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H1 2024 Financial Analysis Report of the Culture and Tourism Group

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2024-09-12

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Since the beginning of this year, the domestic tourism market has continued to maintain a steady and positive trend. Driven by the dual positive factors of booming domestic tourism and the accelerating recovery of inbound and outbound tourism, the operating performance of listed tourism companies in the first half of the year has been mainly profitable, accounting for nearly 70%. At the same time, it also shows characteristics such as "weak revenue growth, room for improvement in profitability, and significant differences between groups", and tourism enterprises are generally under pressure, but there are winners and leaders in sub-sectors such as tourism performances, online tourism, scenic spots and parks, and hotels.

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Author | Xing Jingjing

Editor | Yang Ming

Editor in charge | Jing Xiangyuan

Source | Mai Dian Wang

Overall Observation of the Financial Reports of Tourism Groups in the First Half of 2024: 61 Tourism Groups' Total Revenue is Approximately 201.6 Billion Yuan, and Total Net Profit is Approximately 16.2 Billion Yuan

According to incomplete statistics, 61 tourism groups have released their financial data for the first half of 2024, covering six categories: scenic spots and parks, hotels, travel agencies and online travel service providers, integrated tourism, duty-free shopping and cultural tourism, and industrial supply chains. The total revenue of the 61 tourism groups is 2015.81 billion yuan, with an average revenue of 3.305 billion yuan. Among them, there are 5 companies with revenue exceeding 10 billion yuan, namely China Duty Free (31.26 billion yuan), Yu Garden Co., Ltd. (27.57 billion yuan), Ctrip Group-S (24.677 billion yuan), OCT-A (23.01 billion yuan), and Huazhu Group-S (11.43 billion yuan); 5 companies with revenue between 50 and 100 billion yuan, including Fosun Tourism Culture (9.415 billion yuan), Tongcheng Travel (8.112 billion yuan), Shangri-La (7.477 billion yuan), Jinjiang Hotels (6.892 billion yuan), and Wangfujing (6.38 billion yuan); 11 tourism groups with revenue between 10 and 50 billion yuan, 39 with revenue between 1 and 10 billion yuan, and 1 with revenue less than 1 billion yuan.

The average year-on-year growth rate of revenue for the 61 tourism groups in the first half of 2024 is 18.6%, with 40 companies showing positive growth and 21 companies showing negative growth. Among them, the revenue growth of Ctrip, Sanxiang Impression, and Fengshang Culture was the most significant, with a year-on-year increase exceeding 200%; while the revenue of Lingnan Holdings, Oriental Garden, and Three Gorges Tourism decreased significantly, with a decline ranging from 46% to 61%. Among the 61 tourism groups, the top ten in terms of year-on-year revenue growth include 3 hotel companies and 3 travel agencies, as well as 2 industrial chain companies and 2 scenic spot and park companies, indicating a relatively diversified distribution, which to some extent shows the recovery, expansion, and deepening of the entire tourism industry and the entire industrial chain in the first half of the year.

The total net profit of the 61 tourism groups in the first half of 2024 is approximately 16.2 billion yuan, with an average net profit of 266 million yuan; 41 companies are profitable and 20 companies are loss-making. Ctrip Group, China Duty Free, Huazhu Group, and Yu Garden Co., Ltd. showed excellent net profit performance and strong profitability in the first half of the year, with net profits of 8.145 billion yuan, 3.283 billion yuan, 1.726 billion yuan, and 1.142 billion yuan respectively. Among the remaining 57 tourism groups, 14 have net profits between 100 million and 1 billion yuan, 23 have net profits between 0 and 100 million yuan, and 20 companies have negative net profits. Overall, the profit structure of the 61 tourism groups roughly presents a "pyramid shape", and mid-range and low-end companies (with profits less than 100 million yuan and negative net profits) account for the majority, accounting for about 70%.

The average year-on-year growth rate of net profit for the 61 tourism groups in the first half of 2024 is -4%, with 23 companies showing positive growth and 38 companies showing negative growth. Among them, 8 tourism groups have a year-on-year increase in net profit exceeding 100%, ranked from high to low as follows: Fengshang Culture (5424.74%), Tuniu (995.31%), Ctrip (307.9%), Explorer (295.64%), Sanxiang Impression (129.03%), Ado (119.01%), Xinhua Union (103.97%), and Ctrip Group-S (103.32%). Taking Fengshang Culture as an example, its net profit increased by 54 times in the first half of 2024, partly due to the low base in the same period last year, and partly due to the "multi-point blooming" of tourism performances, landscape art lighting, and performances. In stark contrast to the soaring year-on-year growth in net profit of the above 8 tourism groups, Lingnan Holdings, Tibet Tourism, and 10 other tourism groups saw their net profit decline by more than 100% year-on-year, and Oya Holdings, Qujiang Tourism, and Guilin Tourism saw a year-on-year plunge of more than 10 times. Regarding the reasons for the losses, Guilin Tourism explained in its semi-annual report that the cancellation of medical insurance reduction and exemption policies led to an increase in labor costs year-on-year; the company's investment income decreased by 13.0147 million yuan year-on-year. Qujiang Tourism stated that the expected credit loss model for accounts receivable changed compared to the same period last year, resulting in an increase in the amount of bad debt provision and thus losses.

Summary: A comprehensive comparison of the operating performance of 61 tourism groups in the first half of 2024 shows the following characteristics: With the tourism market moving towards normalization, the low-base effect is weakening, and the year-on-year growth rate of financial indicators of various tourism groups is further returning to normal levels; the operating performance of tourism groups shows certain differences and diversification, and market competition among various groups is becoming more intense; the phenomenon of "increased revenue but not increased profit" is prominent, with 40 companies showing year-on-year revenue growth and 23 companies showing year-on-year net profit growth, which is due to the superposition of multiple factors such as rising costs, increased expenses, and cautious and rational tourism consumption, and the overall profitability needs to be improved and the profit model needs to be optimized.

