Introduction to this report:
The performance was slightly lower than expected, but considering the subsequent shortening of the peak season in the first quarter and the seasonal impact of mountain closures, compounded by traffic improvements in June-July, the stock price is still supported by expectations.
Key points of investment:
Investment advice: Considering that traffic improvements are still supported by expectations, maintain the company's 2024-2025 and 2026 forecast EPS of 1.85/1.99/2.15 yuan. Considering the industry average of 24xPE, the company's traffic improvement was significant. It gave 25x PE higher than the industry, raised the target price to 46.17 (+16%) yuan, and maintained an increase rating.
Performance summary: The company achieved revenue of 724 million yuan in 23, recovered to 135% in '19, gross profit of 359 million yuan, recovered to 139% in '19, gross profit margin of 49.62%, year-on-year +1.49pct, net profit of 175 million yuan, recovered to 149% in '19, after deducting 166 million yuan of non-return mother, recovered to 155% in '19; 24Q1 achieved revenue of 180 million yuan/ -6.13%, recovering to 135% in '19, gross profit margin of 0.99 million yuan/ -11.43%, gross profit margin 54.68% /+1.38pct, tax and additional/sales/management/finance expense ratio +0.06/+0.25/+0.04pct year-on-year, net profit to mother was 52 million yuan/ -15.8%, recovered to 134% in 2019, after deducting 49 million yuan/ -17.94% from non-return mother, and recovered to 132% in '19.
The slightly lower performance expectations for the first quarter are mainly due to the shortening of the peak season and the impact of mountain closures. 24Q1 was mainly affected by the decline in passenger flow. On the one hand, the peak season was shortened due to the delay in the Spring Festival. Second, the spring festival delay and mountain closure had a total impact of about 30 million in revenue. The rest of the time was growth. Profits fell higher than revenue due to high operating leverage, but considering the opening of the Chihuang High Speed Rail and the renovation and expansion of Jiuhua Airport in June-July, there is still expected support.
Investment in the Lion Peak project has been anticipated. The investment announcement for the Lion Peak project was in line with expectations. The project is scheduled to begin construction in December 2024 and be completed and put into use in November 2026.
Risk warning: high travel costs, extended subsidies, and economic recovery falling short of expectations