Incident: Jiuhua Travel released the 2023 Annual Report and the 2024 First Quarter Report. 1) In 2023, the company's revenue was about 724 million yuan, an increase of 117.94% over the previous year; net profit attributable to shareholders of listed companies was about 175 million yuan, turning a loss into a profit. 2) The first quarter of 2024 achieved operating income of 180 million yuan, a year-on-year decrease of 6.13%, and realized net profit of 52 million yuan, a year-on-year decrease of 15.80%.
Accelerate the renovation and upgrading of key projects, and further improve the carrying capacity of scenic spots. In 2023, the company promoted the construction of the Wenzong Ancient Village Project, the Grand Jiuhua Hotel Business Building Renovation Project, and the Jiuhuashan Traffic Transformation Center function improvement project. Among them, the Wenzong Ancient Village and the Grand Jiuhua Hotel business building were put into operation. The traffic conversion center completed the construction of the main functional area and was initially put into use during the 2024 Spring Festival. 5,207 vehicles can be parked to meet the needs of visitors over 5,000 people/hour during peak periods. The carrying capacity and reception capacity of the scenic area was further improved.
The Lion Peak Ropeway project progressed smoothly, and the expansion of internal traffic opened up room for growth. The company plans to use its own capital to invest 326.7 million yuan in the Jiuhuashan Lion Peak Scenic Area passenger ropeway project, including about 295 million yuan for the ropeway and about 31 million yuan for the alpine sightseeing trail. The total construction period is about 24 months. Construction is scheduled to begin in December 2024, and the entire project will be completed and put into use in November 2026. After completion, it can effectively improve the current “medium heat, north, south and cold” tour status in the Jiuhuashan Scenic Area, meet the needs of expanding the Jiuhuashan Scenic Area, relieve operating pressure during peak periods, and better accept the major opportunities for increased passenger flow after improving external traffic. According to the announcement, it is expected to contribute 111.47 million yuan in annual revenue and 370.6 million yuan (after tax).
The progress of high-speed rail construction is in line with expectations, and improvements in external traffic are expected to contribute to incremental passenger flow. The Chihuang High Speed Rail has entered the trial operation stage. It is expected to open at the end of April 11. As of April 11, the Chihuang High Speed Rail Jiuhuashan Station project has successfully passed the initial completion test. The new Jiuhuashan Station and Chizhou Station complement traffic, which is expected to contribute to incremental passenger flow; rail paving of the entire Xuanji High Speed Rail line has been completed, and it is planned to be completed and opened in September. At that time, the Chihuang and Xuanji High Speed Rail will add more than 200 kilometers of railway operating mileage. Improved external traffic has brought about a marginal increase in the movement of people. Combined with the expansion of internal traffic capacity of the Shizifeng Ropeway project, the improvement in tourist conversion capacity has benefited in both dimensions.
Investment advice: The company is expected to achieve revenue of 796/8.76/983 million yuan and net profit to mother of 1.94/2.15 billion yuan in 2024 to 2026, corresponding to 21.1/19.0/17.0 times PE, maintaining an “increase” rating.
Risk warning: Competition in the industry intensifies; construction of new projects falls short of expectations; natural weather impacts disrupt passenger flow.