Key points of investment:
Jiuhua Tourism: The four famous mountains of Buddhism are blessed with resources. The performance has picked up significantly in 23 years, and the core business is flexible. The company was founded in 2000. The company is based on gradually building a ropeway cable car, hotel accommodation, passenger transportation and travel agency travel industry chain based in the Jiuhuashan Scenic Area. Jiuhuashan Scenic Area is the first batch of national scenic spots and the first batch of 5A tourist attractions. Together with Mount Wutai in Shanxi, Mount Putuo in Zhejiang, and Mount Emei in Sichuan, it is a “integrated scenic and Buddhist” tourist attraction and Buddhist dojo. The planned area of the scenic area is 120 square kilometers, and the protected area is 174 square kilometers, which consists of 11 major scenic spots. In 2023, the company's operating income and net profit to mother improved markedly. In 2023, the company's revenue reached 724 million yuan, +34.7% compared with 2019, a record high of nearly ten years. Net profit to mother turned into a profit of 175 million, +49.25% compared to 2019.
The popularity of temple tourism has increased dramatically. The young customer base is the new main force in temple tourism. Temple prayer demand is sustainable, and Buddha worship resources have become a new growth point for scenic spots. Judging from the needs of the temple customer base, relieving the stress of life is the main need, and health is the main desire of the people who want to eat incense. According to Ai Media Consulting's April 2023 survey, relieving life stress/anxiety was the top reason for Chinese consumers to visit temples in 2023, accounting for 58.9%. The proportion of people who go with family during the New Year holidays to pray for blessings and fulfill wishes is similar. They are all close to 50%, and 42.9% of the reasons to check in for sightseeing on social platforms.
Core logic: In the short term, the company's internal traffic will improve, increase the carrying capacity of the Yamashita Visitor Reception Center, and thereby increase the traffic conversion rate in scenic spots. We expect that the increase in passenger traffic in Jiuhuashan will be more flexible, catalyzed by the release of demand for temple tours to pray for blessings. The main line of growth of the central line is clear: 1) The opening of the external Chizhou High Speed Rail and the Jiuhuashan Airport renovation and expansion project is nearing completion. Major transportation improvements will greatly increase the network effect of the Jiuhuashan Scenic Area and open the upper limit of passenger flow growth. 2) Wenzong Ancient Village was put into operation in '23, positioning itself as a high-end hotel, improving leisure and vacation reception capabilities, and actively transforming the opposite. Long-term growth is worth looking forward to:
1) The Lion Peak Ropeway has been approved to enter the construction period. In the future, supporting health and leisure projects will be introduced in accordance with the Shizifeng Ropeway Project to further increase the conversion rate. 2) The Jiuhuashan Scenic Area has a planned area of 120 square kilometers and consists of 11 scenic spots. Currently, there is room for further development in the open area. With the support of the “Construction of a World-Class Leisure, Vacation and Health Tourism Destination in Dahuangshan” strategy, it is expected to accelerate the positive linkage of passenger flow between scenic spots.
Investment analysis opinion: We selected a horizontal comparison of Dachuan scenic spots, which are also famous mountains. Huangshan tourism relies on the tourism resources of the Huangshan Scenic Area, and Xiangyuan Cultural Tourism operates scenic spot resources such as Qiyun Mountain. Mount Emei and Mount Changbai are famous mountain tourism assets in the southwest region and Northeast China, respectively. Based on the net profit of comparable companies in 24-26, the average PE value of comparable companies in 24-26 was 23/19/17 times. We believe that traffic in Jiuhuashan Scenic Area has improved, tourist reception capacity is expected to increase significantly, demand for superimposed temple tours continues to be released, medium- to long-term passenger flow growth paths are obvious, both supply and demand sides have improved, and the stability of the tourist flow is stronger than that of tourist attractions. We expect the company to achieve net profit of 1.94/2.17/242 million yuan in 24-26, giving the company an average valuation of 23 times comparable to the company over 24 years, corresponding to a target market value of 4.45 billion yuan, a target price of 40.1 yuan/share, and a target increase of 23%, covering the first time.
Risk warning: After the opening of the Chihuang High Speed Rail, passenger traffic growth fell short of expectations, and the increase in hotel occupancy rates fell short of expectations.