\u3000\u3 Shengda Resources Co.Ltd(000603) 099 Changbai Mountain Tourism Co.Ltd(603099) )
Core view
Under the background of repeated epidemics, the company’s performance recovered against the trend: in 2021, the company achieved a revenue of 193 million yuan, a year-on-year increase of 30.45%; The net profit attributable to the parent company was -52 million yuan, and the loss narrowed by 7.47% year-on-year. Tourism passenger transport, hotels, travel agencies, enterprise management and other main businesses achieved revenue of 132, 43, 02, 07 and 13 million yuan respectively, with a year-on-year increase of + 28%, + 39%, – 1%, + 37% and + 42% respectively. Although the peak season in August coincided with the recurrence of local epidemics and the willingness of residents to travel was frustrated, the company’s revenue still reversed the trend and recovered to 40% of the 467 million yuan in 2019 before the epidemic, with strong tenacity.
Profitability gradually recovered, and the short-term performance of the expense segment was rigid: in 2021, the company realized a gross profit of -16 million yuan, and the loss narrowed by 42.27% year-on-year. The gross profit margins of tourism passenger transport, hotels and travel agencies were 4.36%, – 25.54% and 47.45% respectively, with a year-on-year increase of + 7pct, + 16pct and + 1PCT respectively. The profitability has an obvious recovery trend. In 2021, the rates of sales, management and financial expenses were 5.31%, 21.27% and 1.89%, basically unchanged and slightly increased year-on-year. There is still much room for recovery compared with 2.64%, 8.45% and 0.47% in 2019 before the epidemic, which is due to the increase of rigid labor costs and sales fees for advertising and online ticket selling fees.
In the short term, the epidemic situation in some areas in the first half of 2022 is still recurrent, and the tourism industry is expected to pick up in the second half of 2022. In the medium and long term, Changbai Mountain Tourism Co.Ltd(603099) as a tourist destination with temperate mountain ecology, volcanic hot springs and high-quality ice and snow resources, has unique resource advantages. With the ice and snow tide behind the East Olympic Games and the subsequent operation of the second phase project of volcanic hot spring tribe under construction, the company has great performance improvement space and business opportunities.
Investment suggestion: at present, the epidemic situation in some parts of China has a repeated trend, and the performance recovery space of natural scenic spots is narrowed. However, in the long run, Changbai Mountain Tourism Co.Ltd(603099) with favorable policies and high-quality natural tourism resources, the resilience of post epidemic recovery is sufficient. It is estimated that the net profit of the company from 2022 to 2024 will be -0.21/0.64/0.87 billion yuan respectively, and the PE valuation in 2023 / 2024 will be 38.4x/28.1x respectively, which is rated as “overweight”.
Risk warning: repeated outbreaks in China; Weak consumption after the epidemic; The progress of projects under construction was less than expected.
