project, and ticket policies. Under current passenger flow improvement expectations, the EPS for 2019-2021 is expected to be 0.10 yuan, 0.11 yuan, and 0.13 yuan respectively, maintaining the “increased holding” rating. Risk warning: The Dayong Ancient City project falls short of expectations, traffic improvements or falls short of expectations, and there is a risk that ticket prices will continue to drop.