Incident: The company released its 2023 interim report. 2023H1 achieved revenue of 1.25 billion yuan, up 234.2% year on year; net profit of 0.3 billion yuan, turning loss into profit; looking at the Q2 quarter, it achieved revenue of 770 million yuan, an increase of 314.3% year on year, and net profit of 200 million yuan.
Driven by both policy and market, the company's various businesses showed a strong recovery trend. 1) Travel agency operations:
The operating revenue of 2023H1 travel agency reached 750 million yuan, an increase of 763.1% over the previous year, and recovered to 23.5% in the same period in 2019. The gross margin was 13.3%, a decrease of 8.3 percentage points from the previous year. 2) Hotel business: The 2023H1 hotel business achieved revenue of 4.1 billion yuan, up 85.0% year on year, recovered to 95.1% year on year compared to 2019, gross margin was 36.2%, up 32.8 percentage points year on year, hotel management business achieved revenue of 0.8 billion yuan, up 41.5% year on year, recovered to 269.6% year on year in 2019, and gross margin was 40.6%, up 7.4 percentage points year on year. 3) Auto service business: 2023H1's revenue was 100 million yuan, a year-on-year decrease of 4.2%, and gross margin was 76.1%, an increase of 1.0 percentage point over the previous year.
Gross margin and net interest rate increased, and the cost ratio showed a downward trend during the period. The gross margin of 2023H1 was 23.0%, up 9.2 percentage points from the previous year, and the net profit margin was 2.2%, up 28.9 percentage points from the previous year. Due to a sharp increase in the gross margin of the hotel business, the company's overall gross margin level has increased. The cost rate for the 2023H1 company was 18.3%, the sales and management expenses rates were 7.8% and 11.2% respectively, down 9.6 and 23.5 percentage points from the previous year, and the financial expense rate was -0.7%, up 2.3 percentage points from the previous year. Thanks to the scale effect brought about by the strong recovery in the business travel business, there was a clear downward trend in the cost rate during the period.
Accelerate the expansion of network channels across the country, and continue to strengthen diversified businesses. The business travel business is actively expanding national network channels and building a “national buying, national selling” tourism service ecosystem. The accommodation business continues to be deeply involved in the Guangdong-Hong Kong-Macao Greater Bay Area urban agglomeration and radiates to major cities and scenic spots across the country. It is expected that with the accelerated development of the “Travel+” diversified business and the continuous improvement of cultural tourism integration and innovation, the company is expected to open up room for long-term growth, and is optimistic that its performance will continue to be released under diversified business and channel network expansion.
Profit forecasts and investment recommendations. The company's net profit for 2023-2025 is estimated to be 0.9, 190 million yuan, and 280 million yuan, respectively. The company is a comprehensive enterprise in the domestic wine and tourism industry. It will fully benefit from the boom recovery in the domestic tourism market. It will give the company 41 times PE in 2024, corresponding to a target price of 11.89 yuan, covering the “buy” rating for the first time.
Risk warning: Risk of changes in inbound and outbound tourism policies, risk of increased market competition, and risk of industry recovery falling short of expectations.