Description of the event
The company released its 2023 financial report. During the period, the company achieved revenue of 1,926 billion yuan/ +320.76%, or 73.76% for the same period in 2019; net loss due to mother of 110 million yuan/ -130.2%, net loss of 88 million yuan/ +6.16%, EPS-0.04 yuan, and plans to distribute a cash dividend of 1 yuan (tax included) for every 10 shares to all shareholders.
Without considering the impairment losses caused by Huafang's long-term equity investment, the company's net profit was 829 million yuan (turning a loss into profit over the same period last year, an increase of 959 million yuan over the same period last year), and operating cash flow of 1,419 million yuan/ +327.4%. 2023Q4 achieved revenue of 309 million yuan/ +343.02%, net loss to mother of 897 million yuan (an increase of 774 million yuan over the same period of the previous year), and net loss of 864 million yuan (increase of 743 million yuan over the same period last year).
Incident reviews
Mature scenic spots continue to contribute the main revenue, and new projects have increased significantly. The Hangzhou/Sanya/Lijiang project achieved revenue of 655 million yuan/192 million yuan/322 million yuan respectively, +214.38%/251.64%/277.65% year on year. Among the new projects, Shanghai Qianguqing began operating in July 2023 and had revenue of 98 million yuan during the period. After the revision of Xi'an Qianguqing, the market response was good and achieved revenue of 52 million yuan.
The company accrued an impairment loss of 861 million yuan on long-term equity investment for Huafang Group, which holds 35.35% of the shares.
The company's shareholding in Huafang Group, a joint venture company, was frozen in April 2023, causing the accounting firm to reserve opinions on the audit report on the company's exit last year. In July 2023, Huafang Group paid 155 million yuan of arrears pending settlement to the relevant authorities. The auditing agency then issued Huafang Group's 2022 qualified audit report and the 2023 standard unqualified audit report. The company received the 2023 annual audit report with an unqualified audit opinion.
The company's gross profit margin during the period was 66.35% /+16.21pct, and the net profit margin was -5.64% /+10.69pct. The overall cost ratio was 12.02% /-76.57pct, of which the sales expense ratio was 4.59% /-0.29pct, and the year-on-year increase in sales expenses was 295.97%, which was an increase in advertising investment in scenic spots; the management expense ratio of 7.61% /-78pct was included in the management cost base comparison during the closing period in the same period of the previous year; the R&D cost rate was 1.56% /-2.5pct, and the financial expenses ratio was -1.73% /+4.21pct. Net cash flow from operating activities was 1,419 million yuan/ +327.4%.
Many indicators of operation of the Spring Festival Scenic Area exceeded the same period in 2019, and the opening of Guangdong through the ages filled the gap in performing arts and cultural tourism projects in the Greater Bay Area. In 2024Q1, the company achieved revenue of 550 million yuan/ +138.7%, net profit attributable to mother of 255 million yuan/ +317.33%, net profit of 249 million yuan/ +349.07%, EPS 0.1 yuan.
During the Spring Festival, many of the company's indicators surpassed the same period in 2019. Among them, the total number of performances over the same period of time, the total number of visitors received, and total revenue were 251%/207%/189% for the same period in 2019, respectively. The company's 9th self-operated scenic spot, Guangdong Ancient Love, opened. The number of shows in a single day reached 10, setting a new high for the Sengoku Love series.
The 2024Q1 company's operating level has fully recovered. 2024Q1 company gross profit margin 68.75% /+17.73pct, net profit margin 45.63% /+20.72pct. The overall cost rate was 13.71% /-3.97pct, of which the sales expense ratio was 4.74% /+1.37pct, the sales expenses were not yet open during the same period last year, and the sales expenses had a lower year-on-year basis; the management fee ratio was 7.92% /-3.69pct, and the management expenses increased 62.81% year over year. This was due to the year-on-year increase in the number of business days in the company's various scenic spots during the period and the opening of a new project in Qianguqing in Guangdong; the R&D expense ratio was 1.34% /+0.25pct; the financial expense ratio was -0.29% /-1.38pct, the same as the company's interest income ratio Increased, and interest expenses decreased year-on-year. Net cash flow from operating activities was 348 million yuan/ +109.93%.
Investment advice
The business situation in the travel market continued to recover during the year. The company's mature projects continued to contribute to major performance, and the revision and upgrading of new projects ushered in a boom in passenger traffic, and the company's profitability is expected to continue to recover. We expect the company's 2024-2026 EPS to be 0.5\ 0.59\ 0.66 yuan respectively, corresponding to the company's closing price of 10.86 yuan on April 30, and the 2024-2026 PE will be 21.9\ 18.5\ 16.4 times, respectively, to maintain the “holdings increase-A” rating.
Risk warning
The recovery in consumer consumption falls short of the expected risk; the performance of the new project falls short of the expected risk.