Event
On April 12, the company issued a forecast of Q1 performance in 2019, showing a net profit loss of 9.5 million yuan to 8.5 million yuan, a year-on-year loss reduction of 36.16% to 42.89%.
Brief comment
The scenic spot benefits from traffic improvement, and the recovery of passenger flow is good for the company's performance.
Since 2019, Zhangjiajie Scenic spot has benefited from the successively opening of Wulingshan Avenue and Yangjiajie Avenue, and the passenger flow has obviously recovered, especially the Yangjiajie cableway, Baofeng Lake Company, Shili Gallery sightseeing tram and other projects, achieving revenue growth at Q1. According to the data of the last two holidays: 1) during the Spring Festival holiday, the core scenic spot of Wulingyuan received 147000 visitors, an increase of 13.5% over the same period last year. 2) during the Qingming Festival holiday, the Wulingyuan core scenic spot received a total of 46900 visitors to the mountain, an increase of 11% over the same period last year. The company's scenic spots all performed well and achieved double-digit growth, which fully demonstrated the supporting role of traffic to the scenic spot. In particular, the company's Yangjiajie ropeway business has obviously benefited from the opening of Yangjiajie Avenue.
Q1 is the off-season of the scenic spot, and it is expected to be enlarged in the peak season.
According to the company's quarterly performance, Q1 is off-season (about 12%), while Q2, Q3 and Q4 account for a relatively high proportion of revenue (29%, 37%, 22%). Considering that some of the more fixed costs and expenses (that is, employee compensation and depreciation amortization) vary little in different quarters, Q1 does not fully reflect the overall profitability of the company. At the same time, as the effect of the peak season far exceeds the off-season, it is expected that with the arrival of the peak tourist season, the effect of traffic on the improvement of scenic spots will be brought into full play, and the company's fundamentals are expected to continue to improve on the basis of passenger flow recovery in the future.
The ancient city of Dayong promotes the transformation of the company and opens up incremental space.
The Dayong ancient city project of the company's transformation of leisure resort scenic spots is expected to be officially opened in October this year, and the current construction progress has exceeded 93.50%. In particular, the two core service projects large-scale folk performing arts "meet Dayong" and flying cinema have been completed. According to the company's estimate, the annual operating income of the mature project will reach 425 million yuan, and the net profit will reach 185 million, which is 90.81% and 7.4 times of the current revenue and net profit (2018 data), respectively, which means that the project will greatly improve the company's profits.
At the same time, the railway lines such as Guizhou-Zhangchang Express Railway, Zhang Jihuai High-speed Railway and Jingzhang High-speed Railway will be opened successively in the future, and the traffic of the scenic spot is expected to continue to improve. At the same time, according to the data of major platforms, the current high-speed rail tour is one of the main choices for consumers to travel during the holidays. According to the 2019 Qingming Festival Tourism trend Forecast report released by Trip.com, about 75% of the visitors to Wuyuan, Shanghai, Changsha and other places chose high-speed rail as a means of transportation. the proportion of tourists who take high-speed rail to Suzhou, Hangzhou, Nanjing, Wuxi and other places also account for more than 60%. It is expected that with the continuous heating up of high-speed rail travel, the company's scenic spots will continue to benefit.
Investment suggestions: we believe that in the future, the company is expected to increase revenue and profits from the two dimensions of the recovery of passenger flow in scenic spots and the increment of the Dayong ancient city project; at the same time, the traffic of the company's scenic spots will expand the radiation radius along with the improvement of the railway network. Continue to benefit from high-speed rail travel. It is estimated that from 2019 to 2021, the EPS will be 0.07,0.08,0.1 yuan respectively, and the stock price corresponding to PE will be 101,85,71 times respectively, maintaining the "overweight" rating.
Risk tips: continuous reduction in ticket prices, lower-than-expected progress in the ancient city of Dayong, natural disasters and so on.