CYTS (600138): Wuzhen maintains steady Gubei growth under pressure

This report reads: In the first three quarters of 2019, tourists in Wuzhen are growing, while growth in Gubei Water Town is under pressure.

The growth rate of China Youth Union is bright, and the long-term value of the company’s high-quality assets is still worth looking forward to.

Investment Highlights: Maintain Overweight rating.

Maintain profit forecast EPS for 2019-2021.

86/0.

95/1.

05 yuan.

The company belongs to scenic areas with high-quality resources 深圳spa会所 and maintains target prices.

2 yuan, corresponding to 20xPE in 2019, maintaining the overweight level.

Brief description of results: The company’s revenue in the first three quarters of 2019 was 95.

45 billion / + 6.

90%, net profit attributable to mother 5.

45 billion / -0.

33%, deducting non-attributed net profit

2.1 billion / -5.

43% EPS 0.

75 yuan.

The company’s revenue in the third quarter was 36.

92 ppm / + 9.

82%, net profit attributable to mother 1.

6.3 billion / + 14.

79%, deducting non-attributed net profit1.

6.3 billion / + 16.

43% EPS 0.

22 yuan.

The business of each segment developed steadily, and the expense ratio improved during the period.

① Wuzhen Scenic Area achieved operating income in the first three quarters of 201913.

7 billion, net profit 6.

20 trillion, all basically the same as the same period last year; the cumulative number of tourists received 730.

510,000 person-times, an increase of 1 every year.

63%; ② The scenic spots in Gubei Water Town were affected by the large-scale events in Beijing and the increasing competition pressure, and gradually received 191 tourists in the first three quarters of 2019.

350,000 person-times, a decline of 6 per year.

76%; realized operating income of 7.

48 ppm, a reduction of 5 per year.

59%; ③ The report’s main conference event management business performed outstandingly. In the first three quarters of 2019, China Youth Union achieved revenue of 17%.

98 ppm / + 4.

66%, net profit 3181.

70,000 yuan / + 49.79%; ④ The gross profit margin for the first three quarters of 2019 is 24.

36% (+0.

30pct); period expense rate is 16.

47% (+1.

28 points).

The third quarter gross margin was 23.

39% (-0.

01pct); period expense rate 16.

28% (-0.

35pct).

The asset value is excellent, and long-term growth is worth looking forward to.

In 2020, the courtyard will be built, the structural transformation of attractions and exhibition towns, the continuous improvement of 深圳丝袜会所 Gubei transportation and brand power will bring long-term growth for the company, and China Everbright Group is also expected to bring improvements in capital and mechanisms.

Risk factors: weather factors interfere with the economy, and the economy reduces tourist spending power.