Investment summary: The company's strategic transformation in 2020 is gradually in place. The company introduced a series of power battles this year, and high-level adjustments were made in October, highlighting the strategic intention for the integrated development of multiple business formats in the future. As the strategic deployment is in place, the company will focus on its core business (travel services & catering services), strengthen business layout such as tax exemption, finance, online, overseas, and industrial funds, and take advantage of the Hainan Free Trade Port policy, and continue to shift its development focus to Hainan. The company's stock of main business (travel services & catering services) can be expected to resume, and there are new profit growth points. In terms of travel services, the company began to adjust its strategic direction in 2020, from focusing on outbound travel to reducing the level and layout of domestic travel, while establishing in-depth cooperation with Hainan many times. In terms of catering services, the company began to transform from air to ground and expand towards social catering services. It is also predicted that the COVID-19 vaccine will be made available to the public as soon as possible. Based on this, the tourism service business is expected to pick up at an accelerated pace. As a traditional outbound travel leader, the company has long had the following four advantages in the travel service business: rich upstream resources continue to accumulate and expand from the six dimensions of aviation, hotels, cruises, attractions, transportation, and visas. We have established a diversified product system while actively innovating products. Leading tourist destination service and operation capabilities. Strong online+offline downstream channel sales network. The company's incremental main business (duty-free business) is about to bring marginal improvements to the company's profits. The company began to work in the direction of duty-free business in 2019. This is not only a horizontal expansion in the company's business chain, but also a vertical expansion. The internal consumption cycle guides the return of overseas consumption. As a starting point, the duty-free industry has huge room for development and profit margins at the same time. The company has accumulated huge resources for outbound tourists and tour guides, which can be fully monetized through tax exemptions. The company participated in the duty-free business by cooperating with the leading duty-free company in the city to operate duty-free shops, and has completed three in-depth cooperation with China Delivery Service. China is the largest duty-free operator in China. It already has airport port entry and exit duty-free business and inbound duty-free business, and is expected to launch duty-free business in the outlying islands in the future. As a leading duty-free business in the city, China Express chose to cooperate with the company for the following major reasons: the company continues to empower duty-free shops from various aspects such as diversion, marketing, and operation, share high-quality resources, and develop “travel+duty-free” business collaboratively. The company uses its own upstream and downstream resources in the tourism industry to help improve the sales efficiency of duty-free shops while increasing the penetration rate of duty-free purchases. The company's continuous and in-depth cooperation with Sanya provides the foundation for the company and China to work together to promote tax exemption on the outlying islands. The in-depth cooperation between the company and JD will bring more profit growth points to duty-free shops, such as the joint construction of smart stores, the full implementation of online orders in duty-free experience stores, and the full use of JD's logistics and warehousing advantages. The company cooperated strategically with China and China Exemption on tax exemptions. The two formed differentiated competitiveness and continued to conquer ground in the duty-free incremental market. The duty-free industry is a golden circuit under favorable policies for the return of overseas consumption. It is conservatively estimated that within five years, the duty-free market in the city will reach 50 billion yuan, and the outlying islands duty-free market will reach 140 billion yuan within five years. Investment advice: Taking into account the expected recovery of the company's stock and main business, and marginal improvements in the duty-free business, and the gradual release of pessimistic market expectations, the company's revenue is expected to grow at -74.6%, 225.9% and 63.2% year-on-year in 2020-2022. Earnings per share were -$0.28, $0.51, and $0.93, respectively. The 2021-2022 corresponding PE is 26 times and 14 times. The company was given 39-46 times PE in 2021, and the reasonable stock price range was 19.68-23.62 yuan. The company was covered for the first time, and a “buy” rating was given. Risk warning: macro-risk and repeated risk of the epidemic; the tax exemption policy is uncertain; the depth of cooperation with China and China Service falls short of expectations; the company's stock and main business revenue fall short of expectations; and the profit of the duty-free industry falls short of expectations.