An epitaxial acquisition expands the map and opens a new chapter in transforming cultural tourism. Established in 1992, Xiangyuan Cultural Tourism completed the acquisition of four scarce tourism assets in 2022, transforming the cultural industry into a new “cultural tourism+technology+IP” model. Since then, it has continued to promote epitaxial expansion while endogenously incubating the “Xiangjian·Tuojiang” project. Currently, it has 5 5A and 3 4A scenic spots, and also operates tea sales, animation, film and television businesses. In 2023, driven by the main destination vacation business, the company quickly resumed operations, achieving revenue/net profit of 0.722/0.151 billion yuan, and a net interest rate of 21% to mother, a record high of 21%.

Tourism assets are high quality and scattered, and there is a strong need for supporting transportation services in scenic spots, creating a safety margin. The five projects that successfully completed asset swaps in 2022 all exceeded their performance promises in 2022 and 2023, with a total promised performance CAGR of 11% in 2024-2027. In addition, Bifeng Gorge, acquired in 2023, Mangshan and Danxia Mountain, which were acquired in 2024, also have their own characteristics and are famous in the region. The above projects focus on providing needed services such as ropeways, cruises, and sightseeing buses in the scenic area, and the tourist conversion rate is high. Furthermore, the cross-regional distribution of scenic spots mitigates the impact of weather factors, and the safety margin for the company's operations is high.

The future core increase comes from: 1) Bailong Tien Ladder: The project's revenue before the pandemic was 0.26 billion yuan, ranking first among the company's scenic spots. Passenger flow has recovered rapidly since 2023, demonstrating operational resilience. The company is actively promoting project upgrading and transformation, increasing the customer unit price for secondary projects. 2) Bifeng Gorge: As a national 5A scenic spot with a giant panda base and the only wildlife park in Sichuan, the revenue/net profit for 2023 was about 0.125/0.058 billion yuan, respectively, and a net profit of 4,000 to 50 million yuan was promised in 2024-2027 (considering shareholding). If the conversion rate of the safari park is actively increased in the future, it is expected to lead to a further increase in revenue and profit. 3) Mangshan: The project is the first barrier-free mountain-type scenic spot in the country, with outstanding location advantages. The revenue/net profit for 2023 was 0.106/0.046 billion yuan respectively, and the company completed its acquisition in September 2024. 4) Danxia Mountain: Famous for its Danxia landscape, it is a national 5A scenic spot. It received 1.81 million visitors in 2023 and achieved revenue of 54.4 million yuan. The company completed its acquisition in September 2024.

5) Xiangyuan General Aviation: Set up a subsidiary of Xiangyuan General Aviation to explore new forms of air travel.

Profit forecasting and investment suggestions: The company lays out natural scenic spots in scarce multi-regions, and asset injection has brought about short- to medium-term profit growth, and “cultural tourism+technology” integrated business operation capabilities help long-term development. The company's total revenue for 2024-2026 is expected to be 0.825/1.14/1.313 billion yuan, yoy +14%/+38%/+15%, achieving net profit to mother of 0.174/0.396/0.54 billion yuan, yoy +15%/+127%/+37%. The current stock price corresponding to the 2024-2026 valuation is 43/19/14 X, respectively, giving it a “recommended” rating.

Risk warning: The improvement in the macro-consumption environment falls short of the expected risk, the increase in project operation falls short of the expected risk, and the impact of natural weather changes.