2023 results are in line with our expectations
Jinjie Holdings announced 2023 results: total revenue of $533 million, a year-on-year increase of 16% (recovering to 30% in 2019). Of this, total gaming revenue was $515 million, up 15% year over year (recovering to 30% in 2019), and non-gaming revenue of $18.45 million. EBITDA recorded $295 million, up 20% year over year, and recovered to 44% in 2019, in line with our expectations.
Development trends
The debt is expected to be fully paid off in July 2024. As of December 2023, the company's net debt EBITDA ratio improved to 0.35x, indicating that the company may be able to repay the debt before it matures in July 2024. We believe that as the debt matures, market concerns about the company's refinancing plans are expected to ease, and the company is also expected to increase investment in marketing and customer acquisition after repayment, further driving the rapid recovery of the business.
Demand for outbound travel from China is expected to grow, and Thailand may be a new growth point. In December 2023, the number of visitors to Cambodia recovered to 75% of the same period in 2019, of which the number of visitors from China only recovered to 27% in 2019. Considering the upward trend in domestic outbound travel demand, we believe the company's business volume recovery is expected to accelerate in 2024. Furthermore, management said that the company has begun to gradually pay attention to Thai customers, thanks to the relatively high spending capacity of Thai tourists among Southeast Asian countries. At the same time, as Thailand's foreign direct investment in Cambodia gradually increased, the number of expatriates and business visitors also increased.
Profit forecasting and valuation
We lowered our 2024 EBITDA forecast by 4% to $391 million and introduced a 2025 EBITDA forecast of $459 million, mainly because we expect the company to recover or take longer. Currently, the company's stock price corresponds to 5 times 2024 EV/EBITDA. We maintain our outperforming industry rating. Taking into account the lower profit forecast and declining market valuation, we lowered our target price by 25% to HK$5.60, which corresponds to 8 times the 2024 EV/EBITDA, corresponding to 61% upward space compared to the current stock price.
risks
Regional competition has intensified; the recovery of visitors to Cambodia has been slower than expected.