Incidents:
Jiuhua Travel released its 2023 report and 2024 quarterly report. In 2023, the company achieved revenue of 724 million/ +117.94%/recovered to 135% in 2019, net profit of 175 million/reversed/recovered to 149% in 2019, and net profit after deducting non-return to mother 166 million/reversed/recovered to 155% in 2019.
2024Q1 achieved revenue of 180 million/ -6.13%/recovered to 135% of 2019Q1, net profit to mother of 52.08 million/-15.80%/recovered to 134% in 2019Q1, after deducting net profit of 49.02 million/ -17.94%/recovered to 132% of 2019Q1.
Comment:
Passenger flow has driven strong growth in the performance of multiple business segments, and the growth and revenue contribution of the hotel business is outstanding.
In 2023, Jiuhuashan Scenic Area received 9.2518 million visitors/ +16.63%/recovered to 82% in 2019. By business, the hotel/ropeway/passenger transport/travel agency business achieved revenue of 234/2.95/1.21/67 million, respectively, and recovered to 140%/128%/133%/151% in 2019, accounting for 32%/41%/17%/9%, respectively; gross margins were 16.46%/85.96%/48.55%/9.39%, respectively, compared to 2019, +5.91/+3.18/+0.03/-0.29 pct, respectively.
Profitability improved significantly in 2023, surpassing pre-pandemic levels, and 2024Q1 saw a slight decline in profit margins due to operating leverage. In 2023, the company's comprehensive gross profit margin was 49.6% /+23 pct/+1.5pct compared to 2019; period expense ratio 18.2%/-9.9 pct/-1.2 pct compared to 2019; net profit margin 24.1% /+28pct compared to 2019. 2024Q1's profitability remained stable, with gross margin of 54.7% /-3.3 pct down 0.3 pct from 2019Q1; the company's period expense ratio was 15.5% /+0.3 pct/0.7 pct higher than 2019Q1; and the company's net profit margin to mother was 28.9% /-3.3 pct/down 0.1 pct from 2019Q1.
Bad weather after the Spring Festival dragged down the passenger flow. Despite the popularity of the Spring Festival scenic area, the cumulative number of visitors to Jiuhuashan Scenic Area declined slightly from January to January due to freezing rain and snow, receiving 1.5826 million visitors/ -8.59%; achieving tourism revenue of 1,829 billion yuan/ -6.84%. Q2 Jiuhua Mountain has entered the traditional peak season. Combined with holiday catalysts, it is expected to usher in impressive passenger traffic and performance.
Investment proposal: Jiuhua Tourism's internal carrying capacity continues to expand. Construction of the Lion Peak project is expected to begin in December 2024 after review and approval by the board of directors. The opening of the Chihuang High Speed Rail is expected to boost passenger traffic in the middle of this year. The company's net profit for 2024-2026 is estimated to be 2.02/2.27/247 million yuan, maintaining a “buy” rating.
Risk warning: macroeconomic fluctuations, policy risks, etc.