Introduction to this report:
Surrounding passenger flow is still under pressure. Real estate depreciation and year-end expense settlement in Wuzhen are dragging down performance, but passenger flow in the two towns has improved marginally, and concerns are picking up in the core scenic area's operating data.
Key points of investment:
Investment suggestions: Considering the impact of short-term long-distance travel recovery on surrounding travel diversion, the 2023-2025 EPS was reduced to 0.26 (-33%) /0.55 (-17%) /0.61 (-32%) yuan, respectively. Considering that the average valuation level of the scenic spot industry is 22x PE, and considering that Wuzhen and Gubei Water Town are expected to recover marginally under a low base as iconic surrounding tourism projects, give the company 25x PE higher than the industry average in 2024, maintaining a target price of 14 yuan.
The performance was slightly lower than expected: 2023Q3 achieved revenue of 2,556 billion yuan, recovering to 69% of the same period in 2019, with gross profit of 698 million yuan, recovering to 81% in 2019, gross margin of 27.31%, +3.92% compared to 2019, net profit to mother of 99.7 million yuan, recovering to 61% in 2019, net profit after deducting 93 million yuan in 2019;? The surrounding tourist flow is still under pressure, and the two towns are steadily recovering. ① Considering that short-term passenger flow in surrounding tourist attractions is being squeezed by the restoration of the long-distance chain, Wuzhen and Gubei are also being diverted and performance pressured as iconic surrounding tourist attractions; ② considering Wuzhen's impact on real estate business impairment and year-end centralized fee settlement, it may be hampered by performance; ③ Considering the overall low base of surrounding tourism in 2023, it is more critical to focus on marginal passenger flow trends.
Focus on rationalizing mechanisms and improving organizational potential. Considering that team organization and core resources are still adapting and reconciling after central enterprises enter, the stability of the organizational team will become the core guarantee for later operations. On the other hand, focus on the incremental impact of the Puyuan project auction contribution.
Risk warning: Competition in the industry is intensifying, transportation costs are rising, and the recovery of surrounding tourism is slow.