Core views:

Incident: The company released its 23 annual report, achieving revenue of 722 million yuan in 23, an increase of 55.81%; realized net profit of 151 million yuan, an increase of 670.72%; realized net profit without return to mother of 138 million yuan, and a loss of 24 million yuan in '22. On a quarterly basis, 23Q4 achieved revenue of 148 million yuan in a single quarter, an increase of 59.89%; realized net profit attributable to mother of 20 million yuan, 22Q4 loss of 0.19 million yuan; realized net profit deducted from non-return to mother of 0.23 million yuan, and loss of 227 million yuan in 22Q4. (The growth rate is calculated based on retrospectively adjusted data, same as below)

The tourism-related business is recovering well. According to the company's financial report, (1) Jingjiao: revenue for 23 years was 353 million yuan, up 148.74%; gross margin increased 17.66pp to 66.98%; (2) Hotels:

Revenue in '23 was $38 million, up 58.71%, and gross margin decreased by 0.56pp to 36.23%; (3) Zoos: Revenue of $37 million in '23, gross margin was 39.21%.

Profitability and ability to control expenses have both improved. The company's gross margin for 23 years was 51.96%, an increase of 8.98pp over the previous year, mainly benefiting from revenue growth, diluting fixed costs, and increasing the share of business revenue with high gross margin. On the cost side, the company's expense ratio for the 23-year period was 22.59%, down 4.61 pp year on year. Among them, sales/management/R&D/finance expenses decreased by 1.67 pp/ down 2.91 pp/ increased 0.44 pp/ 0.48 pp to 8.28%/11.36%/2.30%/0.65% year on year, respectively. Under the combined influence, the net interest rate due to mother in '23 was 20.96%, an increase of 16.72pp over the previous year.

Upgrade the “Cultural IP+Tourism+Technology” characteristic industry model. According to the company's financial report, the company invested in the establishment of a wholly-owned subsidiary “Xiangyuan Travel” to further enhance cultural tourism consumption experience, interactivity and intelligence through digital intelligence, and build an “online+offline” one-stop leisure and vacation brand.

Profit forecasting and investment advice. Net profit from 24-26 is estimated to be 2.3, 3.0, and 40 billion yuan, up 50.1%, 34.0%, and 31.3%, respectively. Considering the continued improvement in the operation of the company's scenic spots, it is expected that collaboration will be achieved, the judgment of a reasonable value of 6.63 yuan/share is maintained, and the “buy” rating is maintained.

Risk warning. The risk of macroeconomic and tourism sentiment fluctuations; the risk of changes in pricing policies; the risk of safety accidents; and the risk of having to re-tender after the right to operate expires.