Derived from high-end genes, endogenous epitaxial has established a leading position. The company is a global leader in high-end leisure and vacation. Through epitaxial mergers and acquisitions and endogenous development, the company has built a multi-dimensional product system such as Club Med with a global full-scene layout, and Atlantis, a comprehensive leisure resort destination rooted in the Sanya market, and an international resort with the theme of the Mediterranean and Alps. Since 2023, along with the rapid recovery of the domestic travel market, the company's 23H1 achieved revenue of 8.899 billion yuan, which basically recovered to the same period in '19; net profit to mother was 472 million yuan, turning a loss into profit over the same period last year, which is basically the same as the profit level for the same period in '19.
Club Med: The world's leading all-inclusive vacation brand, with both volume and price growth drivers. Club Med has achieved a global leisure and vacation market layout, covering diverse vacation scenarios such as mountains, sunshine, and urban surroundings. Thanks to the early recovery of overseas markets, Club Med has entered the recovery channel since 21H2, and indicators such as ADBR, occupancy rate, and RevPAR have improved across the board. Judging from 23H2 orders, the recovery trend is expected to continue. The company plans to increase its capacity by 20% by 2025 compared to 2022, and the combined production capacity upgrade is expected to bring about a steady increase in volume and price.
Atlantis Sanya: Outstanding location and product advantages, and highly resilient after the epidemic. Hainan's unique tropical climate, its positioning as a preferred destination for island tourism, favorable policies for the construction of a free trade port, and high-quality supporting facilities in Haitang Bay provide an excellent location advantage for Atlantis Sanya, and the aquarium, water world, and commercial clusters form product synergy. Sanya Yate opened in 2018. The pandemic interrupted its climbing process, and maturity will continue to improve after the epidemic. Comparing with Atlantis Dubai, there is still room for an increase in the price of Atlantis Sanya.
Vacation asset management center: “real estate+operation” two-wheel drive, passenger flow is recovering and business is improving. Taicang Alps International Resort and Lijiang Mediterranean International Resort target middle and high-end customer groups. While providing high-quality vacation products and services, real estate sales also provide additional contributions. 23H1 Taicang Resort real estate sales picked up. On November 8, the Taicang project opened. While the performance of normalized management is impressive, it is also expected to drive real estate degradation.
Profit forecast and investment advice: We expect the company to achieve revenue of 166.78/190.82/21.391 billion, yoy +20.7%/+14.4%/+12.1%, net profit of 2.4/4.0/650 million yuan, yoy +143.4%/+67.8%/+64.4%, adjusted EBITDA of 34.47/40.4649 billion yuan, yoy +47.0%/+17.5%/+14.7%. The company was given an overall EV/EBITDA of 8.7X in 2024, corresponding to a market capitalization of RMB 13.480 billion and a target price of HK$11.82 (equivalent to RMB 10.85), maintaining the “Recommended” rating.
Risk warning: risk of macroeconomic fluctuations, risk of real estate sales falling short of expectations, exchange rate risk.