Incident: In 2023, the company achieved revenue of 1.42 billion yuan/year on year, achieving net profit of 275 million yuan/year on year +141%; 4Q23, the company achieved revenue of 450 million yuan/year on year -18%, and achieved net profit of 0.3 million yuan/year on year. In addition, the company plans to pay out a dividend of 146 million yuan, with a dividend rate of 53%.
The exhibition business recovered rapidly, exceeding the 2023 performance promise to benefit from the resumption of domestic travel. In 2023, the Convention and Exhibition Group achieved revenue of 1.36 billion yuan/+85% year over year, achieved deducted non-net profit of 185 million yuan, and exceeded the performance promise of 127 million yuan when completing the restructuring and listing. Looking at the main business, the exhibition organization achieved revenue of 760 million yuan/year over year, mainly due to the increase in the number of exhibitions held; the supporting services for the exhibition achieved revenue of 220 million yuan/-7% year over year, mainly due to undertaking the construction of government emergency projects in 2022; the event achieved revenue of 160 million yuan/year over year +59%; and the exhibition hall operation business achieved revenue of 270 million yuan/year on year +1008%. Among them, 4Q23's revenue was -18% year-on-year, mainly due to the revenue settlement of emergency engineering projects in the same period in 2022, resulting in a high revenue base.
Combining endogenesis and extension, the “Exhibition China” strategy has steadily promoted the company as a state-owned exhibition company, with strong operating momentum and implementation capabilities. The established strategies “Exhibition China and “Digital Exhibition” have begun to be implemented and achieved results. The company announced on September 27 that it plans to jointly acquire 40.74% of the shares of Shanghai Dongrui Huizhan Private Equity Fund Partnership through an agreement transfer and targeted capital increase. Of these, the company plans to invest 42.3 million yuan and hold 34.81% of the shares. Its main business is TOPS the TOPS Expo Pet Show. It has been in a period of rapid development in recent years, which can further improve the company's layout in the consumer exhibition field.
The dividend rate remains high and a repurchase plan has been introduced, focusing on shareholders' returns to the company's historical dividend stability. The dividend rate remained above 50% in 2020-23, and the current dividend rate is 3.4%. At the same time, the company continues to carry out repurchases to protect the company's value and shareholders' rights. On February 7, 2024, the company's board of directors decided to use its own funds to repurchase the company's shares, totaling no less than RMB 1-2 billion (including 100 million and 200 million), and the repurchase price did not exceed RMB 12.93 per share.
Investment advice
The company's net profit for 2024-26 is estimated at 3.2, 360, and 410 million yuan, corresponding to PE of 14X, 12X, and 11X, respectively. Considering that the company is a leader in state-owned assets exhibitions, on the one hand, it continues to promote an endogenous+epitaxial two-wheel drive growth strategy, and at the same time attaches great importance to shareholder returns. The valuation and dividend ratio are highly attractive, and it maintains a “recommended” rating.
Risk warning: Risk of off-site exhibition project expansion falling short of expectations; risk of fluctuations in the fair value of financial assets held.