Incident Overview
The company released its annual report for 2023 and the first quarter of 2024. The company achieved operating income of 724 million yuan in 2023, +118% year-on-year, and achieved net profit of 175 million yuan, turning a loss into a profit; in the first quarter of 2024, it achieved operating income of 180 million yuan, -6.13% year over year, and realized net profit of 52 million yuan, or -16% year over year.
Analytical judgment:
Revenue and profit in 2023 greatly surpassed 2019. The company achieved revenue of 724 million yuan and 175 million yuan in net profit in 23, respectively, in line with performance forecasts, and recovered to 135% and 149% respectively in 2019. Looking at the spin-off business, the company's ropeway/hotel/travel agency/passenger business revenue in 2023 was 2.9/2.0/0.7/140 million yuan respectively, which was 128%/140%/151%/133% in 2019, respectively. The company's comprehensive gross profit margin in 2023 was 49.62%, up 1.5pct from 2019, and the gross margin of the ropeway/hotel/travel agency/passenger transport business was +3.2/+5.9/-0.3/+0.0pct compared to 2019, respectively. The ability to control expenses is good, and the comprehensive fee rate is basically the same as in 2019. The company's sales expense ratio/management expense ratio in 2023 was 5.36%/13.00%, respectively, +0.8 pct and -1.2 pct compared with 2019.
2024Q1 revenue and profit declined year-on-year under the high base. We are optimistic that traffic will recover in Q2. The company will achieve operating income of 180 million yuan in Q1 of 2024, -6.13% year over year, +34% year on year 19Q1, net profit to mother of 52 million yuan, -16% year on year, and +59% year on year 19Q1. The company's revenue profit for the first quarter of '24 declined somewhat due to last year's high base effect, but it is still higher than pre-pandemic levels. According to a report on the High Speed Rail Manager's official account, the Chihuang High Speed Rail is expected to be ready for operation by the end of April 2024. It is expected that it will effectively drive passenger flow growth, and the year-on-year passenger flow growth rate in Q2 is expected to improve.
The board of directors reviewed and approved the Lion Peak project, adding new impetus to future growth. The board of directors reviewed and passed the “Proposal on Investing in the Jiuhuashan Lion Peak Scenic Area Passenger Ropeway Project” on April 18, 2024, with a planned investment of 326 million yuan. The construction period is 24 months. The research report estimates that the number of passengers in the first year was 224,000, then increased by 15% every year thereafter, and there was no increase in the 15th year. The average annual turnover for the period was 111 million yuan, the average total profit was 50 million yuan, and the internal return on total investment (after tax) was 9.54%. Profit is expected to begin in the fourth year after operation. The company's long-term growth has added new impetus.
There are many highlights in the future to help new growth
According to our previously released report “One of the Four Famous Buddhist Mountains, Infrastructure Improvements Help New Growth”, we believe that the company has many highlights in the future, mainly including: (1) Temple tourism continues to be popular, and the company is expected to benefit. Emotional consumption and cost-effective consumption continue to rise, and the company's resource endowments are outstanding, and it is expected that it will continue to benefit from new tourism trends; (2) the Chihuang High Speed Rail completed operating conditions in April 24, connecting to the core scenic area of Huangshan Mountain, which is expected to expand passenger flow on the Hangzhou-Wu Central Line; (3) the transportation conversion center was upgraded and put into use, significantly improving parking carrying capacity (more than doubling parking spaces); (4) New projects are actively expanding, and may be expected to bring in new volume in the future. The Wenzong Ancient Village project opened in the first half of 2023 to develop high-end leisure resort products. The Lion Rock project is being actively declared, and the vegetarian catering business has established an independent subsidiary. The new project is expected to bring a new growth curve and further enrich the company's product line.
Investment advice
We have slightly adjusted our 24-25 profit forecast and added a 26-year profit forecast. The company is expected to achieve operating income of 791/861/926 million yuan in 24-26 years (the original forecast was 791/861 million yuan for 24-25), and realized net profit of 204/228/245 million yuan, (the original forecast for 24-25 was 208/229 million yuan), and EPS was 1.84/2.06/2.21 yuan respectively (the original forecast for 24-25 was 1.88/2.07 yuan), corresponding to the latest PE 21/19/18 times (see April 18, 2024), respectively The daily closing price is 38.78 yuan), maintaining the “gain” rating.
Risk warning
(1) Residents' optional spending falls short of expectations; (2) passenger flow growth due to the opening of the Chihuang High Speed Rail falls short of expectations; (3) natural disasters and public health safety risks.