The epidemic has a great impact on companies that open road passenger transport and tourism waterway transport, but the company is gradually coming out of the shadow of the impact of the epidemic. The revenue of Q2 company is down 13.4%, which is smaller than that of Q1. At the same time, Q2 turned from loss to profit, achieving a net profit of 6 million yuan in a single quarter, with a drop of 85%. The company expects to achieve a net profit of 45 million to 60 million yuan in the first three quarters, corresponding to Q3 net profit of 7985 million 94.85 million, an increase of 80% over the same period last year. 114% of the increase in Q3 performance is expected to mainly come from part of the income recognized by land first-level development.
Performance overview: Yichang Shipping 2020H1 revenue decreased by 29.6% to 758 million yuan, gross profit by 84.9%, return to mother net profit / deducted non-net profit by 148.4% to-30 million /-35 million yuan respectively. Among them, 2020Q2, thanks to the recovery of passenger transport, cruise and other businesses after the epidemic, the company's quarterly revenue reached 472 million yuan, with a drop of 13.4%. The decline compared with Q1 narrowed 33pcts, gross profit decreased by 57.2%, and the rate rose to 8.09% in the same period. The net profit / deduction of non-net profit was reduced by 84.9%, 90.5% to 6 million / 4 million yuan, respectively, and Q2 company turned profit from loss to profit.
Passenger transport and tourism business were adversely affected by the epidemic, while automobile sales and supply chain business were less affected and recovered better. 2020H1 affected by the domestic COVID-19 epidemic, the company's passenger transport and tourism service passenger volume have decreased significantly, revenue fell by 55.9% to 76 million / 18 million yuan, gross profit margin also dropped by 47/119pcts to-32.0%. 71.0%. Due to the gradual recovery of the automobile market, revenue in the first half of the year fell 20.7% to 460 million yuan, a small decline, and gross profit margin also fell 0.4pct to 4.7%. Supply chain management business is mainly steel trade, less affected by the epidemic, revenue increased 1.1% to 150 million yuan in the first half of the year, and gross profit margin rose 0.7pct to 4.8%.
Through mergers and acquisitions and self-construction to expand the cruise team, the company continues to make efforts to travel passenger transport business. In July, the company completed the acquisition of seven ships and ancillary facilities assets, including the "Weir" passenger ship of Qixia Company and the "Xiling Gallery" owned by Sandouping Company, and proposed to acquire Sandouping Company's newly built ship "three Gorges Gallery 6". At the same time, the company recently disclosed a fixed increase plan, which plans to raise funds to build two cruise ships with two dams and one gorge and four inter-provincial holiday cruise ships. The company accelerates the layout of waterway passenger transport business during the industry trough, in order to consolidate its leading position in the "cross-strait gorge" area.
The first-level land development has entered the harvest period, and part of the land income confirmation is expected to push up the Q3 performance. The company expects net profit in the first three quarters to be 45 million to 60 million yuan, down 61% to 48% from the same period last year, corresponding to Q3 net profit of 7,985% to 94.85 million net profit, an increase of 80% to 114% in a single quarter compared with the same period last year. The high acceleration of Q3 performance is mainly due to 1) the company will confirm the income of some of the first-level land development projects of the three Gorges Cruise Center during the Q3 period (corresponding to 216 mu of land), and it is expected that there will be nearly 400 mu of land to be confirmed for primary land development, or revenue will be recognized next year; 2) it is expected that the Q3 company will continue to improve its road passenger transport and tourism business, promoting the traditional main business to reduce or even reverse its losses.
Risk factors: recurrent epidemic situation; tourism recovery is not as expected; land development is lower than expected.
Investment advice: after the epidemic has been brought under control, the company's business is gradually recovering. The revenue of Q2 company is down 13.4%, and the decline is 33% lower than that of Q1. Q2 performance has also become a regular employee. Taking into account the continuous and steady progress of the company's business improvement, the primary development of land has entered the harvest period, raising the company's annual EPS forecast on 2020-21-22 to 0.12 EPS 0.33 yuan (the original forecast was 0.024 pound 0.26 pound 0.34 yuan), and the current price corresponds to a multiple of PE in 61-22-18, maintaining the "buy" rating.
