SAIC Group released three quarterly results for 23 years: 23Q1-Q3 achieved revenue of 609 million yuan / + 24%, return to the mother of-42 million yuan / + 57%, deduction of non-56 million yuan / + 52% of the company's revenue of 226 million yuan / + 77%, return of the mother of 4 million yuan / + 106%, deduction of-3 million yuan / + 95% of the gross profit margin of 23Q3 to achieve gross profit margin of 1.8%/+53pct.

Speed up the restructuring process and suggest continuous attention: as of October 24, the company has reviewed and adopted the revised transaction report, obtained the approval of Hainan SASAC, and has completed the reply to the second round of inquiry letter of the Shanghai Stock Exchange. the follow-up needs to be approved by the Shanghai Stock Exchange and registered by the CSRC, and the restructuring process is accelerated. We expect that the injection progress will still be the core catalyst for the company's current share price, and it is recommended that we continue to pay attention.

There is no major adjustment in the revised restructuring plan: it is proposed to invest in Hainan Travel Service for tax exemption at a transaction consideration of 4.08 billion yuan, including 3.468 billion yuan for shares (313 million shares for Hainan Travel Service at 11.09 yuan per share), cash consideration of 612 million yuan, and a fixed increase of no more than 1.4 billion yuan. We expect that after the completion of all transactions, Brigade Investment will hold 43.22% of Haiqi and Haiqi will hold 100% tax-free shares of Hainan Travel. The duty-free promise of SeaTravel will achieve net profit of RMB 1.98 million RMB 326 million RMB in 23-25 years. If calculated on the basis of performance commitment, maximum additional equity issue and 3 billion market value of the original business, the current stock price corresponds to the implied valuation of 23-25 years tax-free business by 49-30-20 times.

Sea travel tax-free sales and performance continue to climb: 1) from financial data, sea travel tax-free 23 years from January to September achieved revenue and net profit of 30.12 yuan and 133 million yuan respectively, with a net interest rate of 4.4%, of which tax-free income was 2.796 billion yuan. The company's sales have continued to climb into the Q4 peak season, with sales of 132 million yuan / + 113% during the National Day Golden week with cumulative sales of 300 million yuan in the first 23 days of October, and the performance is expected to continue to grow. 2) in terms of category structure, the proportion of fragrance / boutique / electronic sales in January-September in 23 years is 68%, 13%, 11%, respectively, compared with the whole year of 22 years-5pct/+5pct/-3pct, the increase in the proportion of quality products is expected to promote further growth of gross profit margin.

The layout of taxable business is further promoted: 1) to further grasp the advantages of Hainan Olai, Huating Olai is located in Sanya CBD, and the distance between Huating Olai and Sea Travel Duty Free City is less than 1km. By October 23, the project decoration and investment promotion have been basically completed, and it is expected to start business soon and become a good supplement to duty-free business. The company expects Huating Project to achieve an income of 0.37 million yuan, 123.95 million yuan respectively in 23-25. Contributed net profit respectively-0.46 kilogram, 0.07 plum, 51 million yuan 2) Sea Travel tax-free newly established holding subsidiary Guilin Sea Travel, with a stake of 51%, which is located in the integrated retail complex of shopping, catering and entertainment.

Investment suggestion: the company's acquisition of sea travel is carried out in an orderly manner, and we are optimistic about the tax-free growth potential of sea travel, which is expected to inject new momentum into the company after integration. Leaving aside the sea travel tax exemption for the time being, we expect the overall performance of the company to gradually stabilize. Hainan SASAC enjoys strong resource endowment and core management innovation, and is expected to integrate resources after the acquisition. With the continued release of tax-free dividends on outlying islands, we expect sales and profit margins to climb downhill. We expect the company to enjoy greater performance flexibility.

Risk hints: the progress of restructuring matters is not as expected; policy risks; intensified market competition, and so on.