The company released its 2023 performance forecast. It is expected that the profit side will turn losses into profits throughout the year due to the rapid release of demand for travel, accommodation, and catering, and the company's performance will be repaired in stages. Looking ahead to the future market, the domestic travel related business has been initially repaired, and there is still room for improving quality and efficiency; the outbound travel business is still highly resilient, and we maintain our holdings increase rating.
Key points to support ratings
A loss turned into a profit for the whole year, and the recovery continued in the fourth quarter. According to the company's performance forecast, net profit for the full year of '23 is expected to be achieved of 0.61 to 77 million yuan, an increase of 239-255 million yuan compared with a loss of 178 million yuan in the same period last year; net profit without return to mother is estimated to be 0.53 to 69 million yuan. Compared with losses of 242 million yuan and an increase of 292-311 million yuan for the same period last year, the profit side has achieved a good reverse loss. Furthermore, the low tourism season continued to recover in the fourth quarter, and continued to achieve high year-on-year growth under the influence of a low base in the same period last year. Net profit due to mother was 372.09-1972.09 million yuan in the fourth quarter, an increase of 8608.28-10.0828 million yuan over the same period last year; net profit deducted from mother in the fourth quarter was 6296-166.296 million yuan, an increase of 104-120 million yuan over the same period last year, and the recovery continues.
Domestic travel is recovering well, and domestic tourism is expected to continue to grow in 24 years. The company's domestic travel-related business quickly recovered in '23, and achieved good business growth. In the lodging industry, the hotel management business brand output is quite strong, and revenue has exceeded the 19-year level; the annual revenue performance of the hotel business is close to the 19-year level. Domestic tourism continued to recover in 24 years, and the number of domestic travel revenues and visitors during the New Year's Day holiday period exceeded 19 levels. The company also seizes market opportunities and actively operates. On New Year's Day, the number of participants in the business travel industry tripled year on year, and revenue increased 7 times year on year; revenue from the lodging industry increased 155.54% year on year. Following the arrival of winter vacation, the popularity of related travel products also continued to rise. Travel demand performed well after the start of the year, and is expected to continue to grow throughout the year.
The outbound business is still recovering, and we look forward to a flexible recovery. Before the pandemic, inbound and outbound travel-related businesses were an important part of the company's revenue, accounting for more than half. The inbound and outbound travel business was undergoing a period of rapid restoration throughout '23, but it was still affected by supply and demand and slow restoration of international flights, and was not fully restored. According to flight managers, as of January 28, the recovery rate of international flight operations for the past four weeks was over 65%, and there is still room for restoration. On this basis, the company also continues to make efforts to develop related travel products in line with market demand, and looks forward to a flexible recovery in future inbound and outbound travel performance.
valuations
The company's business broadly lays out the upstream and downstream cultural tourism industry chains. The domestic travel business has recovered well throughout the year. It is expected that the growth trend will continue in the future, while the inbound and outbound tourism sector is looking forward to a flexible recovery in the future. Based on the company's performance forecast and recovery performance, we adjusted the 23-25 EPS forecast to 0.11/0.36/0.42 yuan, corresponding price-earnings ratio of 67.0/20.5/17.3 times. Maintain an increase in holdings rating.
The main risks faced by ratings
The recovery in entry and exit fell short of expectations, the recovery in consumer confidence was insufficient, and market competition intensified risks.