Event: The company publishes its 2024 semi-annual report. The company's revenue for the first half of 2024 was 0.385 billion yuan, a decrease of 1.93% year on year; realized net profit attributable to shareholders of listed companies was 0.112 billion yuan, a decrease of 7.22% year on year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 0.112 billion yuan, a decrease of 11.32% year on year.

The tourist boom continued in the first half of the year, and the number of visitors received by the ropeway increased steadily. In the first half of 2024, the company's three ropeways received a total of 3.2367 million visitors, up 7.65% year on year, including: Hikawa Park Ropeway received 1.5019 million visitors, down 8.14% year on year; Yunshanping Ropeway received 1.4661 million visitors, up 19.97% year on year; Yak Niu Ping Ropeway received 0.2688 million visitors, up 79.39% year on year.

Impressions show a total of 395 shows in Lijiang, up 13.83% year on year, receiving 0.8618 million visitors, up 7.85% year on year; Lijiang Hefu Hotel Co., Ltd. achieved revenue of 58.4334 million yuan, a year-on-year decrease of 8.87%. Diqing Shambhala Tourism Investment Co., Ltd. achieved revenue of 11.6374 million yuan, a year-on-year decrease of 16.33%. Influenced by fluctuations in market demand, the revenue of the hotel and catering business declined significantly. The revenue of the ropeway transportation business/impression performance business/hotel service business/food service business/other business was 1.98 /0.75/0.069/0.012/0.031 billion yuan respectively, which changed 1.46%/-1.79%/-12.73%/-11.94%/9.41% respectively from H1 in '23.

Cultural tourism projects are progressing steadily, and the new business format is expected to drive the growth of tourists. In 2024, Gucheng District of Lijiang City signed 7 new cultural tourism industry projects such as Immersive Night Tour in Heilongtan, Immersive Flower, and Lijiang, launched a number of new business formats such as motorhome camping, research, agricultural, cultural and recreational tourism, and developed 13 personalized tourist routes such as the East Tea Horse Trail Line to create a tourism marketing pattern with seasonal highlights, monthly activities, and weekly drainage. The ancient city is actively promoting the construction of 6 cultural tourism projects, building 7 boutique experience zones, 4 “night tour” demonstration blocks, 4 provincial gold medal tourist villages, and 5 new ancient city tourism IPs, constructing a “one city, two rings, three belts and four scenic spots” global tourism development pattern, and launching a number of rural tourism micro-attractions and personalized tourist routes.

Investment advice: The company is expected to achieve revenue of 0.877/ 0.912/0.947 billion yuan in 2024-2026 and achieve net profit to mother of 0.237/0.254/0.268 billion yuan, corresponding to 19.9/18.6/17.7 times PE, maintaining an “increase” rating.

Risk warning: New project construction falls short of expectations; extreme weather affects passenger flow; industry competition intensifies.