Incident: The company released its annual report, with total operating revenue of 798.9 million yuan in '23, +152.37%, +10.5% compared to '19; net profit to mother was 227 million yuan, +5971.91% year over year, and +11.8% compared to 2019. Net profit to mother was the median of the previously forecast range.
Benefiting from the recovery of tourism, revenue recovered rapidly. By business, the ropeway business achieved revenue of 387 million yuan, +16.8% compared to '19, and revenue of Impression Performance of 137 million, compared to -22.8% in '19. Hotel operations achieved revenue of 188 million, +57.8% compared to '19. The gross profit margin of the travel sector in '23 was 61.49%, compared to -8.04pct in '19. Among them, the gross margin for ropeways was +3.89pct compared to '19, the gross margin for impression shows was +3.89pct compared to '19-6pct, and the gross margin of the hotel compared to 19-27.34pct. It is expected to increase significantly, mainly due to depreciation. The net profit margin in '23 was 28.5%, +0.3pct compared to '19, mainly due to a decrease in the cost ratio. The sales expense ratio/management expense ratio for '23 was 3.36%/15.42%, respectively, compared to -6.15pct/-3.42pct in '19.
Passenger flow recovered rapidly, and new hotels were put into operation to open up room for growth. In '23, the company's three ropeways received a total of 6.1211 million visitors, an increase of 4.1821 million, an increase of 215.67%, of which: Hikawa Park Ropeway received 3.1622 million visitors, an increase of 1,862 million, an increase of 143.20%; Yunshanping Ropeway received 2.5774 million visitors, an increase of 2.006 million, an increase of 346.89%; Yakniuping Ropeway received 3815 million visitors, an increase of 319,400 over the previous year. 514.46% Impression Lijiang had a total of 739 shows, an increase of 462 shows over the previous year, an increase of 166.79%. It received 1.56 million visitors, an increase of 1,259,800, an increase of 419.57%; Longyue Restaurant received a total of 670,000 visitors, an increase of 517,000 over the previous year, an increase of 337.56%. The company's Indigo Lugu Lake Hotel is scheduled to open in June 2024. The hotel is the first international high-end brand hotel introduced in Lugu Lake. The project plans to build 200 rooms, providing new impetus for the company's long-term development.
The dividend performance was outstanding. Draft profit distribution plan for fiscal year 23: A cash dividend of 3.50 yuan (tax included) will be distributed for every 10 shares, and a total cash dividend of 192 million yuan will be distributed, with a dividend ratio of about 84.6%. If the total market value is calculated at the end of the year, the dividend rate for 23 reached 4.33%, the highest value since 2004 (vs. 1.7% average for 20-22). The company has high-quality tourism resources in Lijiang, a stable business model, and long-term high dividend potential.
Considering the impact of the company's opening of new projects in 24, passenger flow continues to recover, and future expenses are expected to be properly controlled, we predict that the company's 24-26 EPS will be 0.46/0.50/0.52 yuan respectively (0.37/0.41 yuan for 24-25 years before adjustment), which corresponds to a target price of 10.58 yuan based on 23 times that of comparable companies, corresponding to a target price of 10.58 yuan.
Risk warning
The recovery of the tourism market fell short of expectations; progress in new projects fell short of expectations; consumer demand was weak, etc.