Key points of investment:

The company released a semi-annual performance report, and the performance was in line with expectations. 24H1 achieved operating income of 0.395 billion yuan, a year-on-year increase of 3.92%, and the company realized net profit to mother of 0.114 billion yuan, an increase of 2.65% over the previous year. In the second quarter of a single quarter, the company achieved revenue of 0.215 billion yuan, a year-on-year increase of 14.2%, and realized net profit to mother of 62.22 million yuan, an increase of 25.7% over the previous year. Looking at the breakdown, according to the company's announcement, the hotel business achieved revenue of 0.118 billion yuan in the first half of the year, an increase of 2.72% year on year, and a gross profit margin of 18.31%, +1.27 pct year on year. The company's passenger transport business achieved revenue of 90.47 million yuan, a year-on-year increase of 28.1%, and a gross profit margin of 57.77%, +4.96pct year-on-year. The company's ropeway and cable car business achieved revenue of 0.153 billion yuan, -6.14% year over year, gross profit margin of 87.76%, and -0.31 pct year on year. In the second quarter, the company achieved a gross profit margin of 54%, a year-on-year increase of 5 pct, a sales expense ratio of 3.4%, a year-on-year increase of 0.1 pct, a year-on-year management expense ratio of 12%, and a year-on-year increase of -1 pct.

The tourism consumer market in the Jiuhuashan Scenic Area remained active in the first half of the year, and a traffic conversion center was established to solve the problem of traffic congestion during the peak season.

In the first half of the year, Jiuhuashan Scenic Area received 5.4763 million visitors, an increase of 10.33%, achieving tourism revenue of 6.168 billion yuan, an increase of 9.04% over the previous year. The Jiuhuashan Scenic Area tourism consumer market remained active. The company's project construction progressed in an orderly manner. The Jiuhuashan Transportation Conversion Center function upgrade project was successfully completed and fully put into use. 5,207 vehicles can be parked to meet comprehensive integrated services such as passenger transfers, consultation and intelligent needs of more than 5,000 people/hour during peak periods. It is also actively promoting the construction of the Jiuhuashan Lion Peak Scenic Area passenger ropeway project. It has completed project planning, land use review and site selection, EIA, project approval, and ropeway equipment tendering, etc., and has promoted woodland and land use filing and approval in an orderly manner. At the same time, the decoration construction of the Jiuhua Healthy Vegetarian Restaurant in Hefei is also progressing steadily.

The passenger transport penetration rate has increased significantly thanks to improvements in the company's internal traffic, and the main line of the company's medium- to long-term growth is clear. First, major transportation improvements such as the opening of the external Chizhou High Speed Rail and the renovation and expansion of Jiuhuashan Airport will greatly increase the network effect of the Jiuhuashan Scenic Area and open the upper limit of passenger flow growth. Second, Wenzong Ancient Village was put into operation in '23, positioning it as a high-end hotel, improving reception capacity for leisure vacations, and actively transforming the economy. At the same time, the ropeway project Shizifeng Ropeway has been approved and has entered 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. 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, and it is expected that it will continue to benefit from the support of the “Construction of a World-Class Leisure, Vacation and Health Tourism Destination in Dahuangshan” strategy.

Investment analysis: Considering that the growth of the company's passenger transport business in scenic spots exceeds expectations, traffic improvement effects are expected to gradually be implemented while passenger flow is growing steadily, driving the steady growth of the company's operating cash flow. We maintain the company's 24-26 profit forecast. We expect to achieve net profit of 0.194/0.217/0.242 billion yuan in 24-26. The current stock price corresponds to PE 18/16/15 times, maintaining a “buy” rating.

Risk warning: Bad weather disturbances have had a negative impact on passenger flow in scenic spots. 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.