Incident: The company disclosed its annual report for '23. 1) In '23, the company achieved revenue of 1,929 million yuan/+20.1% compared to '19, net profit of 423 million yuan/+24.3% compared to '19, and net profit of 391 million yuan/+24.9% compared to '19. 2) The 23Q4 company achieved revenue of 495 million yuan/+34.6% compared to 2019, net profit of 15 million yuan/+258.8% compared with 19 years, after deducting net profit of non-return to mother - RMB 16 million.

By business: ① Passenger flow in Huangshan grew high in '23, and the three major scenic spots continued to be popular, receiving 4.5746 million visitors throughout the year/ +227.5% year-on-year, +30.7% compared to '19, setting a record high, driving the scenic area business to achieve revenue of 265 million yuan, +24.2% compared to '19. Among them, the ticket business is expected to contribute mainly to profits. Taiping Lake lost 7.55 million yuan, and Huashan Mysteries Caves lost 57.76 million yuan, due to the climbing period after the renovation, the ropeway expanded. and cumulative transportation by cable car ② 9.5061 million visitors/year over year, +207.7%, helping the ropeway business achieve revenue of 700 million yuan/+26.3% compared to 19, of which Yuping Ropeway and Taiping Ropeway achieved net profit of 138 million yuan/013 million yuan respectively; ③ The hotel business achieved revenue of 460 million yuan, -30.6% compared to 19. If the influence of the Huicai business is excluded, it achieved revenue of 699 million yuan, +5.5% over 2019; ④ The Huicai business achieved revenue of 239 million yuan, and the travel service business achieved revenue of 239 million yuan 4.70 billion yuan.

In terms of gross margin, the overall gross profit margin is 54.0%, compared to 19-1.9 pct. We expect it to be mainly affected by the Huashan Mysterious Cave Scenic Area. On the cost side, the sales/management/finance rates were 2.67%/18.57%/-0.07%, respectively, changing -3.85pct/-0.33pct/+0.42pct from the same period in '19. The overall improvement was positive, and sales expenses were clearly optimized. Net profit margin 21.92%/+0.75pct compared to the same period in '19.

Project construction is progressing at an accelerated pace, and the business layout is being strengthened and expanded. ① The company promoted the speeding up and efficiency of project construction, positioned the Shilin Cliff House renovation project of the Alpine Healing Hotel already put into operation, the Beihai Hotel environmental remediation project, and the Huangshan Tourism CBD project continued to advance, and the East Huangshan Ropeway is expected to be put into operation in 2025; ② At the same time, the company is strengthening the use of Huangshan's IP value and resource advantages to promote Huicai's business layout (the number of stores in operation and construction has reached 26), and the company actively manages business output (hosting the Wangmangling Ropeway project and has some project reserves); in addition, the company actively manages business output (hosting the Wangmangling Ropeway project and has some project reserves); Implement cross-border cooperation with Aofei ③ Entertainment launched a “travel+animation” cooperation experiment, joined hands with B-station “The Legend of Mortal Immortals” animation to carry out large-scale IP linkage activities, cooperated with New Oriental to jointly exploit the advantages of cultural tourism and education and training resources, and signed a strategic cooperation agreement with Huazhu Group.

The location advantage is obvious, traffic continues to improve, and the customer source market continues to expand. The Changjinghuang High Speed Rail was opened to traffic at the end of '23; the Chihuang High Speed Rail is expected to be officially opened at the end of April. After opening, it is expected to become a golden tourist route connecting two mountains and one lake in southern Anhui, and expand the number of high-quality passengers in East China and central China. Huangshan District has an obvious location advantage. With the opening of highways, high-speed railways, etc., we believe that the potential customer market for scenic spots is expected to expand further.

Company highlights: High-quality traditional natural scenic spots, outstanding resource endowment advantages; Q1-Q2 implemented policies such as free admission every Wednesday on non-holidays and free admission for young people and the elderly, which is expected to continue to be popular; the scenic area is backed by the Yangtze River Delta, with obvious location advantages, and continuous traffic improvement; the continuous development of Donghuangshan Scenic Area and the integration of resources in Taiping Lake and Huashan Mysterious Cave projects are expected to contribute to revenue growth. The company's medium- to long-term growth path is clear. According to iFind's agreed expectations, the company's net profit for 24-25 was 485/546 million yuan, respectively, and the PE corresponding to the closing price on April 19 was 19/17 times, respectively.

Risk factors: Increased industry competition, project construction falling short of expectations, management risks, etc.