Recently, the company released its semi-annual report for 2023. 23H1 achieved revenue of 1,251 billion yuan, yoy +234.18%; net profit of 273.05 million yuan, yoy +127.35%; net profit of 248.913 million yuan after deducting non-return net profit of 248.913 million yuan, yoy +118.21%. As residents' travel and offline consumption scenarios returned to normal, the company's H1 business travel and hotel business recovered strongly. The outbound travel policy is expected to be further relaxed in the second half of the year. Coupled with summer and other holidays, the company's business travel business is expected to recover at an accelerated pace, and we will maintain our ratings increase.
Key points to support ratings
The company's H1 performance turned profitable and increased, and the recovery trend was strong. 23H1 achieved revenue of 1,251 billion yuan, yoy +234.18%; net profit of 273.05 million yuan, yoy +127.35%; net profit of 248.913 million yuan after deducting non-return net profit of 248.913 million yuan, yoy +118.21%. Among them, Q2 achieved revenue of 774 million yuan, yoy +314.29%; net profit of 186.2221 million yuan, yoy +177.60%; net profit of non-return net profit of 17.8085 million yuan, yoy +130.14%. In the first half of 2023, residents' travel demand was released with high flexibility during the Spring Festival, May Day and Dragon Boat Festival holidays, and the company's business travel and accommodation business benefited from accelerated recovery.
The hotel business has recovered brilliantly, and the travel agency business supply chain has been rebuilt. 1) Hotel business: In terms of hotel management, the company's 23H1 expansion management projects, and the number of projects of Guangzhou Lingnan Hotel Property Management Co., Ltd. newly established in 2022 increased relatively well, achieving operating income of 93.4402 million yuan, yoy+ 44.71%; net profit of 11.5713 million yuan, yoy+ 625.63%; in terms of hotel management, the company's Guangzhou Garden Hotel, China Grand Hotel and Guangzhou Oriental Hotel 23H1 achieved total revenue of 4.1 billion yuan, with net profit for the mother 143.478 million yuan, business revenue yoy +85.01%.
The hotel business is the mainstay of the company's 23H1 profit structure, providing a solid foundation for the company's business recovery. 2) Travel agency business: The company's outbound travel business was still in the repair stage during the reporting period. Overall travel agency business revenue reached 752 million yuan, yoy +763.12%, achieving net profit of 4.6036 million yuan, turning a loss into a profit over the previous year. In recent years, Guangzhou Tour has completed a national strategic layout. 23H1 subsidiary companies outside of its South China headquarters have achieved revenue accounting for 38.68% of Guangzhou Tour's total revenue. 23H1 added more than 100 resource suppliers, and was the first to organize a total of 19 launch tours to destinations such as Egypt and Thailand. The number of outbound travel teams ranked among the highest in the country. In the first half of the year, the Ministry of Culture and Tourism announced the list of three batches of overseas group tours to countries and regions, bringing good opportunities for restoration to the company's travel agency business.
Demand for travel continues to rise, and the tourism industry chain is expected to recover at an accelerated pace during the National Day. As the impact of the epidemic gradually weakened, residents' travel needs and savings were released. The number of domestic travelers and income both increased year-on-year in the first half of the year. The cumulative passenger traffic volume of domestic routes from January to July 2023 reached 334 million, recovering to 98.90% in the same period in 2019. The cumulative passenger traffic volume of international routes during the same period reached 11.72 million, or 27.34% for the same period in 2019, which still limits the resumption of outbound travel services. According to travel information from Guangzhou, since the Ministry of Culture and Tourism announced the third batch of outbound travel team countries in August, the company's relevant national tourist routes have responded quickly and been listed, and the market demand for products from many countries has been booming. Since then, with the continuous resumption of routes and the arrival of the golden period for National Day travel, there is a high level of repair room for the company's outbound travel.
valuations
The company's business involves the upstream and downstream cultural tourism industry chains. 23H1 has achieved performance recovery through its diversified layout in the context of the overall restoration of the industry. There is plenty of room for inbound and outbound tourism to resume, and there are additional points in the scenic area and exhibition business. We maintained our 23-25 EPS forecast of 0.21/0.42/0.48 yuan, and the corresponding price-earnings ratio was 45.7/23.4/20.4 times. Maintain ratings to increase holdings.
The main risks faced by ratings
The resumption of holiday travel fell short of expectations, consumer confidence recovered insufficient, and market competition heightened the risk.