Benefiting from the recovery of the tourism market, the company's performance improved markedly. The theme park industry is characterized by strong supply and demand, and the company's competitive advantage is highlighted by its misplaced marine theme. In the short term, we are optimistic about the continuous improvement in the company's performance under the recovery in passenger flow, and in the medium to long term, we are optimistic about the increase in performance brought about by the company's project extension expansion, IP operations, and asset-light operation transformation, and adjusted to a buying rating.

Key points to support ratings

Supply and demand in the theme park industry are booming, and the competitive advantages of misplaced marine themes are highlighted. 1) Supply side: In recent years, China's theme park area has continued to expand, and world-renowned theme park groups and domestic IP operators have accelerated their deployment in China. 2) Demand side: Demand for cultural tourism was released centrally after the epidemic. Family trips during the holidays were particularly popular, helping theme park traffic and revenue to recover at an accelerated pace. Overall, the industry has shown the characteristics of strong supply and demand. Competition among theme parks is becoming more and more intense, while the marine-themed track is misplaced, the competition pattern is clear, and the advantages of Haichang Ocean Park are highlighted.

The heavy asset business recovered collaboratively, and IP integration created a new consumption model. 1) Inventory business: After the epidemic, the company's stock park traffic increased steadily, exceeding the same period before the epidemic, and the company introduced high-quality IP to help increase the unit price of visitors. The business performance during the peak summer season was impressive, and the performance of stock parks recovered markedly. 2) Incremental business: The company adopts a strategy for the collaborative development of heavy assets. In terms of heavy assets, the first phase of Zhengzhou Park opened before the National Day, and the second phase is expected to open in 2024. As a scarce marine resource in the Central Plains region, it is expected to enjoy the local population and location dividends and become the company's new performance pivot. On the asset-light side, the subsequent Shanghai Park Phase II, Beijing Park, and Boutique Aquarium projects will continue to contribute to increased performance. The cooperative construction project with Saudi Arabia marks that the company has successfully embarked on an international layout, and the asset-light transformation is also expected to optimize the company's financial structure. Currently, IP operations have begun to show results in the park sector. With the superior background and rich resources of strategic shareholders, the company's IP matrix is expected to continue to expand, empower the development of the main business, and build a second revenue curve.

valuations

Benefiting from the recovery in tourism and the boom in the parent-child travel market, the company's performance has improved markedly. In the short term, we are optimistic about the continued improvement in the company's performance under the recovery in passenger flow, and the medium to long term, we are optimistic about the company's project expansion and the increase in performance brought about by the transformation of IP and asset-light operations. After the asset-light transformation, the company will need to invest less capital, and it is expected that the next year will enter a period of performance release. We expect the company's EPS to reach 0.01/0.06/0.07 yuan in 23-25, and the corresponding P/E is 69.1/15.1/13.6 times, respectively. As far as the valuation multiplier for 24-25 is concerned, the margin of safety is high, and the company's future growth is sufficient, so it will be adjusted to a purchase rating.

The main risks faced by ratings

The progress of new projects falls short of expectations, and the expansion of asset-light projects falls short of expectations