Key points of investment:
The company announced its 2023 performance forecast, which is in line with market expectations. According to the company's announcement, the company expects to achieve net profit of 184 million yuan in 23 (-334 million yuan for the same period in '22 and +568 million yuan for the same period in '19) and net profit after deducting non-return to mother of 143 million yuan (-418 million yuan for the same period in '22 and +432 million yuan for the same period in '19). Among them, the company expects non-recurring profit and loss attributable to the owner of the parent company to be approximately RMB 40.8062 million, mainly due to the public listing and sale of assets by the company and its holding subsidiaries. The company's estimated net profit loss attributable to the fourth quarter of the same quarter was 22.5978 million yuan (loss of 163 million yuan in the same period of '22, profit of 23.34 million yuan for the same period in '19), after deducting loss of 506.925 million yuan in non-net profit (loss of 234 million yuan for the same period in '22, profit of 10.79 million yuan for the same period in '19).
Wuzhen and Gubei Water Town are operating well, and outbound travel agency business is gradually resuming. According to the company's announcement, the company's Wuzhen Scenic Area received 6.1587 million visitors in the third quarter, recovering to 84% in 2019, achieving operating income of 1,385 billion yuan, exceeding the same period in '19, and achieving net profit of 332 million yuan. In the third quarter, the travel agency business achieved its first profit in many years and continued to expand the boundaries of traditional travel business, forming a “global visa+national processing” integrated business development model. Gubei Water Town received 1.120,700 visitors, achieved revenue of 546 million yuan, and realized net profit of 10.4797 million yuan. Passenger traffic in the two towns and scenic spots continued to boost during the New Year's Day holiday. The fourth quarter was a traditional low season for the company and there were costs and expenses, so the profit side did not contribute to a positive increase in the fourth quarter.
Online and offline integrated operation, “live streaming+short video” empowers new travel consumption. In 2023, the China Youth Travel Douyin flagship store actively explored and carried out in-depth marketing links with the platform, and continued to publish high-quality video content such as travel tips, destination guides, and sharing hot travel news topics, which attracted the attention of more than 1.05 million highly loyal travel fans. A number of special live broadcasts were held at important marketing points such as Summer, National Day, 618, and Double Eleven. The live broadcast GMV during the 618/Double 11 period surpassed 10 million. China Youth Travel actively exploited the platform's ecological resources, launched the “live broadcast with talent delivery” dual-channel delivery model, achieved rapid introduction of global traffic, and insisted on accurate product operation. It conducted in-depth research on user attributes and consumption habits for new media channel customer groups such as Douyin, and built a channel-specific product system to comprehensively improve the product write-off rate. The write-off rate for core popular products reached 30%, far exceeding the industry level.
Investment analysis opinion: Considering the slow recovery of the company's two scenic spots and the fragmentation of profitability by other business sectors such as hotels, we lowered the company's profit forecast. The estimated net profit for 23-25 was 1.84/3.89/571 million yuan (original value 3.83/596/718 million yuan), and the current stock price is 41/19/13 times PE for 23-25. In the medium to long term, the company's ability to operate scenic spots is remarkable, and Wuzhen can bring stable and healthy cash flow. The external environment for outbound travel has improved, and the performance of travel agencies and integrated marketing can be expected to be flexible. We selected Songcheng Performing Arts, Xiangyuan Cultural Tourism, and Changbaishan as comparable companies. Comparable companies in 24 had an average price-earnings ratio of 23 times, and gave the company 23 times PE in 24 years. The corresponding target market value was 9.1 billion yuan, a corresponding increase of 22%, maintaining a “buy” rating.
Risk warning: The recovery of surrounding tourist attractions fell short of expectations, progress of new projects fell short of expectations, etc.