Introduction to this report:
2023H2 Overseas high-end demand continues to pick up. Among them, prices in the Asia-Pacific region are better than volume; the share of real estate sales business has declined sharply, and it is expected that the main tourism business will focus on managing resources and speeding up profit-side recovery.
Summary:
The investment proposal takes into account the major environmental impact of real estate, and lowered the company's projected net profit for 2026 to 3.54 (-10%)/3.95 (-28%)/430 million yuan in 2026. Considering the industry average PE valuation is 22x, considering the company's scarce product positioning, the company was given 28x PE higher than the industry average in 2024, and the target price was lowered to HK$8.77 (-4%) to increase its holdings.
Performance summary: The company achieved revenue of 17.152 billion yuan/ +24.5% in 2023, of which Club Med was 14.157 billion yuan/ +22.3%, Sanya Atlantis 1,761 billion yuan/ +96.3%, vacation asset management center 1,059 million yuan/ -5.6%, reunion and related business 175 million yuan/ -2.6%; gross profit of 5.595 billion yuan/ +40.2%, gross profit of 32.6%, compared to 2019; net profit of 307 million yuan to mother. Margin was 1.8%, compared to -1.7 pct in 2019, and non-GAApeBitda was 3.73 billion yuan, returning to 100% in 2019; non-GAAP adjusted net profit of 395 million yuan, margin was 2.3%.
Overseas recovery has been more remarkable, and prices have risen markedly in the Asia-Pacific region. According to operating data, Club Med's turnover in Europe, Africa and the Middle East recovered to 111% in 2019, 163% in the Americas, and 102% in Asia Pacific; customer volume recovered to 90%/122%/105% in 2019, and customer unit prices recovered to 123%/133%/97% in 2019, respectively; price support was more significant. Among them, judging from 2023H2 split, Europe, Africa and the Middle East recovered to -3.8% month-on-month compared to the first half of 2019, America -4.68% and Asia Pacific +18.4% respectively; volume recovery was + 0.68%/+12.87%/-8.72%; the price difference was -5.15%/-17.73%/+25.47%. The price increase in the Asia-Pacific region was more obvious than in overseas regions.
Implement asset-light positioning and structurally improve the resort business. ① Club Med and Sanya Atlantis's business revenue in 2023 already accounted for 92.8% of the Group's revenue, the vacation asset management center's revenue has dropped to 6.2%, and the return tour business revenue has dropped to 1%. The revenue profit from the tourism operation business has all surpassed the real estate sales business, and structural optimization has been achieved; ② The short-term downturn of the Taicang project has been hampered by the gradual maturity of operations, which is expected to accelerate loss reduction in the later stages.
Risk warning: repeated epidemic, increased market competition, obvious decline in the same store, etc.