The company issued a performance announcement for the first half of '24, and the results were in line with expectations. 2024H1's tourism operations achieved a turnover of 10.649 billion yuan, an increase of 10.5% over the previous year, and achieved revenue of 9.415 billion yuan, an increase of 5.8% over the previous year. Net profit attributable to mother was 0.322 billion yuan, a year-on-year decrease of 31.79%. It was mainly a one-time income from the sale of Kemer Resort and the sale-leaseback of Les Bouncaniers Resort during the same period in '23. Excluding the proceeds from this disposal, net profit to the mother increased 20.3% year over year. By sector, Club Med achieved revenue of 8.193 billion yuan in the first half of '24, an increase of 9.1%; Atlantis Sanya achieved revenue of 0.868 billion yuan, a year-on-year decrease of 7.4%. The year-on-year decline was mainly due to 1) actively reducing prices to cope with the impact of the macro environment; 2) optimizing the inefficient Sanya Abinon business. The Holiday Asset Management Center achieved revenue of 0.294 billion yuan, a year-on-year decrease of 24.5%. Property sales and construction revenue decreased by 58.8%, mainly due to real estate industry trends and fluctuations in domestic consumer demand.

Club Med's global revenue has reached a record high, and bookings are showing sustainable growth. The future will focus on high-priced mountain and premium collections. Club Med's sales in the Americas, Europe, Africa, Middle East, and Asia Pacific increased 9.7%/5.6%/32.5%, respectively.

24H1 Club Med's turnover in mainland China increased by 20.5%. Among them, the Chinese outbound travel business and inbound tourism sales received by resorts increased 5 times and 7 times, respectively. 24H1 Club Med's capacity increased 3.6% year over year, the global average room occupancy rate reached 70.4%, up 0.8 pct year on year, and the average daily bed price increased 8.1% year on year to 1,922 yuan. The number of reservations showed a sustainable increase. As of August 3, 2024, the company achieved a 6% increase in cumulative reservation volume in the second half of '24 compared to 23H2 sales, and the cumulative number of bookings for the first half of '25 increased by about 11% compared to 24H1.

Atlantis Sanya is under short-term pressure, and the Taicang Phase II project has been officially signed, a milestone in the implementation of the company's asset-light strategy.

The turnover of 24H1 Sanya Atlantis fell 5.0% year on year to 0.866 billion yuan. The average room occupancy rate reached a record high, rising 3.4 pcts to 89.6%, breaking the historical record of visiting customers to 3.44 million. The average daily housing price was actively adjusted due to changing supply and demand trends in the domestic travel and lodging industry market, down 15.1% to 2,044 yuan year on year. The 24H1 Taicang Alps International Resort is still in the climbing phase, achieving a turnover of 0.11 billion yuan and about 0.29 million visitors. The second phase of the project was signed in June '24, with a total investment of over 5 billion yuan. It was funded by the Taicang Municipal Government Platform, and is a new milestone in the implementation of the company's asset-light strategy. 24H1 Lijiang Mediterranean International Resort had a turnover of 0.046 billion yuan and 0.107 million visitors, up 15.3% and 67.4% year-on-year respectively. By the end of June '24, the number of reunion members had increased by 12.6% to 6.9 million, and the reunion and related business had increased by 28.6% year-on-year to 0.134 billion yuan.

Maintain a “buy” rating. We believe that the company's mid-term management strategy is clear. On the one hand, the company's product tone is improved through the Club Med upgrade strategy, and the company's extensive global resort portfolio is maintained and further promoted; on the other hand, the company actively shifts to lighter management and plans to gradually reduce debt ratios by introducing strategic investors, etc., and the Taicang and Lijiang business sides are steadily increasing, and real estate projects are gradually being digested. We maintain our 24-26 profit forecast. We expect net profit to be 0.349/0.416/0.492 billion yuan for 24-26, maintaining a “buy” rating.

Risk warning: Foreign business growth is slowing down, Taicang project operations fall short of expectations, and market spending intentions are weakening risk.