Core views:
Incident: The company released its 2023 annual report and 2024 quarterly report. The company's revenue in 2023 was 1,926 million yuan, an increase of 320.76% over the previous year; net profit to mother was 110 million yuan, after deducting net profit from non-mother of 88.31 million yuan, which was mainly dragged down by Huafang Group's investment impairment losses of 860 million yuan. 24Q1 achieved revenue of 550 million yuan in a single quarter, up 138.7% year on year; net profit from mother was 255 million yuan, up 317.33% year on year; net profit after deducting non-return to mother was 249 million yuan, up 349.07% year on year, mainly because all scenic spots of the 24Q1 company operated normally and some scenic spots failed to open during the same period in '23.
Business division: Revenue from all projects has rebounded sharply in 23 years. As the base camp, the Songcheng Scenic Area in Hangzhou staged 18 events in a single day for 2 consecutive days during the May 1st holiday in '23, making it the most popular scenic spot outside the West Lake, setting a new record of 21 shows in one day during the summer season. In 2023, Hangzhou Songcheng Scenic Area's revenue was 619 million yuan, up 243.9% year on year, and gross profit margin was 63.06%, up 41.73 pp year on year. The revenue of Lijiang and Guilin scenic spots both achieved significant growth compared to 2019. The number of performances in a single day reached record highs, and the market share continued to rise. The Xi'an Scenic Area is becoming more mature, and the number of shows continues to grow. It has become a tourist hit in Xi'an. It is planned to officially open Theater No. 2 during the summer of '24. In terms of asset-light business, the company achieved design and planning fee revenue of 84.621 million yuan in 2023, an increase of 413.9% over the previous year.
Profit forecasting and investment advice. All of the company's existing projects have already started in 2024. The performance of the Foshan project has exceeded expectations, and the Three Gorges project strives to open in the summer; during the pandemic, the company reduced costs and increased efficiency, and the theater's capacity was further improved, and it is expected that the peak season will release great performance flexibility. The recovery of individual visitors was good in '23, and the recovery of group visitors was average. Scenic spots such as Lijiang and Guilin were dominated by group visitors, and both groups and individual visitors fully recovered in '24. The company's revenue for 2024-2026 is estimated to be 27.95 billion yuan, 33.69 billion yuan, and 37.69 billion yuan respectively, with year-on-year growth rates of 45.1%, 20.5%, and 11.9% respectively; net profit to mother was 12.7, 15.8 billion yuan, and 1.88 billion yuan, respectively. Net profit to mother was corrected in 24, and the same increase of 24.6% and 19.0% in 25-26, respectively. Taking into account the restoration of the profitability of the company's stock projects, the new project in Foshan is growing strongly, maintaining a reasonable value of 12.14 yuan/share, corresponding to the PE valuation 25 times over 24 years, maintaining a “buy” rating.
Risk warning. The risk of macroeconomic fluctuations, a slowdown in the growth rate of stock projects, the risk of new project launches and profits falling short of expectations, and the risk of safety accidents.