Incident: Songcheng Performing Arts released its 2024 three-quarter report. The company achieved total operating income of 2.013 billion yuan in the first three quarters of 2024, an increase of 24.46% year on year; net profit attributable to shareholders of listed companies was 1.008 billion yuan, an increase of 28.04% year on year.

The company's National Day and new summer program climbs both exceeded expectations. 1. From July 1 to August 31, “Love in Xi'an Through the Ages” performed 586 shows, with a maximum of 15 shows in a single day, making it the large-scale tourist entertainment with the most total number of summer performances and the largest audience in Xi'an. 2. During the 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 was 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.

Multi-dimensional upgrades enhance the visitor experience and significantly optimize operational efficiency. In the first half of the year, Xi'an Qianguqing opened Theatre No. 2, improving reception capacity and economic efficiency. The Shanghai Ancient Scenic Area has begun comprehensive rectification and upgrading of the space above the second floor, creating new scenes, expanding new spaces, and creating a new atmosphere. Songcheng, Hangzhou completed the upgrading and renovation of the parking lot, adding more than 1,100 parking spaces, effectively solving the problem of “parking difficulties” during peak passenger flow periods and effectively providing convenience for tourists to travel. Various scenic spots have also launched Hanfu experience stores and costume shops one after another, introduced branded restaurants, improved street signs, power bank stores, and influencer check-in points, and increased the SKU of the Songli store.

Investment advice: The company is expected to achieve revenue of 2.402/2.753/3.232 billion yuan and net profit to mother of 1.052/1.289/1.522 billion yuan in 2024-2026, corresponding PE of 24.5/20.0/16.9X, maintaining an “incremental” rating.

Risk warning: macroeconomics fall short of expectations; new projects fall short of expectations; industry competition intensifies.