The current situation of the company
On August 10, the Ministry of Japanese Tourism released the third batch of resuming outbound group tours, including South Korea, Japan, the United States and other 78 destination countries. We believe that the company's outbound tour product line will be further enriched.
Comment
The Ministry of Culture and Tourism released the third batch of lists for resuming outbound group tours, contributing to the further release of outbound travel demand and paying attention to the further recovery of outbound group tours under the climbing slope. On August 10, the Ministry of Japanese Tourism released the third batch of list for the resumption of outbound group tourism, with a total of 78 destination countries, including South Korea, Japan, the United States, Australia and other popular destination countries. So far, the number of outbound group travel destinations for Chinese citizens has increased to 138, basically covering major outbound travel destinations. Prior to this, Chinese inbound and outbound travel was subject to supply-side restrictions (such as flights, visas and destination reception facilities, etc.). The pace of recovery is lower than expected at the beginning of the year (air travel vertical and horizontal data show that the number of domestic Aviation Department passengers returned to about 55% 2% in the same period in 2019; we estimate that the outbound passenger flow of Chinese to Japan and South Korea in June returned to about 23.7% and 35.4% respectively in the same period in 2019). At this time, when the summer season is high, and there is an 8-day Mid-Autumn Festival National Day holiday in the second half of the year, we believe that the further liberalization of this outbound group tour will contribute to the continued release of demand, and suggest paying attention to the further recovery of outbound travel under the climbing slope of supply.
We believe that the further liberalization of outbound group tours is expected to enrich the company's outbound group tour product line and pay attention to the gradual climbing of income and performance. 2Q23 forecasts a net profit of 15-6.5 million yuan, the first quarterly profit since the epidemic. From the perspective of business recovery, with the release of demand for travel during the May Day and Dragon Boat Festival holidays, popular long-term destinations such as 2Q23 Europe (such as Switzerland, France, Italy, Spain, Portugal, etc.) are doing well, and the market share of short-term destinations such as the United Arab Emirates and Thailand is expected to increase by a further 3%. We expect that the further liberalization of this outbound group tour is expected to promote the further enrichment of the company's outbound group tour product line and help to promote the continuous recovery of turnover. In the medium to long term, we believe that the company remains competitive in terms of resource control, product research and development, channel construction and brand awareness, and the pace of business recovery is expected to be faster than that of the industry as a whole.
Profit forecast and valuation
Taking into account the steady recovery of outbound travel business, we raised the 2023 income forecast by 44% to 3.172 billion yuan, the profit forecast from 71 million yuan to 9 million yuan, the 2024 revenue forecast by 14% to 7.385 billion yuan, and the profit forecast by 50% to 104 million yuan. The current share price corresponds to 2.7 times 2023 P / S and 1.1 times 2024 P / S. Maintain a neutral rating, raising the target price by 12% to 9.4 yuan, with upside space of 9%, corresponding to 2.9 times 2023 P / S and 1.3 times 2024 P / S.
Risk
The recovery of outbound tourism supply is not as expected; the repair of spending power is not as expected.