On July 19, the company issued a notice on the implementation of the Jinding cableway transformation and upgrading project, with a plan to invest 351 million yuan in self-raised funds for ropeway transformation, with a construction period of 18 months, that is, trial operation at the end of the 24th.

Project details: (1) location: the construction location of the project is located on the east side of Jinding Scenic spot of Emei Mountain, which is an important node of the traffic ring line of "going north to south" of Emei Mountain Scenic spot. (2) content: including the construction of a new No. 2 passenger traffic ropeway, the replacement of three cableway supports for No. 3 passenger and cargo dual-use traffic ropeway, and related ancillary facilities. (3) funds: the total investment is 350 million yuan, and the source of funding is raised by the owners themselves: 1) the construction cost of the first part of the project is 288.52 million yuan, accounting for 82.27% of the total investment estimate; 2) the second part of the project construction other expenses is 36.2 million yuan, accounting for 10.32% of the total investment estimate; 3) the third part of the preparatory cost is 25.98 million yuan, accounting for 7.41% of the total investment estimate. (4) Construction period: the construction period is from June 2023 to November 2024, and it is expected to be completed and accepted and trial operation will be carried out in December 2024.

The actual transport capacity of Jinding cableway is expected to increase by 110%, relieving traffic pressure in scenic spots. The current design capacity of Jinding cableway: passenger ropeway 1200 person / hour + passenger and cargo ropeway 1250 person / hour = 2450 person / hour, the actual capacity amounts to 2000 person / hour. After the completion of the reconstruction of the project, the designed capacity: passenger ropeway 1200 person / hour + rebuilt passenger ropeway 3200 person / hour = 4400 person / hour, the actual transport capacity is 4200 person / hour.

After the reconstruction, the designed capacity is increased by 80%, and the actual capacity is increased by 110%.

This project can alleviate the traffic congestion and dredge the tourist line of the ropeway in Emei Mountain, while the ropeway with freight function focuses on solving the problem of transport efficiency and ensuring the supply of materials needed for Jinding's existing tourism reception and daily management, so as to improve the efficiency of ropeway passenger and freight transport and enhance the image of the scenic spot.

After the completion of the project, the annual revenue of ropeway tickets is estimated to be 213 million yuan, with IRR reaching 34.12%. The company estimates that in the future Jinding scenic spot will have a daily tourist capacity of 12400 and a fixed-year tourist capacity of 4.5311 million, of which 80% will take the Jinding ropeway, and 70% of the annual tourist capacity will be considered as the average annual number of tourists, the ropeway will carry 2.5374 million tourists per year; if the new ropeway accounts for 70% of the ropeway tourists, the project will carry 1.7762 million tourists a year. With reference to the current average round-trip ticket price of ropeway in Emei Mountain Scenic area, the annual ropeway ticket income of this project is 213 million yuan. The company estimates that the average annual operating cost of the project is about 45.35 million yuan, the investment internal rate of return is 34.12% after tax, the investment payback period is 4.37 years, and the total investment rate of return of the project is 39.44%.

Profit forecast and investment suggestion: as a 5A scenic spot and one of the four Buddhist holy places in China, the company actively develops the culture and tourism industry in combination with its local culture, and the improvement of surrounding traffic and the increase of internal carrying capacity may bring further increment. It is estimated that the company's income from 2023 to 2025 will be 1.32 billion yuan, an increase of 183%, 9%, 7%, and a net profit of 3.2pm, 384.1 million yuan. A year-on-year increase of 317%, 20%, and 8%, with the current share price corresponding to a PE of 19, 16, and 15X respectively, maintaining a "recommended" rating.

Risk hint: the project construction schedule is lower than the expected risk, the passenger flow growth is not as good as the expected risk, and the return on project investment is not as good as the expected risk.