Key points of investment:
Investment advice: Since the company's issuance of shares and payment of cash to purchase assets has not yet been completed, there is uncertainty about duty-free asset injection. We expect the company's revenue for 2022-2024 to be 833, 10.63, and 1,206 million yuan respectively. The net profit attributable to the mother is -0.19, 0.39 and 70 billion yuan respectively, and the corresponding EPS is -0.06, 0.12 and 0.22 yuan. Since Sea Travel Duty Free is the company's controlling shareholder asset, there is a high probability that it will be injected. We gave a valuation premium. 200x PE in 2023, the target price was 24 yuan. The first coverage gave a rating for increasing holdings.
The company is a state-owned enterprise in Hainan Province. Its main business in the last three years has been bus passenger transport, bus terminal development and operation, comprehensive automobile services, and transportation and tourism.
The company announced that it intends to issue shares and pay cash to Hainan Travel Investment to purchase 100% of its duty-free shares. At the same time, supporting capital is raised by means of a non-public offering of shares. The issue price for the current issue of shares purchased assets is 11.09 yuan/share. Since the audit and evaluation work has not yet been completed, the estimated value of the duty-free assets of sea travel has not yet been determined.
Sea Travel Duty Free mainly deals in the outlying islands duty-free business and consumer goods. The company set up a high-end tourism retail complex, Sea Travel Duty Free Mall, launched the operation and management business of offline duty-free stores, retailing duty-free goods to tourists from outlying islands across the country, with a business area of 95,000 square meters, attracting more than 700 internationally renowned brands to settle in. 2020-2022Q1 revenue was $0.13, $24.55, and $1,384 million, respectively, and net profit of -0.53, -0.26, and $62 million respectively. The net profit margin of 2022Q1 to the mother was 4.5%.
Risk warning: risk of asset purchase failure; epidemic factors affecting the number of travelers, macroeconomic fluctuations affecting tourism demand; deregulation of Hainan's duty-free policy lower than expected, etc.