Incident: The company disclosed its annual report for the year 23 and the quarterly report for the year 24. 1) In '23, the company achieved revenue of 630 million yuan/+25.2% compared to the same period in '19, net profit of 147 million yuan/+18.8% over the same period in '19, after deducting net profit of 140 million yuan/+14.9% over the same period in '19. 2) The 24Q1 company achieved revenue of 107 million yuan/-11.3% compared to the same period in '23, net profit of 111 million yuan/-42.8% compared to the same period in '23, and net profit of 209 million yuan/-44.7% compared to the same period in '23. 3) It is proposed to transfer 4.5 shares and pay 5.36 yuan (tax included) for every 10 shares, and the dividend payment rate will reach 67.93% (no dividends in 21-22).
Passenger flow performance in the scenic area sector has both recovered, and hotels have contributed significantly to revenue growth. 1) Scenic area sector: Facing the diversion of long-term visitors, the company actively marketed and drained. Shanshuiyuan and Nanshan Zhuhai achieved revenue of 1.79/146 million yuan respectively, +8.7%/7.5% compared with 2019, and gross margins of 70.4%/72.3%, respectively, and +2.4pct/+3.0pct, respectively. 2) Hotel sector: Over the past 20 years, the differentiated hotel matrix of the company's layout has climbed one after another. The hotel business achieved revenue of 207 million yuan/+45% compared to '22, and a gross profit margin of 29.9%/+5.0 pct compared to '23. 3) The hot spring/water world/travel agency business achieved revenue of 0.47/0.13/0.09 million yuan respectively, or -10.9%/-19.6%/-28.7% compared with 2019, and gross margins of 48.4%/7.0%/7.2%, respectively.
Changes in gross margin were affected by the hotel's climbing slope, and overall cost control capacity was optimized. On the gross profit side, the company's gross profit margin was 54.3% in '23, +18.1pct compared to '22, and -11.0% compared to '19. Mainly due to the increase in the share of the hotel business, but the gross margin declined due to the increase in new project operations, materials and depreciation. On the cost side, sales rate/ management rate/ finance rate were 7.6%/13.7%/-1.1%, respectively, compared to 2019, -5.8pct/-1.1pct/+0.2pct, respectively. The overall optimization was obvious. Net profit margin was 23.3%/-1.2pct year on year 19, mainly affected by the decline in gross margin.
Promote supply quality upgrades, state-owned holdings, and complement each other's advantages. The company is actively promoting the construction of a rafting project. We believe that the project is expected to open in the summer of '24 to meet the needs of summer vacationers. At the same time, the company is actively promoting the Nanshan Xiaozhai Phase II project and the Animal Kingdom project to enrich the tourism product matrix; the Shanghai-Suhu Railway is expected to be ready to open by the end of 24, and Tianmu Lake is expected to enter Shanghai's “one-hour traffic circle” at that time, further facilitate the flow of visitors from East China. Furthermore, Liyang Chengfa has become the largest shareholder, which helps to complement the advantages of private and state-owned assets, while also addressing the company's capital needs and resource acquisition, and empowering the company to grow externally.
Profit forecast: As a high-quality leisure and vacation destination in the Yangtze River Delta, the company has significant location advantages and outstanding operating capacity. In the short term, the outside benefits from the increase in passenger flow brought about by improved traffic, and the internal benefits from the operation of rafting projects and the improvement of hotel business operations. In the medium to long term, there is considerable room for growth, and the injection of state-owned capital has enabled the company to develop in the long term. We expect the company's net profit to be 1.78, 2.09, and 237 million yuan respectively in 2024-26. The PE corresponding to the current stock price is 20X, 17X, and 15X, respectively.
Risk factors: Increased industry competition, project construction falling short of expectations, management risks, etc.