2023 successfully reversed losses, in line with the performance forecast
The company announced revenue of 9.635 billion yuan/yoy +50.15% for the year 23, net profit of 194 million yuan, deducted non-net profit of 130 million yuan, and deducted non-net interest rate of 1.35%, reversing the year-on-year loss. Among them, 4Q23 deducted non-net loss of 63 million yuan, and deducted non-net interest rate of -2.18% /qoq-5.8pct, considering that it was mainly due to off-peak season switching and centralized cost calculation. The quality of the company's leading products in the two major leisure towns has been upgraded, and the brand reputation has improved, laying a good foundation for the restoration of passenger flow. The company has been seizing tourism restoration opportunities for 23 years, and businesses such as scenic spots/integrated marketing/hotels/travel agencies have picked up in an orderly manner. Looking ahead to 24 years, the domestic leisure travel market is expected to continue. With the optimization of visa policies and the resumption of international flights, the company's cross-border travel business is expected to usher in a substantial recovery, and the performance of travel agencies can be expected to be flexible. Considering the steady return of passenger flow in Wuzhen and Gubei, and pressure on the profit side of other businesses, we expect the 24-26 EPS0.54/0.68/0.82 yuan (24-25E previous value of 0.96/1.32 yuan), which is comparable to the company's 24-25E consistent profit forecast average PE 20X. Considering that the recovery in outbound travel demand leverages performance elasticity, it is expected to catalyze the valuation. The target price is 11.88 yuan (previous value 22.94 yuan).
The operating performance of the two major scenic spots, Wuzhen and Gubei, was stable. The passenger flow of Wuzhen Xizha surpassed the same period in '19, and Wuzhen achieved revenue of 1,784 million yuan/yoy +183.65%, net profit of 284 million yuan, and a steady recovery in business performance. Among them, the entire Wuzhen Scenic Area/Dongzha/Xizha received 772.1/227.4/5.446 million visitors, +568/1310/ 448% year-on-year, or 84/59/ 103% in the same period in '19. The Wuzhen Scenic Area focuses on innovative products and continues to enrich the business scene. It successfully hosted the 10th Wuzhen Theatre Festival in 23 years, including 87 performances of 28 specially invited repertoire and more than 2,000 performances at the Ancient Town Carnival. Adhering to its unique resource endowments, Gubei Water Town has enhanced its refined operation capabilities. It received 1,523,600 visitors/yoy +34.89% in 23 years, or 64% for the same period in '19. Revenue was 735 million/yoy +6.78%, and operating profit recovered. The products of the two towns boosted the company's brand reputation and formed a good synergy with integrated marketing and travel agency business.
The performance of the integrated marketing business is relatively positive. In '24, the cross-border travel business is expected to see a substantial recovery in integrated marketing operations. In '23, China Qingbo Federation's revenue was 2.187 billion yuan, +108.99% year-on-year, and net profit of 44.523 million, reversing losses over the previous year. The net interest rate was 2.04%, and the advantages of independent IP and digitalization were highlighted.
Shanshui Hotel achieved revenue of 410 million/yoy +27.77%, a year-on-year loss of 39 million yuan; travel agency business revenue was 1,298 billion yuan, an increase of 179.62% over the previous year, benefiting from the boom in the domestic leisure travel market. Looking ahead to 24 years, the company's entry/exit business is expected to see significant improvements as international flight supply recovers. In 23 years, the company has been steadily developing entry visa business. It has successively won bids for the right to operate overseas visa centers such as Israel and Saudi Arabia. The Chinese Visa Application Center in Ethiopia and the Philippines have already opened.
The strategic investment business is resilient; the company's gross margin has improved slightly
In 23 years, the strategic investment business continued to contribute to the company's stable performance. Among them, the IT business was 3.886 billion yuan, accounting for 40.3% of total revenue, and was the main source of revenue. Benefiting from operational recovery, the company's profitability has improved. The company's scenic area/hotel business achieved a gross margin of 75.14/ 27.31% in '23, +21.25/16.24pct. The company's comprehensive gross profit margin was 24.45%, up 0.36pct from '19.
Risk warning: The recovery of the surrounding travel market fell short of expectations, subsidies in Wuzhen were reduced, and the progress of new projects fell short of expectations.