Event Overview:
The company released its 2023 performance forecast. It is expected to achieve revenue of 723 million yuan in 2023, +118% year over year; net profit to mother of 175 million yuan, +1377% year over year, after deducting net profit of 166 million yuan, +801% year over year.
Analytical judgment:
The 23-year results are in line with expectations, and post-pandemic recovery is flexible
The company expects to achieve revenue and net profit of 723 million yuan and 175 million yuan respectively in 2013, which is basically in line with our previous expectations, with increases of 34.6% and 49.6% respectively from 2019. Revenue and profit increased significantly from 2019. We judge that it is mainly due to the concentrated release of residents' travel consumption demand after the epidemic, while Jiuhuashan has become a tourist destination for more young tourists with resources from the famous mountains of China, rich Zen cultural resources, and high cost performance.
The traffic conversion center has been upgraded. It is expected that the Spring Festival in '24 may become a popular tourist attraction in Sichuan and Oyama. According to our previous report “One of the Four Famous Buddhist Mountains, Infrastructure Improvements Help New Growth”, the Jiuhuashan Traffic Transfer Center currently has less than 2,000 parking spaces, making it difficult to meet the parking needs of current self-driving tourists. In December 2022, the Jiuhuashan Traffic Conversion Center function upgrade project was launched, with a total investment of 350 million yuan. It is expected to be fully completed and put into use before the 2024 Spring Festival. At that time, the Jiuhuashan Traffic Transfer Center will expand to 5207 parking spaces (according to Dawan News Report), which will significantly improve the current parking difficulties and further enhance the experience of self-driving tourists. According to information related to Tencent's location service, during the 2023 Spring Festival, Jiuhua Mountain ranked first in the country's 5A Famous Sichuan Mountain Popularity List. We have determined that as transportation conversion centers are upgraded and temple tours continue to be popular, Mount Jiuhua may become a popular attraction in the famous mountains during the Spring Festival in '24, making a good start in '24.
There are many highlights in the future to help new growth
According to our previously released report “One of the Four Famous Buddhist Mountains, Infrastructure Improvements Help New Growth”, we believe that the company has many highlights in the future, mainly including: (1) Temple tourism continues to be popular, and the company is expected to benefit. Emotional consumption and cost-effective consumption continue to rise, and the company's resource endowments are outstanding, and it is expected that it will continue to benefit from new tourism trends; (2) the Chihuang High Speed Rail opened in June 24, connecting to the core scenic area of Huangshan, which is expected to expand passenger traffic on the Hangzhou-Wu Middle Line; (3) the transportation conversion center was upgraded and put into use, significantly improving parking carrying capacity (more than doubling parking spaces); (4) new projects are actively being expanded, and may be expected to bring in new volume in the future. The Wenzong Ancient Village project opened in the first half of 2023 to develop high-end leisure resort products. The Lion Rock project is being actively declared, and the vegetarian catering business has established an independent subsidiary. The new project is expected to bring a new growth curve and further enrich the company's product line.
Investment advice
We slightly adjusted our 23-year forecast and maintained our 24-25 forecast. We expect the company to achieve operating income of 723/791/861 million yuan respectively in 23-25, with net profit of 175/208/229 million yuan, EPS of 1.58/1.88/2.07 yuan respectively, corresponding to the latest PE 19/16/15 times (see closing price of 30.40 yuan on January 29, 2024), and maintain the “increase in holdings” rating.
Risk warning
(1) Residents' optional spending falls short of expectations; (2) passenger flow growth due to the opening of the Chihuang High Speed Rail falls short of expectations; (3) natural disasters and public health safety risks.