Performance summary:

The company issued a pre-performance increase announcement. It is expected to achieve net profit of between 360 million and 450 million yuan in 2023, reversing losses over the previous year. Based on this, it is estimated that 4Q recorded net profit of -48 million to 52 million, a year-on-year loss/reversal of losses (22Q4 loss of 72 million yuan). Full year results are in line with expectations.

Comment:

Benefiting from the high travel boom throughout the year, the combined company continued to launch free ticket campaigns, and the number of visitors entering Huangshan Mountain recovered significantly. The total number of visitors entering the mountain in 2023 was 4.575 million, up 227.5% year on year, up 30.6% from the same period in 2019; the number of people entering the mountain reached 1.047 million in the 4th quarter, up 248.4% year on year, up 31.9% from the same period in 2019. The high increase in the number of people entering the mountains led to a recovery in annual results. Net profit is forecast to increase 6%-35% over the same period in 2019, and net profit for the 4Q single quarter loss/increase of 1144% compared to the same period in 2019.

Huangshan remained popular during the New Year's Day holiday, welcoming a total of 42,500 visitors, an increase of 94% over the same period last year (affected by rain and snow, about 26,000 people in the same period in 2019). Looking at this year, the highest peak, Tiandu Peak, is expected to resume opening to the public in April. The tourist experience continues to improve, and the popularity of tourism in Huangshan is expected to remain high.

In the long run, while “relying on mountains to eat mountains,” the company has always insisted on “walking down the mountain and going out”, and has accelerated the transformation and optimization of the mountain tourism experience internally. By strengthening marketing, focusing on leveraging local characteristics, strengthening IP output, developing and enriching the customer source structure, extending the upgrading and transformation of Huashan Mysterious Cave and Taiping Lake Scenic Area to the outside world, the company actively transforms, and broadens the path of long-term development.

Maintaining profit forecasts, it is estimated that 2023-2025 will achieve net profit of 432 million, 495 million, and 545 million, respectively, with year-on-year losses, up 14.5% and 10.3%, respectively. EPS is 0.59 yuan, 0.68 yuan, and 0.75 yuan, respectively. The current stock price corresponds to PE of 20 times, 17 times, and 16 times, maintaining “buy-in”.

Risk warning: Abnormal weather caused passenger flow to fall short of expectations