Event: Zhongxin Travel released its 2024 semi-annual report. In the first half of 2024, we achieved operating income of 2.617 billion yuan, an increase of 230.25% year on year; realized net profit to mother of 0.072 billion yuan, turning a loss into a profit.

Focus on outbound travel repair combined to reduce costs and increase efficiency, boosting both order and profitability. In the first half of the year, the company actively gained insight into new market trends and always focused on its main business. On the one hand, by optimizing the travel product structure, the company developed an incremental market on the basis of deep cultivation of the stock market, and promoted a relatively rapid growth trend in total travel product orders. On the other hand, we continue to improve the quality and efficiency of operations and promote cost reduction and efficiency measures, thereby continuously improving overall profitability. The revenue of travel wholesale/travel retail/integrated marketing services/other industry products in the first half of the year was 20.69/ 2.75/ 0.253/0.02 billion yuan, accounting for 79.04%/10.50%/9.68%/0.78% of revenue, up +449.23%/+111.32%/-9.81%/+316.32% from the same period in 2023.

The platform helps the industrial chain develop collaboratively, and Hangzhou Axin is expected to boost performance. In the first half of the year, the company's shareholding company Hangzhou Axin continued to use its role as a platform to help upstream and downstream enterprises in the industrial chain develop collaboratively. By the end of July 2024, the cumulative number of registered travel consultants and stores in Hangzhou had increased by 35% compared to the end of 2023. The number of product lines launched was about 3,000, and the monthly turnover peaked at about 40 million. Among them, the number of fulfilled orders increased 32% over the same period of the previous year, and the overall payment GMV increased 779% over the same period of the previous year. In the second half of the year, Hangzhou Axin will continue to continuously enhance the platform's resource supply and guarantee capabilities around industry channel demand.

Investment advice: The company is expected to achieve revenue of 6.55/ 11.254/13.195 billion yuan and net profit to mother 0.139/0.257/0.326 billion yuan in 2024-2026, corresponding to 44.8/24.3/19.2 times PE, maintaining an “increase in holdings” rating.

Risk warning: Overseas travel safety incidents impact, industry competition intensifies, and extreme weather affects travel intentions.