Incident: Jiuhua Travel released the 2023 Annual Report and 2024 Quarterly Report. The company achieved revenue of 724 million yuan in 23, an increase of 117.9% over the previous year, and recovered to 134.7% in 2019; realized net profit of 175 million yuan, an increase of 1374.9% over the previous year, and recovered to 149.3% in 2019. The 24Q1 company achieved revenue of 180 million yuan, down 6.1% from 23Q1, and a recovery of 134.7% from 19Q1; realized net profit of 52 million yuan, down 15.8% from 23Q1, and 134.4% from 19Q1.
The company's business recovered significantly in '23, and the gross margin of the main business reached 49.7%. In 2023, the company achieved main business revenue of 718 million yuan and gross margin of 49.7%. By business, the hotel business achieved revenue of 234 million yuan, a year-on-year increase of 86.2%, achieving a gross profit margin of 16.5% /+34.4pct; the ropeway cable car business achieved revenue of 295 million yuan, up 136.1% year-on-year, achieving a gross profit margin of 86.0% /+15.4pct; the passenger transport business achieved revenue of 121 million yuan, an increase of 126.3% year-on-year, achieving a gross profit margin of 48.6% /+18.3pct; the travel agency business achieved revenue of 0.67 million yuan, an increase of 197.0% year-on-year, achieving a gross profit margin of 9.39% /-5.4pct .
It is planned to invest 326 million yuan to build the Lion Peak Ropeway to promote project expansion and handle the increase in passenger traffic brought about by the opening of the Chihuang High Speed Rail. The company plans to invest in the construction of the Jiuhuashan Lion Peak Scenic Area passenger ropeway project to meet the tourist expansion needs of the scenic area. The estimated investment amount for the project is 326 million yuan, of which about 295 million yuan for ropeways and 31 million yuan for alpine walking trails. The construction period of the project is about 24 months, with an estimated passenger volume of 224,000 passengers in the first year of construction, with an average annual revenue of 111 million yuan and a total annual profit of 50 million yuan during the period. The return on investment was 15.32%, and the IRR (after tax) was 9.54%.
The project is expected to turn a loss into a profit starting in the 4th year, and the overall payback period (after tax) is 11.92 years (including 2 years of construction).
Dividends: The company plans to distribute 7.9 yuan (tax included) in cash dividends for every 10 shares (not distributed in 22 years), with a total cash dividend of 87 million yuan, with a dividend rate of 50.06%, corresponding to the current dividend rate of 2.03%.
Profit forecast and investment advice: We expect the company's 2024-2026 revenue to be 8.12/8.78/939 million yuan, respectively, up 12%/8%/7% year on year, and net profit to mother of 2.08/2.38/262 million yuan respectively, up 19%/14%/10% year on year. The PE corresponding to the current stock price is 20/17/16X, respectively, covered for the first time, giving a “recommended” rating.
Risk warning: risk of macroeconomic fluctuations, risk of natural weather changes, risk of project construction falling short of expectations.