Introduction to this report:

The 2023 performance forecast is in line with expectations. Outbound travel is recovering slowly due to capacity and visas. It is expected that there will be a steady recovery in the future, and a sharp increase in the company's market share will strengthen the channel and product share.

Key points of investment:

The performance was in line with expectations, and the holdings were increased. Considering the recovery situation in 2023, the 2023/24/25 EPS was lowered to 0.03/0.12/0.22 (0/-0.08/-0.08) yuan. Considering that outbound travel is expected to return to normal in 2025, and after the industry clears up drastically, the company became a supplier of scarce high-end outbound travel products in the industry, giving 36xPE higher than the industry average in 2025, and lowering the target price to 7.92 yuan.

Summary of the performance forecast: According to the company's announcement, it is expected to achieve net profit of 23 to 34.5 million yuan, non-net profit deducted from mother of 800-12 million yuan, net profit to mother of 68.61 million yuan in 2019, and non-deducted from mother of 59.04 million yuan; estimated operating income in 2023 is 3-3.5 billion yuan, or 12.7 billion yuan in 2019.

Outbound travel has been slow to recover due to multiple restrictions. ① The market has previously fully anticipated the pace of outbound travelers and revenue recovery; ② Visa transfers are not a bottleneck; it is short-term capacity. It is expected that overseas travel capacity will return to 50-60% in 24, and revenue will return to 50% in 2024. Optimistic estimates expect a full recovery in 2025. ③ The price recovery is significantly better than the recovery in the number of people. Currently, product costs are generally 50-150% higher than before the epidemic (depending on the route). Subsequent prices are expected to decrease.

Demand is gradually picking up, and the easing of transportation visa bottlenecks is expected to accelerate expansion. ① Taking into account consumption capacity, international relations, and product bottlenecks, we expect that the recovery pace of outbound travel will be a process of steady recovery, price increases and falls, and profit margin levels will gradually return as prices and supply and demand relationships recover; ② Zhongxin's share will increase dramatically, and the company will continue to launch new products and channel capabilities. The company will strengthen retail channels and continue to launch new products to maintain competitive advantage.

Risk warning: Economic fluctuations affect demand, organizational structure integration, and efficiency improvements fall short of expectations.