Matters:
In 2023, the company achieved revenue of 9.635 billion yuan, a year-on-year increase of 50.15%; net profit due to mother of 194 million yuan (loss of 333 million yuan in '22); net profit after deducting non-return to mother of 130 million yuan (loss of 418 million yuan in '22). Non-recurring profit and loss mainly included profit and loss of 48.37 million yuan from asset disposal, 16.46 million yuan, and other profit and loss of 14.21 million yuan; net cash flow from operating activities (-312 million yuan in '22).
The 24Q1 company achieved revenue of 1,922 billion yuan, an increase of 15.96% over the previous year, a net profit loss of 29 million yuan, an increase of 24.2 million yuan over the 23Q1 loss, deducted net profit of 28.06 million yuan from non-return to mother, and an increase of 20.68 million yuan compared to 23Q1 losses.
Commentary:
Passenger traffic in Wuzhen continued to recover, with passenger orders exceeding 20% in 2019. In 2023, Wuzhen Scenic Area achieved revenue of 1,784 billion yuan, recovering to 81.9% and net profit of 284 million yuan in the same period in '19; receiving 7.721 million visitors, recovering to 84.1% in the same period in '19, and passenger traffic between the east and west gates was 227.4 and 54.46 million, respectively, recovering to 58.5% and 102.8% in the same period in '19. Xizha accounted for about 70% of passenger traffic, an increase of 13 pct over 2019; the increase in special themed activities and the advantages of exhibitions promoted a stronger leisure and vacation atmosphere in Wuzhen. There was an increase. The unit price for customers in '23 was 222.8 yuan, +16.4% over the same period in 2019. Wuzhen received 1.48 million visitors in 24Q1, up 16.1% year on year, achieving revenue of 360 million yuan, up 7.9% year on year; due to increased investment in employees and hotel support, Wuzhen 24Q1 net profit declined year on year.
Passenger flow recovery in Gubei was relatively slow. Gubei Water Town achieved revenue of 735 million yuan in 23 years and received 1,524 million visitors, recovering to 77.3% and 63.7% respectively in the same period in '19. The customer unit price increased 21.5% to 482 yuan compared to '19. The operating performance was profitable, which improved markedly from '22. Under the influence of declining popularity in the suburbs of Beijing and the spillover of demand for surrounding tourism, Gubei Water Town received 183,000 visitors in 24Q1, a year-on-year decrease of 26.4%, achieving revenue of 110 million yuan, a year-on-year decrease of 32.1%.
The exhibition picked up, integrated marketing restoration; China Youth Chuangge and housing leasing remained steady. In '23, the company's integrated marketing business achieved revenue of 2.19 billion yuan, a year-on-year increase of 109.0%; 24Q1 integrated marketing achieved revenue of 320 million yuan, a year-on-year increase of 35.0%; net profit of 44.523 million yuan, which turned a year-on-year loss into profit, with a net interest rate of 2.0%, +2.5pct compared to '22. IT product sales and technology achieved revenue of 3.89 billion yuan in 23 years, an increase of 1.3% over the previous year. Among them, China Youth Chuangge achieved net profit of 55.6 million yuan and a net interest rate of 1.4%, which was the same as the previous year. The housing rental business achieved revenue of 190 million yuan in 23 years, an increase of 11.7% over the previous year.
Hotels and travel agencies are still recovering. Shanshui Hotel achieved revenue of 410 million yuan, a year-on-year increase of 27.8%, recovering to 74.4% in 2019. Net profit loss was about 40.36 million yuan, a decrease of 39.44 million yuan compared to 2022. Profitability was not as good as before the pandemic or the main properties were relatively old, making it more difficult to rent housing after the epidemic; in 23 years, Shanshui Hotel's goodwill depreciated by 32.81 million yuan; 24Q1 hotel business revenue declined, and net profit remained flat year on year.
The travel agency business achieved revenue of 1.30 billion yuan in 23 years, up 179.62% year on year; 24Q1 revenue increased year on year, and net profit remained flat year on year.
Investment advice: As a national destination, Wuzhen's holiday-based passenger flow in Xizha has surpassed the 19-year level, driving a continuous increase in passenger numbers. In the future, we will continue to pay attention to the restoration of tourist traffic in Dongzha and the promotion of the company's cultural content activities to Dongzha. Gubei Water Town is still recovering due to the diversion of passenger traffic in Beijing. In the future, we will continue to pay attention to the increase in passenger traffic in Gubei brought about by the linkage of many attractions in Beijing and the increase in passenger traffic. We expect the company's net profit to be 3.60, 526, and 609 million yuan in 2024 to 2026, with growth rates of 85.3%, 46.2%, and 15.8%, PE 21/15/13 times, respectively, giving 2024 25 times PE, with a target price of 12.42 yuan, maintaining the “recommended” rating.
Risk warning: The passenger flow in the two towns is weak, the decline in residents' income expectations affects the unit price, the recovery of entry/exit and group tours falls short of expectations, etc.