The company released its 2023 annual report. In '23, the company achieved revenue of 9.635 billion yuan, +50.15% year-on-year; net profit to mother was 194 million yuan, reversing a year-on-year loss of 528 million yuan. In '23, the company grasped the opportunities for cultural tourism market recovery, and overall business performance improved. Subsequent suggestions focused on the growth of the hotel business in scenic spots and the recovery of cross-border travel catalysts on the company's travel agency business to maintain the purchase rating.
Key points to support ratings
The company's results in '23 turned a loss into a profit. In '23, the company achieved revenue of 9.635 billion yuan, +50.15% year-on-year; net profit to mother was 194 million yuan, reversing a year-on-year loss of 528 million yuan; net profit without return to mother was 130 million yuan, reversing a year-on-year loss of 548 million yuan. Of these, 23Q4 achieved revenue of 2,900 million yuan, +80.99% year-on-year, and net profit to mother of -12 million yuan, a year-on-year decrease of 151 million yuan.
The number of visitors to the scenic spots in the two towns has increased steadily, and business performance has improved dramatically. Wuzhen Scenic Area maintained and consolidated its advantages as a comprehensive destination for vacation and cultural exhibitions. It received 7.720,700 visitors in 23 years, +568% year-on-year, recovering to 84% in the same period in '19; achieved revenue of 1,784 billion yuan, +183.65% over the same period; achieved net profit of 284 million yuan, and a steady recovery in business performance. Gubei Water Town received a total of 1,523,600 visitors in 23 years, up 34.89% year on year, recovering to 63.65% in the same period in '19; achieved revenue of 735 million yuan, +6.78% year on year, and business performance achieved profit, with significant year-on-year improvement.
Travel agency business operations are improving, and policy optimization can be expected to increase. Based on immigration policies and the new characteristics of cultural tourism consumption, the company leverages its innovative advantages to create a number of boutique tourist routes, focusing on segments such as parent-child travel, research, and health care for young families to enhance market share and brand influence. Revenue of 1,298 billion yuan was achieved in '23, +179.62% year-on-year, and the operating situation continued to improve. Currently, international flights are recovering at an accelerated pace, and the number of countries covered by the visa-free policy is gradually increasing. The company's travel agency business is expected to benefit, and future increases can be expected.
Integrated marketing picked up across the board, and the hotel business slowly recovered. Integrated marketing business: China Youth Expo Federation has comprehensively improved the quality and efficiency of operations, and overall business performance has fully recovered. It achieved annual revenue of 2,187 billion yuan, +108.99% year-on-year; net profit of 44.5232 million yuan, turning a year-on-year loss into a profit. Hotel business: The hotel industry showed a good recovery trend in '23. Shanshui Hotel achieved revenue of 410 million yuan, +27.77% year over year, a loss of 39.4417 million yuan compared to '22, but still unprofitable.
valuations
The company's operating performance improved across the board in 23 years. It is expected that hotel depreciation and amortization will increase the company's financial pressure in the short term. Follow-up suggestions focus on the continuous climbing of new hotels in the Wuzhen Scenic Area and the recovery of cross-border travel catalyzing the company's travel agency business. We adjusted the company's 24-26 EPS to 0.52/0.69/0.86 yuan, and the corresponding PE was 20.9/15.8/12.6 times. Maintain a buy rating.
The main risks faced by ratings
Consumer demand recovery falls short of expectations, market competition is fierce, and the recovery of international tourists falls short of expectations.