Event: Zhongxin Travel released its 2023 annual results forecast. The company expects operating income of 3 billion yuan to 3.5 billion yuan in 2023, and net profit attributable to shareholders of listed companies of 23 million yuan to 34.5 million yuan, turning a loss into a profit over the previous year.

Policies and flights have resumed in an orderly manner, and the visa-free policy has boosted the continued development of outbound travel during the Spring Festival. Since 2023, with improvements in outbound travel policies and the recovery of outbound flight supply, the number of outbound travelers has continued to rise. The China Institute of Tourism Research estimates that the number of inbound and outbound tourists and international travel revenue in 2024 will exceed 264 million and US$107 billion, respectively. By January 30, 24, outbound flights had recovered to 69.35% of the same period in '19, and flight supply continued to improve. Recently, Singapore and Thailand have successively signed visa-free agreements. Previously, Malaysia also announced the implementation of visa-free entry measures for Chinese tourists. New Malaysia's visa-free visa is a two-way visa-free, and outbound travel to Southeast Asia during the Spring Festival is expected to benefit.

The pre-sale situation for the Spring Festival in '24 was optimistic, and domestic travel, hot and cold, became mainstream. According to the company's official statement, the total number of visitors during the Spring Festival has exceeded 90%. The total number of visitors has increased by more than 50% compared to the 11th Golden Week of 2023, the number of travelers has increased by about 45%, the Nordic Spring Festival market has increased by about 500% over last year's 11th, the Australian and New Zealand Spring Festival market has increased by 550% compared to last year's 11th, and the pre-sale situation in Southeast Asia is quite optimistic. Among long-term destinations, Northern Europe, Antarctica, Australia, New Zealand, and South Africa became popular choices; among short- and medium-term destinations, Dubai, Singapore, Sri Lanka, Thailand, Malaysia, and Japan ranked high; domestic snow and ice search volume increased 500% year over year; inquiries about customized products, free travel products, and winter camp ski products in Northeast China remained high, and warm domestic destinations such as Guangdong, Sanya, Xiamen, and Yunnan also became an important direction for Spring Festival travel.

Investment advice: The company is expected to achieve revenue of 32.11/65.50/11.254 billion yuan and net profit to mother of 0.29/1.34/246 million yuan in 2023-2025, corresponding PE of 225.2/48.4/26.3X, maintaining an “increase in holdings” rating.

Risk warning: The impact of overseas security incidents; flight repairs fall short of expectations; digital incubation falls short of expectations.