Different from the market: The market believes that the company's long-term passenger unit price growth is limited, and the ropeway-centered business system is less affected and catalyzed by passenger flow. However, we believe that the company has the attributes of a Buddhist mecca, stable customer flow, and high repurchase rate. The trend of tourism recovery is improving. Cost-effective travel benefits famous mountains and rivers, and the popularity of temple tours has catalyzed an increase in passenger traffic. The expansion of the Chihuang High Speed Rail and Jiuhuashan Airport brought increased passenger flow, forming a scenic link with Huangshan; the company's Wuxi Project, the Dajiuhua renovation project, has been completed, and the traffic conversion project will be put into operation during the 2024 Spring Festival, and Lion Peak is expected to contribute to the increase in the long term.
Mount Jiuhua: A famous mountain with a long history and a large river
The company has a long history and steady revenue. The company relies on transportation (including passenger transport and ropeways) in scenic spots and has stable performance. The compound revenue growth rate in 2011-2019 was 5.4%, and the compound profit growth rate was 9%. The profit growth rate was better than the revenue growth rate, and profitability continued to strengthen. Demand for leisure was released in 2023, and the company's performance was outstanding. The ropeway and passenger transport business contributed the main revenue, and the ropeway gross margin was the highest, contributing the main profit.
At the industry level: demand recovery is strong, and peak season flexibility can be expected
National and local governments have introduced a series of policies to stimulate tourism consumption, and travel demand has been released. Currently, the unit price for tourists in China is low, and tourism revenue depends on a rapid recovery in passenger traffic; student tours and family tours are developing rapidly, and temple tours are spawning a new trend in tourism.
Company level: Resource endowments+state-owned enterprise reform+project upgrade+transportation improvement to help the company grow in the middle line 1) Jiuhua Mountain is one of the four famous mountains of Buddhism in China. The attributes of a Buddhist sacred place make it have a stable passenger flow and strong stickiness in the core customer base. The company's business is diversified, the risk of relying on tourist flow in scenic spots is more balanced, and uses multi-channel marketing and promotion to create differentiated travel products. 2) State-owned enterprise reform promotes the company's efficiency, improves operating leverage, and increases profits. 3) Make every effort to promote the upgrading of project construction and promote the company's tourism industry empowerment and industrial layout. New projects include: the Wenzong Ancient Village Five Creek Project, the Jiuhua Mountain Transportation Transformation Center Function Improvement Project, and the Lion Rock Project; 4) The opening of high-speed rail and airport expansion to provide travel convenience. The Chihuang High Speed Rail will establish a new Jiuhuashan Station to directly reach the scenic area. At the same time, the renovation and expansion of Chizhou Jiuhuashan Airport will greatly increase passenger throughput and greatly facilitate tourist travel.
Profit forecasting and valuation
In 2023-2025, the company's revenue is expected to be 704/7.47/787 million yuan, +111.97%/+6.13%/+5.41% year-on-year respectively; the hotel business and ropeway business contribute more than 75%, the hotel business revenue is 2.52/2.64/278 million yuan, and the ropeway cable car business revenue is 2.93/314/336 million yuan; the net profit for 2023-2025 is 168/1806/209 million yuan, respectively. %/ +12.28%, 2023-2025 EPS is 1.52/1.68/1.89 yuan respectively, corresponding to PE 20X/18X/16X. Covered for the first time, a “gain” rating was given.
Risk warning
Consumption recovery falls short of expectations; industry competition intensifies; risk of natural disasters or bad weather.