Core views:

Incident: The company released its 2023 interim report. 23H1 achieved revenue of 8.899 billion yuan, up 38.69% year on year, and basically recovered to the same period in '19; adjusted EBITDA was 230 billion yuan, up 92.43% year on year, up 15.32% from the same period in '19; net profit for the same period last year was 472 million yuan, turning loss into profit over the same period last year, similar to the profit level for the same period in '19.

Club Med: 23H1's turnover exceeded 20% before the pandemic, and will continue to grow in the second half of the year. 23H1 achieved a turnover of 7.939 billion yuan, up 32.2% year on year, and 19.6% over the same period in '19. By region, America, Europe, Africa, Middle East, and Asia Pacific regions respectively were +64.6%, +12.7%, and -7.3% compared to the same period in '19. Among them, mainland China recovered to 83.1% of the same period in '19, mainly because outbound travel business has not yet recovered. Looking ahead to the second half of the year, August 6, 23 recorded cumulative bookings for the second half of '23 (measured by accommodation, travel and service turnover at a consistent exchange rate), an increase of 21% over the turnover recorded on August 6, 19 for the second half of '19. By the end of the 23H1 period, the company had 66 resorts (10 ownership+41 leasing+15 management contracts), and plans to open 4 new resorts in 23H2.

Sanya Atlantis: 23H1's performance has increased, and experience programs continue to innovate. 23H1 achieved a turnover of 887 million yuan, an increase of 82.2% over the previous year; adjusted EBITDA was 461 million yuan, an increase of 122.9%; the average occupancy rate was 86.2%, an increase of 40.1 pp, an increase of 24.2 pp over 19H1; and RevPar was 2075 yuan, an increase of 82%. The company continues to innovate experiential programs. According to an interim report, the Water World Pink Night was unveiled on January 16, '23. The full network event had an exposure of over 2.68 billion people. In July '23, it upgraded its summer logo program, the Pink Night Water Screen Show, leading the market trend.

Profit forecast and investment advice: Optimistic about the company's brand and global tourist destination layout advantages and travel and vacation ecology, it is estimated that net profit for 23-25 will be 47,7.1 million yuan, and 870 million yuan respectively. Referring to comparable companies, 7 times EV/EBITDA will be given in 23 years, corresponding to a reasonable value of HK$14.07 per share, and maintain the “buy” rating. (The exchange rates in this article are all using the exchange rate of 1 HKD = 0.93 RMB)

Risk warning: New projects fall short of expectations, demand for high-end tourism falls short of expectations, exchange rate fluctuations