Event

On October 28, the company released a three-quarter report, with an operating income of 1.694 billion yuan, an increase of 1.32% over the same period last year, a net profit of 109 million yuan, an increase of 23.29%, and a non-return net profit of 98.0946 million yuan, an increase of 65.09% over the same period last year.

The performance maintained steady growth, and the net profit of Q3 deducted from non-return was greatly increased.

In the first three quarters, the company achieved a year-on-year increase of 23.29% in net profit and 65.09% in net profit deducted from the same period last year, maintaining the good growth trend since the first half of this year. Q3 achieved 43.8104 million yuan in non-return net profit in a single quarter, an increase of about 82.3% over the same period last year, with a rapid growth rate. In the first three quarters, the company's gross profit margin reached 16.17%, an increase of 2.95pct over the same period last year, of which Q3 single-quarter gross profit margin reached 17.27%, an increase of 3.27pct over the same period last year. On the expense side, the company's sales expense rate in the first three quarters was 1.99%, year-on-year + 0.01pct. The rate of management expenses is 5.19%, which is + 0.26pct compared with the same period last year, and the R & D expenses will be increased by 467500 yuan this year. Financial expense rate 0.77%, year-on-year-0.28pct. The overall cost side remains stable, and the decline in the financial expense rate compared with the same period last year is mainly due to the company adjusting the financing structure, optimizing the financing model, replacing short-term loans with long-term loans, and uniformly allocating funds. In the first three quarters, the company's net operating cash flow was 18.921 million yuan, compared with-232 million yuan in the same period last year, showing a significant improvement. From the perspective of the main matters, accounts receivable increased by 214.51% over the beginning of the year, mainly due to the addition of tour groups and tickets in tourism business and road passenger transport business. Projects under construction increased by 47.53%, mainly due to the expenditure of the East Railway Station Logistics Center, Songzi passenger Station, Yidu New passenger Station and so on.

Continue to increase the size of tourism business, endogenous extension to promote transformation and upgrading

The company ploughs the regional transportation market, has strong transport strength and influence, and has a multi-point layout of its comprehensive tourism business in the past two years, based on building an integrated tourism service enterprise. In terms of business, the revenue from tourism services in 2019 accounted for 9.36%, which was basically the same as the annual report in 2018. In 2018, tourism services accounted for 2017 of revenue and increased 1.92pct. 2019 China reported that trade and logistics revenue accounted for 17.61%, an increase in 2.57pct compared with the 2018 annual report, and the trend of multi-business layout is obvious. The company has taken a number of measures to promote transformation and upgrading. In May this year, the company announced that it would issue shares to acquire 100% of the shares in Jiufeng Valley Scenic spot. In August, the assets were delivered and the acquisition was completed; Changjiang Power invested a total of 90 million yuan in R & D and construction of pure electric sightseeing cruise ships in the Yangtze River three Gorges; signed a port shore electricity cooperation agreement with the national network Yichang. Jiufeng Valley Scenic spot has a good growth, is also located in the three Gorges area, and can form a good synergistic effect with the company. Changjiang Electric Power, the partner of the sightseeing cruise project, is rich in resources and strength in Yichang, and it is expected that this project will greatly improve the tourism experience and quality. Cooperation with the shore power project of Yichang, the national network, is also expected to further enhance the profitability of the port.

There is a broad space for the development of comprehensive tourism business.

At present, the company is committed to building a tourism traffic service system, launching tourism route products, and deepening the layout of tourism business. The tourism traffic service system will rely on the company's rich experience in tourism traffic operation, with the goal of building a tourism traffic service system that radiates "one river, two mountains". At present, the company has built and completed the urban "one master and two deputy" urban tourism distribution center. At the same time, we will promote the construction of a "one main and four auxiliary" tourist passenger terminal system, "three Gorges International Cruise Center Wharf" and other projects are already under construction, and the original port is also actively promoting functional upgrading. At the same time, the company actively launched tourism route products, currently has six luxury cruise ships and more than 160 luxury tour buses, has launched "transportation * two dams and one gorge", "transportation * scenic spot through train", "transportation * night excursion on the Yangtze River", "transportation * ship lift" and other high-quality tourism products In the future, the company will continue to deepen the layout of tourism business, including jointly investing with Hubei Shennong Tourism Investment Group to establish Shennong Tourism passenger Transport Company, and working with the Yangtze River three Gorges Tourism Development Company to promote the construction of "one zone, four towns" and "two dams and one gorge". Promote the construction of Jiufeng Valley scenic spot and the construction of electric sightseeing boats. The company has the advantages of natural regional tourism resources, policy advantages, strong influence of the main industry, strong cooperation in new energy and other fields, and actively promote the transformation to integrated tourism business in the future, with great growth space and potential.

Investment suggestion: it is expected that the company's main business will further develop steadily in the next two years, automobile sales services and delivery business will be stable and innovative, focus on the development of logistics business, and continue to increase the size of tourism business, with great potential for growth. From 2019 to 2021, the EPS is expected to be 0.37,0.44,0.48 yuan respectively, and the current stock price corresponds to 25X, 21X and 19x respectively, maintaining the "overweight" rating.

Risk tips: road passenger transport and tourism service traffic safety risk; transport market downward risk; Yangtze River Delta tourism service enterprise competition risk; subordinate enterprise management integration risk.