The company announced its 2022 quarterly report. In 22Q1, the company achieved revenue of 188 million yuan, yoy -35.01%; realized net profit of 75.39 million yuan, yoy - 35.74%; realized net profit of non-attributable income of 77.62 million yuan, yoy -27.29%; during the period, the company's basic earnings per share were 0.113 yuan, yoy -36.14%. The domestic epidemic disrupted the pace of business travel recovery in the first quarter. The company's business performance in the first quarter was clearly under short-term pressure. The revenue level for the same period only reached 10.31% of what it was in '19. However, the company's financial performance is still relatively steady under the pressure of the epidemic. The company's Guangzhou Tour R&D investment continues to increase, and it is expected to recover rapidly after the epidemic is brought under control.
Key points to support ratings
The epidemic has disrupted, and the pressure on operations is obvious. During the reporting period, the company was affected by the domestic epidemic and the cross-provincial travel fusing mechanism. Revenue from the business travel business and accommodation business decreased year-on-year. The company achieved revenue of 188 million yuan, yoy - 35.01% in the current period; realized net profit of 75.39 million yuan, yoy - 35.74%; achieved net profit deduction of 77.62 million yuan, yoy - 27.29%. However, at the same time, due to a decrease in business revenue, costs and sales expenses also declined, with a year-on-year decrease of 30.46% and 32.36%, respectively. The company's revenue for the first quarter was only 10.31% of the same period in '19, but according to historical data from 17-19 years before the pandemic, the first quarter was a low season for the company's revenue, accounting for about 22%-23% of the annual revenue. If the national epidemic can be quickly and effectively controlled, the company's overall recovery pace can still be maintained throughout the year.
The epidemic in Guangdong has initially stabilized, and a recovery in domestic revenue can be expected. Since the outbreak of COVID-19, the country has shut down the outbound travel business, and the share of the company's business revenue in Hong Kong, Macao, Taiwan and overseas regions has shrunk from 60.49% in '19 to 1.21% in 2021. At the same time, due to the disturbance of the epidemic and the collapse of travel across provinces, the travel radius of domestic tourists decreased and the proportion of surrounding travel increased. The company's revenue share in Guangdong Province increased from 21.95% in '19 to 67.88% in '21. However, the overall epidemic prevention and control pressure in Guangdong was high in the first quarter. At the beginning of February, the Health and Health Commission requested that the transmission chain be quickly cut off, which had a certain impact on the company's business. However, after April, the Health and Health Commission stated that the epidemic in Guangdong and other places is generally manageable. It is expected that after further results of the epidemic prevention are achieved, control measures are expected to be relaxed, thus enabling the company's business to resume rapidly and accept more business tourists from Guangdong and other provinces.
Overall finance is stable, and R&D investment has increased. Although the disturbance of the epidemic has hindered the company's revenue to a certain extent, the company's balance ratio for the current period was 26.70%, down from the balance ratio of 30.77% in Q1 in '21. At the same time, the net CFO amount remained stable year-on-year, yoy -2.8%, and the overall financial structure remained stable.
The company also provided financial support to its four subsidiaries to help them overcome difficulties overall. During the reporting period, the company increased its R&D investment in Guangzhou Tour. It is expected that investment in technology will enable business expansion in the future.
valuations
According to the company's quarterly report for '22, the EPS for 22-24 was adjusted to 0.31/0.55/0.69 yuan. The corresponding price-earnings ratio is 29.0/16.2/13.0 times. The disturbance of the epidemic in the first quarter put pressure on the company's business development, and the interprovincial travel meltdown continued. However, the company's overall finances are stable, the prevention and control of the epidemic in Guangdong is initially improving, the company promotes technology to enable business development, and performance is expected to recover rapidly after the epidemic improves, so it maintains an increase in ratings.
The main risks faced by ratings
Domestic epidemic prevention and control policies continue to be at risk, overseas travel recovery falls short of expectations, market competition risks