The company announced its 2023 annual results forecast. In '23, the company is expected to achieve net profit of 360 to 460 million yuan, reversing the year-on-year loss of 492-592 million yuan; net profit after deducting non-return to mother of 335 to 430 million yuan, reversing the year-on-year loss of 517 to 612 million yuan. Among them, 23Q4 is expected to achieve net profit attributable to mother of -0.48-0.52 billion yuan, net profit after deducting non-attributable net profit of -0.72 to 023 million yuan. The company's performance grew steadily in '23. In the future, it is still optimistic that the free ticket policy and the addition of high-speed rail will boost passenger flow in scenic spots, and maintain the rating of increased holdings.

Key points to support ratings

Benefiting from the recovery of the travel market, the company's performance grew steadily for 23 years. In '23, the company is expected to achieve net profit of 360 to 460 million yuan, reversing the year-on-year loss of 492-592 million yuan; net profit after deducting non-return to mother of 335 to 430 million yuan, reversing the year-on-year loss of 517 to 612 million yuan. Among them, 23Q4 is expected to achieve net profit attributable to mother of -0.48-0.52 billion yuan, net profit after deducting non-attributable net profit of -0.72 to 023 million yuan.

Tourism demand concentrated and released combined free ticket policies, and the number of people entering the scenic area reached a record high. Benefiting from the concentrated release of tourism demand after the epidemic, combined with active marketing by the Huangshan Municipal Government, the main scenic area adopted a free ticket policy several times. In '23, Huangshan Scenic Area received 4.57 million visitors to the mountain, a record high. The number of visitors received throughout the year has repeatedly broken through history. The highest number of visitors in a single month was set twice in April and August. Overall, the low season was not weak, and the peak season was even stronger. On Wednesday, which is not a holiday in the first quarter of '24, the scenic area will continue its free admission campaign, which is expected to increase its appeal to visitors and leverage other forms of consumption within the scenic area.

The gradual improvement of high-speed rail lines is expected to boost passenger flow in scenic spots. In December '23, the Changjinghuang high-speed railway line was officially completed and operated, connecting Huangshan to several cities in Jiangxi; since January 10, '24, the Guangzhou-Shantou High Speed Rail was connected to the Changjinghuang High Speed Rail, and the fastest direct high-speed rail from Guangzhou to Huangshan North Station took only 5 hours and 37 minutes, greatly improving the convenience of the Greater Bay Area to Huangshan Mountain. Furthermore, the Chihuang High Speed Rail officially entered the joint commissioning and testing phase in January '24. It is expected that it will be put into trial operation after March. After the opening of this line, it will connect Mount Jiuhua, Mount Huangshan, and Taiping Lake, forming a “two mountains and one lake” golden tourist route. The gradual improvement of the external transportation network is expected to boost the number of visitors to the scenic area.

valuations

The company's performance has been growing steadily in '23, and the number of visitors received has caught up with pre-pandemic levels. The free ticket policy will continue to help in the short term; in the medium to long term, external transportation routes are gradually being improved, and the company's various businesses can be expected to continue to improve and increase. Considering the possible increase on the Q4 cost side, we adjusted the company's 23-25 EPS to 0.59/0.68/0.74 yuan, and the corresponding price-earnings ratio was 19.8/17.3/15.9 times, respectively, to maintain the holdings increase rating.

The main risks faced by ratings

The recovery of the industry falls short of expectations, and risks such as the difficulty of implementing transformation and expansion.