核心重资产项目场次同比下滑拖累收入，新项目表现亮眼。根据宋城演艺主秀场次预告数据（可能与实际场次有出入），Q3 杭州/三亚/丽江/九寨/桂林/张家界/上海项目主秀场次同比分别下滑16%/7%/9%/5%/1%/34%/12%；西安千古情表现亮眼、场次同比增长66%；广东千古情经营火爆、Q3 上演场次合计约337 场。Incidents:
In the first three quarters of 2024, the company achieved revenue of 2.013 billion yuan/ +24.46%, net profit attributable to mother of 1.008 billion yuan/ +28.04%, after deducting non-attributable net profit of 0.994 billion yuan/ +28.05%. 2024Q3 achieved revenue of 0.836 billion yuan/ -4.69% in a single quarter, net profit due to mother 0.457 billion yuan/ -5.54%, after deducting non-attributable net profit of 0.446 billion yuan/ -7.10%.
Comment:
The year-on-year decline in the number of core heavy asset projects dragged down revenue, and the performance of new projects was impressive. According to the forecast data for Song Cheng's leading entertainers (which may differ from the actual number of shows), the number of leading shows in the Q3 Hangzhou/Sanya/Lijiang/Jiuzhai/Guilin/Zhangjiajie/Shanghai project decreased 16%/7%/5%/1%/34%/12% year over year, respectively; Xi'an Qianguqing performed brilliantly, and the number of shows increased 66% year over year; Guangdong Qianguqing is booming, and the total number of shows performed in Q3 is about 337.
The decline in revenue from core projects and the rise in new projects disrupted profitability. Flower house operations gradually improved, and the company's profit margin declined slightly but remained stable overall. The 2024Q3 company's comprehensive gross profit margin is 76% /-2 pct, and the period expense ratio is 11% /+2 pct; net profit margin to mother is 55% /-0.5 pct, after deducting non-return net interest rate of 53% /-1.4 pct. Although Huafang has not resumed trading, the operating level has improved markedly. In Q3, Songcheng's net investment income was 15.81 million yuan (-22.01 million yuan in the same period last year). Combined with the degree to which the book value of Song Cheng's holdings matches Huafang's net assets, and the positive contribution to Songcheng's performance after the stabilization of Huafang's operations, we believe that the risk of the Huafang problem is manageable in the short term.
The rebound in passenger traffic during the National Day holiday validates the appeal of the Songcheng project, focusing on the recovery of mature projects and the continued prosperity of new projects. During National Day Golden Week, Song Cheng Performing Arts's 13th National Scenic Area was in full swing, receiving more than 2.6 million visitors over 7 days, which is 159.7% of the 2023 National Day Golden Week; 481 shows of the 13th National Day “Love Through the Ages”; during peak periods, “Love Through the Ages” performed at a maximum of 95 shows in a single day.
Investment advice: Songcheng's asset-heavy scenic spots were expanded and upgraded during the pandemic, greatly improving reception capacity during peak seasons and enriching the supply of products in the park. Passenger flow & customer orders have the potential to increase in both directions. The equity incentive plan helps to further bind the interests of the core team, helps release performance steadily, and along with the strong recovery of mature projects and nurtures the continuous upward growth of projects. Songcheng is full of medium- to long-term highlights. The company's net profit for 2024-2026 is expected to be 1.067 billion/1.33 billion/1.496 billion, respectively, maintaining a “buy” rating.
Risk warning: New project development falls short of expectations, increased market competition, macroeconomic fluctuations, etc.
