Core views:

Incident: The company disclosed its 2024 mid-year report. 24H1 achieved revenue of 0.263 billion yuan, a year-on-year decrease of 6.93%, realized net profit of 0.053 billion yuan, a year-on-year decrease of 15.81%, and realized net profit deducted from non-mother of 0.051 billion yuan, an increase of 14.34% over the previous year. According to estimates, 24Q2 achieved revenue of 0.157 billion yuan in a single quarter, a year-on-year decrease of 3.68%. Net profit due to mother was 0.042 billion yuan, a year-on-year decrease of 3.87%, and net profit without return to mother was 0.041 billion yuan, a year-on-year decrease of 2.23%.

On the cost side, the company achieved a gross profit margin of 52.18% in 24H1, a year-on-year decrease of 1.5pp, and 24Q2 achieved a gross profit margin of 40.38%, a year-on-year decrease of 3.34pp. The company's 24Q2 expense ratio was 19.63%, up 1.7 pp year on year. Among them, the sales/management/finance expenses ratio was 7.42%/13.34%/-1.13%, respectively, up 1.36 pp, up 0.75 pp, and decreased 0.41 pp. Taken together, 24H1's net profit margin was 26.54%, a year-on-year decrease of 0.05pp, which is basically the same.

By project, the gross margin of the scenic area and hot spring business has increased. In the first half of the year, the company's revenue from scenic spots was 0.151 billion yuan, down 13% year on year, gross profit margin was 61.75%, up 3.19pp; travel agency business revenue was 0.087 billion yuan, down 14% year on year, gross profit margin 0.09%, down 0.06pp year on year; hotel business revenue was 0.075 billion yuan, down 19% year on year, gross profit margin was 30.57%, down 5.72 pp year on year; hot spring business revenue was 0.023 billion yuan, same The ratio increased by 3.39 pp.

The company is proceeding with the annual project according to the plan. The first half of the Nanshan Xiaozhai Phase II project carried out pre-construction plan approval and land listing procedures; the company and Tianmuhu Town jointly promoted development cooperation in the Pingqiao Shiba area, and the commissioned management of Pingqiao Shiba Park has officially begun; and the overall planning and land resource reserve work for the Yushui Hot Spring Phase III project has begun.

Profit forecasting and investment advice. The company is expected to achieve net profit of 0.148, 0.176, and 0.203 billion yuan in 24-26, with year-on-year growth rates of 0.9%, 18.7%, and 15.3%, respectively. Referring to comparable company valuations, the company was given 22 x PE for 24 years, corresponding to a reasonable value of 12.08 yuan/share, maintaining a “buy” rating.

Risk warning. The risk of macroeconomic fluctuations, the risk of increased competition in the industry, and the risk of new project launches and profits falling short of expectations.