Core view: Thanks to the recovery in passenger flow, the company's performance increased in '23, but Q1 performance declined slightly in '24 due to changes in the consumer environment and the diversion of long-term travel. In the future, we need to pay attention to the pace of recovery in the surrounding tourism scene and the operating results of the rafting program.
Adjust profit forecasts to maintain a “buy” rating. Due to passenger flow pressure brought about by the diversion of long-term travel, we lowered our 24-25 profit forecast. We expect the company's net profit to be 1.7/2.0 for 2024-2025 (the previous 24-25 forecast was 200/230 million yuan), respectively, and the adjusted performance growth rate is 15.1%/18.3%. Looking ahead to the future market, we need to pay attention to the recovery of tourism in the surrounding area and the operating results of the Pingqiao Rafting Project, which was put into operation in mid-year.
The 23-year results were in line with expectations, and the high base put pressure on 24Q1 operations. In 2023, the company achieved revenue of 630 million yuan, up 70.9% year on year, and net profit of 150 million yuan, up 623.9% year on year, in line with previous guidelines.
Among them, the core scenic area and hotel business achieved revenue of 330 million/210 million respectively, an increase of 2.8%/118.2% over 2019. The company achieved revenue of 110 million in Q1 2024, a year-on-year decrease of 11.3%. Net profit due to net profit of 110 million yuan, down 42.8% year on year. The main reason for the pressure on results in the first quarter was that the 23Q1 backlog of concentrated tourism demand erupted, leading to a high base and the diversion of long-term tourism to the tourist flow around the Yangtze River Delta.
Product restructuring affects gross margin performance, and net profit margin benefiting from fee control is close to 2019 levels.
The company's gross margin in 2023 was 54.3%, down 11.3 pcts from 2019. The main reasons are: 1. The gross margin of the company's newly opened high-end hotels is lower, and the newly opened hotels are still climbing. 2. The share of the hotel business with lower gross margin levels increased. However, in terms of cost control, the company's performance is still excellent. The sales expense ratio, management expense ratio, and financial expense ratio in 2023 were 7.6%/13.7%/-1.1%, respectively, compared to -5.8/-1.0/+0.2pct in 2019. Thanks to good fee control, the company's net interest rate to mother was 23.3% in 2023, down only 1.3% from 2019.
In the short term, focus on the recovery pace of surrounding tours and the implementation of rafting projects. In the medium to long term, we expect traffic improvements and new projects to increase passenger traffic. In the short term, we need to pay attention to the recovery of tourism in the surrounding area and the operating results of the Pingqiao Rafting Project, which was put into operation in the middle of the year. In the medium to long term, let's take a look at the opening of the Shanghai-Suhu High Speed Rail at the end of the year. At that time, it is expected that the arrival time of the main passenger groups will be shortened, and the second is the implementation of the Animal Kingdom project, which will enrich tourism resources in the Tianmu Lake region and increase passenger traffic.
Risk warning events: risk of passenger flow recovery falling short of expectations; risk of seasonal fluctuations in business; risk of untimely update of research report usage information.