The company issued the 2023 mid-report performance forecast: 1) spin-off 2023Q2: expected to achieve a net profit of 0.015% to 0.065 million, reverting to 3.3% to 14.4% in the same period in 2019, deducting 0.03% to 0.08 million in the same period of 2019, and returning to 6.5% to 17.7% in the same period in 2019. 2) 2023H1: the estimated return net profit is-0.31 million, an increase of 55.4%, 61.6% over the same period last year, deducting the non-return net profit of-0.31 million, an increase of 56.8% and 62.8% over the same period last year.

The outbound travel business has been steadily repaired, and the short-term recovery of business has been suppressed by the low supply of international flights. According to the Ministry of Culture and Tourism, Chinese citizens' outbound group travel and "air ticket + hotel" business have resumed one after another. So far, the number of destinations for outbound and group tours has increased to 60. The recovery of Q2 company's tourism business continues to improve. In terms of outbound travel, with the arrival of traditional holidays such as May Day Golden week and Dragon Boat Festival short holiday, products from popular long-term destinations such as Switzerland, France, Italy, Spain and Portugal are selling well, and the market share of short-term destinations such as the United Arab Emirates and Thailand is expected to further increase. According to the flight constant data, as of 2023-7-17, the supply of international flights has returned to 46.8% of that of the same period in 2019. Although the recovery of outbound travel is still suppressed in the short term, the trend for the better is certain (the degree of supply recovery is 34.25% after the summer and autumn flight schedule is updated on 2023-3-26). The follow-up progress of the company's outbound travel business needs to continue to track the recovery of the supply of international flights, as well as the update of outbound and group travel policies.

Investment advice: outbound travel and group tours are gradually restored, the industry has been cleared for three years of the epidemic, and the industry concentration has increased, and the level of recovery is expected to be higher than the industry average; however, the recovery progress of short-term outbound travel and group tour business is limited by the supply of international flights and the restrictions on pilot destinations for outbound and group tours, which is still in the stage of slow recovery, and it is still necessary to continuously track changes in flight supply and exit policies. We expect the company to make a 24-year net profit of 0.1 yuan and 290 million yuan in 2023. Given an investment rating of-A, the 6-month target price is 8.7 yuan, equivalent to a dynamic price-to-earnings ratio of 30 times in 2024.

Risk tips: outbound passenger flow recovery is not as expected, the supply of international flights is not as expected, and so on.