The company released its 2024 mid-year report:

1) First half of 2024: The company achieved revenue of 1.177 billion yuan/ +59.00%, recovering to 45.08% in the same period in 2019, net profit due to mother 0.55 billion yuan/ +81.75%, after deducting net profit of 0.547 billion yuan/ +85.22%. The increase in revenue was mainly due to the year-on-year increase in the number of opening days for various scenic spots and the opening of the Guangdong Ancient Love Project.

2) 2024Q2: The company achieved revenue of 0.618 billion yuan/ +22.07%, net profit due to mother 0.299 billion yuan/ +23.17%, after deducting non-attributable net profit of 0.298 billion yuan/ +24.17%.

Industrial expansion led to rising costs, and projects continued to recover positively.

1) 2024H1: gross profit margin 69.19% /+5.24pcts; sales expense ratio 4.50% /+1.80pcts, mainly due to increased advertising investment in various scenic spots; management expense ratio 7.44% /-0.59pct, mainly due to the year-on-year increase in the number of opening days of each scenic spot and the increase in costs and expenses due to the opening of the new Guangdong Qianguqing Project; R&D expense ratio 1.43% /+0.21pcts, mainly due to the year-on-year increase in the company's R&D investment, achieving a net profit margin of 46.74% /+5.85pcts. Significant improvement.

2) 2024Q2: gross profit margin 69.58% /-0.35pct, sales expense ratio 4.28% /+1.89pcts, management expenses to revenue ratio 7.00% /+0.63pct, R&D expenses ratio 1.50% /+0.47pct, net profit margin 48.34% /+0.43pct.

The recovery rate of various scenic spots continued to climb, and projects such as Hangzhou performed brilliantly.

During the peak summer season, the popularity of scenic spots such as Hangzhou remains high, and they have recovered brightly. Revenue from various projects: ① Hangzhou project: revenue 0.293 billion yuan/ +29.42%, recovering to 73.46% in '19, gross profit margin 60.47%/-0.26pct; ② Sanya project: revenue 0.112 billion yuan/ +6.45%, recovering to 48.12% in '19, gross profit margin 78.86%/-0.20pct; ③ Lijiang project: revenue 0.125 billion yuan/ -7.72%, recovering to 86.42% in '19, gross profit margin 76.91% /- 3.49pcts; ④ Guangdong project: revenue 0.126 billion yuan, gross profit margin 68.00%. Furthermore, projects such as Guilin and Xi'an performed well.

Investment advice:

Buy-A investment rating, 6-month target price of 9.74 yuan. We expect the company's revenue growth rates from 2024 to 2026 to be 40.5%, 16.2%, and 11.8%, respectively, and the net profit growth rates will be 1260.8%, 19.2%, and 14.0%, respectively; given a buy-A investment rating, the target price for 6 months is 9.74 yuan, which is equivalent to a dynamic price-earnings ratio of 20x in 2024.

Risk warning: Offline consumption recovery falls short of expectations, project expansion falls short of expectations, etc.