Core views:
The first performing arts company in China, creating an original “theme park+cultural performing arts” business model. Relying on the two major brands “Song Cheng” and “Love Through the Ages”, the company uses specific scenes such as theme parks as carriers to provide visitors with high-quality cultural tourism products centered around various entertainment repertoire. The company currently operates 12 ancient scene zones across the country. According to the company's performance forecast, the company's operating income recovered to 71%-78% in the same period in '19 in '23, and net profit returned to 56%-67% of the same period in '19 after excluding Huafang Group. The business recovery trend is stable and improving, and we are optimistic about the company's long-term development.
The performing arts market is recovering at an accelerated pace, and policy+technology have brought dual empowerment to the tourism industry. (1) Demand side:
The per capita consumption level is growing steadily, consumer demand is increasing, the tourist consumer group is getting younger, and the holiday economy has had remarkable effects. (2) Supply side: Content upgrades drive the entertainment market to recover faster, and there is more room for future development due to low penetration rates. (3) Policy side: Relevant departments issue policies such as the “Domestic Tourism Promotion Plan (2023-2025)” to help improve the quality and capacity of the tourism industry. (4) Technical side:
VR, AR and other technologies are combined with performing arts to open up a new travel and performing arts experience.
Multiple rounds of expansion amplify brand influence, and new projects contribute to revenue growth. The company leverages the advantages of the entire industry chain, performed well in the first round of expansion projects, combined the importance of the second round of expansion, and used upgrades during the pandemic closure period to enhance the richness of existing repertoire content and inject new vitality into existing projects. In terms of new projects, the Shanghai Qiangu Scenic Area had a double harvest in terms of passenger traffic after being upgraded and revised; the Foshan Qiangu Scenic Area changed from light to heavy, and its performance has exceeded expectations since opening; the Three Gorges Qiangu Scenic Area is expected to be completed and opened in July '24, making it the fourth asset-light project launched by the company.
Profit forecasting and investment advice. The company's revenue for 23-25 is estimated to be 20.0, 28.9 billion yuan, and 3.39 billion yuan, respectively, up 338%, 44%, and 17%, respectively. Net profit to mother is -1.1, 12.7 billion yuan, and 1.57 billion yuan respectively. Net profit to mother was corrected in '24, and increased by 24% in '25. Taking into account the restoration of the profitability of the company's stock projects, the new project is growing strongly. Referring to comparable companies, a 24-year 25 X PE valuation was given, corresponding to a reasonable value of 12.14 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of macroeconomic fluctuations, slowing growth of stock projects, risk of new project launches and profits falling short of expectations, risk of safety accidents