The company successfully distributes tourism transportation and logistics, and provides cruise passenger services relying on the high-quality tourism resources of two dams and one gorge. In the past three years, passenger volume has increased by 40% per year, and tourism gross profit has increased by 73% in 4 years, CAGR 25% 2019H. With the transformation of 3 million passengers from the three Gorges Dam to the two dams and one gorge leisure project, it is expected that the company's tourism service business with the three Gorges as the core will continue to grow strongly in the future, with a steady increase in superimposed logistics, and the company will enter the ROE promotion period, covering it for the first time and giving it a "buy" rating.
The company started passenger transport, involved in auto sales, transformation of tourism, plus logistics. The traditional main business of Yichang transportation is passenger motor transportation. affected by the opening of Hanyi high-speed railway, the company's original main business has shrunk, and the growth of car distribution business has also stagnated. Subsequently, the company made efforts to provide tourism services, mainly providing cruise passenger services around the three Gorges Dam Scenic area, and the gross profit of tourism business increased from 13% in 2012 to 31% in 2019H. At the same time, the company promotes the construction of the logistics center of Yichang East Railway Station, and the first phase of the project contributed 18% of the company's total net profit last year. Under the two-wheel drive of tourism and logistics, the performance has returned to growth, and the non-net profit deducted by 2018/2019Q1~3 has increased by 33% and 65%.
With the deep ploughing of two dams and one gorge, the passenger flow of cruise ships is growing at a high speed. Relying on the high-quality resource endowments of the two dams and one gorge (three Gorges Dam-Xiling Gorge-Gezhouba), the company has developed all kinds of cruise passenger transport products. * the passenger transport volume of the two dams and one gorge has increased by 40% annually in the past three years, and the passenger volume is expected to increase to 800000 in 2019, accounting for 25% of the total population of the three Gorges Dam Scenic spot. In the past five years, the gross profit CAGR of cruise ships / travel agencies was 40% and 16% respectively. In March 2019, the company signed a strategic agreement with the Yangtze River three Gorges Group, which will carry out in-depth cooperation in the tourism of the three Gorges Dam, further consolidating the monopoly position of tourism transportation in the two dams and one gorge.
Scenic spot passenger flow + cruise ship penetration + passenger unit price increase, the company's tourism service business is expected to grow rapidly in the future. With the improvement of the popularity of the two dams and one gorge and the expansion of the tourist radiation area of the two dams and one gorge to Henan, Hunan, Sichuan and Chongqing after the opening of the Zheng-Wan railway at the end of the year, the passenger flow of the three Gorges Dam will continue to grow rapidly in the future. With the continuous growth of passenger flow in scenic spots, the increase in passenger penetration of superimposed cruise ships and the growth of secondary consumption on board (the consumption per person on board has increased to 40 yuan from 20 yuan in previous years), the gross profit of company cruise ships / travel agencies will maintain the growth rate of CAGR35%/20% in the next three years. The company now plans to acquire Jiufenggu Tourism Company, add scenic spot operation business and improve tourism layout. Jiufenggu promises to deduct non-net profit of not less than 8 million / 9.5 million / 11.5 million yuan on 2019-20-21.
The port has benefited from dam-turning and transshipment, and the volume of business has greatly increased; the second phase of the logistics center will soon be put into production to bring new growth points of performance.
Affected by the fact that large ships no longer give priority to passing through the three Gorges Dam, the company's dam-turning volume at the three Gorges Dam port has increased significantly, driving the port gross profit of 2018 Great 2019H to increase by 251% to 135%. With the follow-up growth of port capacity and business volume and thickening income from the use of shore power system, it is expected that the short-term CAGR growth rate of port gross margin can be expected. The company is currently promoting the construction of the logistics center of the East Railway Station. the first phase of the project has been in operation for many years and gradually contributes profits. Tianyuan Logistics, a subsidiary of Tianyuan Logistics (responsible for the construction and operation of the logistics center), turned a deficit in 2017, and its net profit increased by 248% to 17.15 million yuan in 2018. The second phase of the project may be put into production next year, which will bring new performance increments for the company.
Risk factors: downward macroeconomic growth; two dams and one gorge tourism demand is not up to expectations; safety accidents and so on.
Investment suggestion: with the continuous growth of the company's cruise ship passenger flow and the increase of passenger unit price in the future, the company's tourism business is expected to maintain high-certainty and rapid growth and become the core factor driving the company's performance growth. at the same time, the short-term completion of the logistics center of the East Railway Station is expected to contribute to new performance growth, while other main industries maintain a steady development trend. It is predicted that the company's annual net profit in 2019-20-21 will be 130 million / 161 million / 195 million yuan respectively, and the current stock price corresponding to PE will be times higher than 25-20-16, covering for the first time and giving a "buy" rating.
