Introduction to this report:
Hainan's core traffic entrance advantage is remarkable, and they are optimistic that the construction of a free trade port will bring room for growth.
Key points of investment:
The recommended investment performance was slightly lower than expected. Considering the remarkable results of de-real estate in the early stages, the pace of progress in Q1 slowed down. The company's 2024-2026 EPS was reduced to 0.10 (-0.01) /0.11 (-0.02) /0.13 (-0.03) yuan, respectively; referring to the valuation of comparable companies in the same industry, 36xPE was given in 2024, which was higher than the industry average, maintained a target price of 4.00 yuan, and downgraded to prudent increase in holdings.
Performance summary: 2024Q1 revenue was 1,193 million yuan/-5.28% year over year, net profit to mother 219 million yuan/-5.97% year over year, net profit excluding net profit of 119 million yuan/year over year. Net profit margin to mother 18.3% /y-0.1 pct/month-on-month +11.0 pct.
The decline in revenue was mainly affected by the decline in carry-over revenue from the real estate business. In terms of real estate business, from January to January 2024, the contract area for the company's real estate sales project was 15,455.30 square meters, down 46.87% from the same period last year; the contract amount was 262.0586 million yuan, down 47.28% from the same period last year. In terms of airport business, from January to January 2024, the company's airports had 4,2516 take-off and landing sorties (-8.11% YoY), passenger throughput was 7.3617 million passengers/YoY +2.96%, and cargo and mail throughput was 42461 tons/YoY +2.95%.
Q1 Gross margin declined year on year, and non-recurring profit and loss increased return to mother's profit. 2024Q1 has a gross profit margin of 46.0% /YoY -4.5 pct/month-on-month -11.1pct, sales expense ratio 2.8% /y-0.3 pct/month-on-month -0.6 pct, management expense ratio 13.8% /YoY +0.6pct/month-on-month +2.5pct, financial expense ratio 4.5% /y-3.8pct/month-on-month -0.5pct. The main reasons for the decline in the company's net profit and net profit not attributable to mother are: first, the company's overall operating costs increased in the first quarter; second, the company's total investment income in participating units decreased compared to the same period last year; third, interest on loans from relevant units that had a one-time confirmation in the current period covered non-operating profits and losses.
Risk warning: Policy implementation falls short of expectations; consumer demand weakens; industry competition intensifies.