Event: The company released its performance report for the third quarter of 2023. 23. In the first three quarters, the company achieved revenue of 2,053 billion yuan, a year-on-year increase of 647.46%, net profit of 14.132,700 yuan, a year-on-year increase of 110.72%, a year-on-year increase of 107.514 million yuan, a year-on-year increase of 107.56%. In the 23Q3 quarter, the company's revenue was 1,261 billion yuan, +207.89% year over year, net profit of the mother was 486.56 million yuan, +195.560 million yuan, +191.06% year over year.

Q3 There was a clear recovery in performance, and overseas tourism continued to resume. Q3 In the single quarter, benefiting from the peak summer travel season and the recovery of the overseas travel market, revenue increased 92.52% month-on-month and recovered to 32.82% in the same period in '19. Net profit per quarter was the second highest in five years. Since the third quarter, with the reopening of the third batch of outbound travel destinations, a number of domestic outbound routes have resumed flights one after another, and the popularity of outbound travel has continued to rise. According to extensive air travel data, in October, domestic airlines actually carried out more than 27,000 inbound and outbound flights, and more than 3.6 million inbound and outbound passengers, all returning to around 60% of the same period in 2019. The recovery in outbound flight supply is expected to continue to boost the company's performance in the future.

Multiple measures were taken to deal with rising costs, and gross margin was higher than the same period in '19. 23 The company's gross margin/net margin for the first three quarters was 11.52%/0.61%, year-on-year -3.27/+59.29pcts, and the gross margin was 1.52pcts higher than the same period in '19. The gross margin for Q3 alone reached 11.84%, -2.90pcts year on year, exceeding 3.18 pcts in the third quarter of '19 and 1.33 pcts over 23Q2. The company is actively reducing costs and increasing efficiency to cope with rising costs of air tickets, chartered buses, and overseas connecting hotels. 23 The company's sales/management/financial expenses in the first three quarters were 7.17%/3.63%/0.61%, respectively, and -32.62/-17.26/ -12.34pcts, respectively. The various cost rates were significantly optimized year-on-year.

The “super long” Spring Festival favors outbound travel, and the company launched a variety of products. The official holiday for the Spring Festival in 2024 is February 10 to February 17, and enterprises are encouraged to take a holiday on New Year's Eve. The Spring Festival holiday lasts 8-9 days.

The “super long” Spring Festival holiday is expected to further increase the popularity of outbound travel. Currently, the company has launched a variety of outbound Spring Festival travel products from the US, New Zealand, Western Portugal, etc., to seize the peak demand for long holiday trips.

Investment suggestions: Outbound travel has gradually returned to normal levels before the pandemic, and the company has reduced costs and increased efficiency to improve profitability. The company's EPS for 23-25 is expected to be 0.01/0.21/0.34 yuan, and the corresponding PE is 528/33/20 times, giving it an “increased holding” rating for the first time.

Risk warning: Market recovery falls short of expectations; global geopolitical risk; market competition risk.