The company published its 22-year semi-annual report. 22H1 achieved operating income of 374 million yuan, yoy -49.01%; net loss due to mother - 999.290 million yuan, yoy -5.69%; net loss after deducting non-return net loss - 137 million yuan, yoy -32.49%. The epidemic had a big impact on China's cultural tourism market in the first half of the year, and the company was inevitably under operating pressure. However, the company has responded positively to the impact of the epidemic, innovated its diversified business layout, and maintained a relatively stable financial structure. With the gradual liberalization of policies and the marginal decline of the impact of the epidemic, the company is expected to reverse its difficulties, and we maintain the company's increasing rating.
Key points to support ratings
The H1 pandemic is under deep pressure, and the revenue structure has further changed. 22H1 The impact of the epidemic in China was severe. 22H1 China added a total of 781,087 locally confirmed and asymptomatic infected cases, compared to 4,009 cases in the same period last year. On this basis, the country's travel confidence, frequency, and radius declined markedly. The number of domestic travelers in 22H1 fell 22.2% year on year, and tourism revenue fell 28.2% year on year. The company's operations were also affected. According to the semi-annual report, the company achieved a 49.01% year-on-year decrease in operating income; a 5.69% increase in net loss due to non-return income; and a 32.49% increase in net loss due to non-return income. The company's operating pressure in the first half of the year was quite obvious. Based on this, the company's business performance has also changed to a certain extent. Due to the interruption of cross-provincial travel and the uncertainty of long-distance travel, the company's revenue share in Guangdong Province and mainland China increased from 21% and 39% of 19H1 to 92% and 99% of 2022H1. It is expected that under the influence, the company will lose business in markets outside of the province. From a business perspective, the company's business travel business has been severely affected by the pandemic. Many businesses have not yet been developed, and its revenue share has declined from 87% of 19H1 to 38% of 22H1. Overall, some of the company's business conditions have changed to a certain extent due to the force majeure of the epidemic, disrupting the pace of growth before the pandemic.
There is a steady and positive financial response, and the reversal of the difficult situation is worth looking forward to. The company's financial level remained stable during the pandemic. 22H1's balance ratio was 27.92%, and monetary capital accounted for 43.75% of total assets. The stable cash and financial structure provided a good buffer for the company to cope with adverse shocks.
Furthermore, in order to cope with the impact of the epidemic, the company has taken various positive measures. Guangzhou Travel innovated product supply in response to scattered travel needs under the pandemic, launched products such as hot springs, cruises, and camping. At the same time, it also focused on developing customized travel business and optimizing service processes. The company's gross margin of travel agency operations increased from 12% of H1 last year to 22% in the same period this year. Although Neiguang Travel's revenue fell 78% year-on-year during the reporting period, net profit and loss from Gumo decreased by 63.15%, reflecting an increase in profitability after optimizing the operating model under the pressure of the pandemic. In terms of accommodation, Lingnan Hotel added 12 new expansion management projects, and 22H1 Lingnan Hotel achieved a 5.43% year-on-year increase in revenue. During the Dragon Boat Festival holiday, the hotel project managed by the company achieved a year-on-year increase of 152.92% in revenue, recovering to 71.79% of the same period in 2019. Currently, with the epidemic being effectively controlled and policies gradually relaxed, cultural tourism activities in various regions have gradually resumed. Currently, many of the company's businesses are heavily affected by the epidemic. There may be great resilience in future recovery, and the reversal of the difficult situation is worth looking forward to.
valuations
The company's operating pressure in the first half of the year was clearly affected by the epidemic, making it difficult to carry out various types of business normally. However, the company is still actively advancing innovative business products and developing markets, demonstrating the company's long-term confidence in future operations. Furthermore, further changes in the revenue structure also make us look forward to the extent of a rebound in its performance. It is expected that the difficult situation will be reversed after the macroeconomic environment improves. Based on the above, we revised our 22-24 EPS forecast to 0.10/0.26/0.50 yuan, the corresponding price-earnings ratio was 94.2/35.9/18.3 times, and maintained our holdings growth rating.
The main risks faced by ratings
The risk of COVID-19, the risk of increased market competition, and the risk that the pace of recovery from the epidemic will not meet expectations