occurrences
On April 23, the company released its 2018 annual report and 2019 quarterly report:
1) In 2018, the company achieved revenue of 2.26 billion yuan, an increase of 11.56% over the previous year; achieved net profit of 487 million yuan, an increase of 580.37% over the previous year; and net profit loss of 187 million yuan after deduction of non-return to the mother.
2) In Q1 2019, the company achieved revenue of 327 million yuan, an increase of 15.06% over the previous year; Guimu's net profit loss was 20.85,800 yuan; net profit loss after deduction was 21.2433 million yuan.
Brief review
The company's main business is running steadily, and investment income has triggered large fluctuations in performance
The company's business is characterized by diversified development. Of the seven major businesses, most grew well. Tourism real estate (25.73%) and travel agency (24.05%) business revenue, which accounted for more than 20% of revenue, increased 36.70% and 10.01% respectively. Travel and transportation (12.22%), tourism culture (6.27%), and tourist attractions (2.92%), which accounted for a relatively small share of revenue, increased 17.61%, 95.13%, and 24.52%, respectively. The decline in revenue included landscaping and gardening (24.29%), conference hotels (3.31%), and comprehensive (1.21%) sector, decline 11.74%, 11.99%, 29.75%, respectively.
During the period, the rate fell, and the level of net interest rate increased. The main reason for the sharp increase in the company's net profit in 2018 was the investment income from the sale of shares, which increased the company's overall net interest rate level by 16.19pct to 23.14% in 2018. The company's fee rate decreased by 1.2 pct during the period, mainly sales expenses fell by 6.69%, which reduced the sales rate by 1.24 pct; the company management fee rate increased by 0.52 pct, mainly due to the increase in intermediary service fees caused by planning major asset restructuring and the increase in remuneration expenses due to the implementation of the new remuneration system; although overall financial expenses increased by 18.70%, the financial rate decreased by 0.48 pct, and the overall cost level was better controlled.
Plan major asset restructuring and inject high-quality asset cultural tourism technology
The company is planning to acquire Cultural Tourism Technology and has received approval on March 29, 2019. The acquisition project is expected to be implemented in Q2 to optimize the company's financial performance. Cultural Tourism Technology is a first-class comprehensive supplier of high-tech amusement equipment R&D and manufacturing, park planning and design, and engineering agency construction services in China. The target revenue CAGR was 24.81% in 2015-2017, with good growth capacity. At the same time, the high profitability of cultural tourism technology can also further improve the company's performance level. It promises that net profit after deducting non-return to the mother in 2019-2021 will not be less than 180, 198, and 215 million yuan respectively.
Reshape and adjust the industrial structure, and the company will focus on the main tourism industry in the future
2018 was a critical year for the company's industrial restructuring. During the reporting period, the company divested its highly volatile real estate business, strengthened the travel agency business through 51% of the shares of Yunnan International Travel Service, and implemented major asset restructuring projects in cultural tourism technology to add elements of tourism technology. At the same time, the company is currently competing with the controlling shareholder Shibo Travel Group in tourist attraction operations, hotel meetings, and travel agency-related businesses. The company's shareholders have promised to resolve their own competition issues with listed companies through various methods such as asset restructuring, sales, trusteeship, and business adjustments. Some of the assets will clearly be injected into the listed company this year, and the company is expected to form a “whole industry chain” of tourism in the future. According to the company's plan, it achieved revenue of 2.5 billion yuan (+ 10.60%) in 2019, and the operation was steady.
Investment suggestions: We believe that the company's main business will be greatly improved in the future: 1) after the acquisition of cultural tourism technology, the target assets are in a leading position in the industry, have strong ability to obtain orders, and have high growth potential; 2) the two major shareholders that the company relies on are extremely rich in tourism resources, and potential asset injection expectations will increase, which will help improve the layout of the company's major tourism industry chain. It is estimated that the EPS in 2019-2021 will be 0.26, 0.34, and 0.37 yuan respectively, and the corresponding PE will be 29, 23, and 20 respectively, maintaining the “buy” rating.
Risk warning: The acquisition progress falls short of expectations; risk of economic fluctuations.