Comparative Analysis of Financial Performance of Various Types of Tourism Groups in the First Half of 2024: Traditional "three-horse carriage" companies such as scenic spots, hotels, and travel agencies and online travel services are mainly profitable, while integrated tourism companies and upstream supply chain companies in the landscape design industry are experiencing losses.

1. Scenic Spots and Parks: Overall, profitability is dominant, with significant performance differences. Songcheng Performance and Huachang Special are leading, while Tibet Tourism and Guilin Tourism have "turned from profit to loss" compared to the same period last year.

Comparing the operating performance of 15 listed scenic spot and park tourism companies in the first half of 2024, the characteristics of "weak revenue and profit growth and polarization" are obvious: The average revenue of the 15 scenic spot and park tourism groups in the first half of the year is only 5.7%, and the average year-on-year growth rate of net profit is -1.6%; Songcheng Performance, supported by the "five new" (new projects, new content, new improvements, new marketing, and new management) operating advantages, achieved "dual growth" in revenue and net profit, and both year-on-year indicators ranked first among similar companies (revenue year-on-year growth of 59%, net profit year-on-year growth of 81.75%); while Guilin Tourism, Tibet Tourism, Zhangjiajie, etc., are in a state of varying degrees of loss, due to factors such as increased costs, intensified competition, the impact of floods, reduced investment income, project performance drag, and high sales costs leading to lower gross profit.

2. Hotels: Operations return to normal, with the phenomenon of "weak revenue growth and increased revenue but not increased profit" being significant; a decrease in profits, an increase in losses, and companies with "negative negative" trends such as turning from profit to loss account for 75%.

Looking at the year-on-year revenue of 12 hotel-type cultural tourism groups, except for GreenTree Inn, the remaining 11 all showed positive growth. Hotel enterprises represented by Jinjiang, Shoulu, Jinling, and Huatian saw revenue increases of less than 5%, indicating a return to normal hotel operations and a weakening of the low-base effect. However, in terms of year-on-year net profit, only 3 companies showed positive growth—Jinjiang, Shoulu, and Ado—while the rest experienced varying degrees of decline. Combining year-on-year revenue and year-on-year net profit, among the 12 hotel-type cultural tourism groups in the first half of 2024, only Jinjiang, Shoulu, and Ado showed increases in both indicators. Ado's growth was the most significant, with year-on-year revenue up 75% and year-on-year net profit up 120%.

3. Travel agencies and online travel-related cultural tourism groups: Except for three travel agencies—Feiyang, Kaisar, and Guolv United—which incurred losses, the remaining eight all made profits.

In the first half of the year, three online travel service providers represented by Ctrip, Tongcheng, and Tuniu showed impressive growth in both revenue and net profit, with significant year-on-year increases. Analysis of Ctrip and Tongcheng's revenue composition shows that accommodation bookings and transportation tickets form their basic revenue base. In contrast, travel agencies showed some disparity; three of the eight travel agency groups incurred losses, with the loss amounts from highest to lowest being Guolv United (¥17.22 million loss), ST Kaisar (¥16.87 million loss), and Feiyang Group (¥14.85 million loss). In the first half of the year, CYTS's revenue reached ¥4.351 billion, ranking first among the eight travel agencies, but its net profit declined by about 30% year-on-year due to increased costs and labor costs. Driven by the rapid recovery of inbound and outbound tourism markets, CYTS's performance in the first half of the year was impressive, with both revenue and net profit achieving triple-digit growth.

4. Comprehensive tourism: Among the eight comprehensive groups, Fosun Tourism Culture, Xiangyuan Tourism, and Xinhua Lian achieved profitability.

Compared with the same period last year, among the eight comprehensive cultural tourism groups in the first half of 2024, two saw increased losses, two saw reduced losses, two saw reduced profits, one became profitable, and one became unprofitable. Huaciocheng A continued to lose money, but the losses narrowed this period, indicating a positive trend; Xinhua Lian experienced a resurgence, returning to a healthy development track after restructuring and successfully achieving profitability; Qujiang Tourism's performance declined, turning from profit to loss due to a significant increase in bad debt provisions; Xi'an Tourism's revenue and net profit both decreased year-on-year due to a significant decline in business travel revenue and the hotel sector being in a growth phase, and losses further expanded; Fosun Tourism Culture and Xiangyuan Tourism experienced varying degrees of profit reduction.

5. Duty-free shopping and cultural commerce tourism: Insufficient revenue growth, overall profitability, only Nanjing Shanglv achieved "dual increase" in revenue and net profit.

Affected by factors such as insufficient consumer confidence, consumption downgrading, e-commerce diversion, increased competition, pressure on offshore duty-free sales, and increased marketing expenses, the revenue growth of consumer goods retail shopping and duty-free enterprises was insufficient, and profits declined: China Duty Free and Wangfujing saw declines in both revenue and net profit;豫园股份 saw a slight increase in revenue but a nearly 50% year-on-year decline in net profit. In comparison, Nanjing Shanglv's "tourism + commerce" dual-drive strategy proved effective, and the transformation results were further demonstrated, with steady performance growth. In the first half of the year, the Qinhuai Scenic Cruise business maintained high operation, achieving revenue of ¥103 million during the reporting period; Nantour's overseas travel agency business revenue was ¥31 million; the combined revenue of the above two items accounted for approximately 34%, highlighting the important position of the tourism business.

6. Industry supply chain: Except for the four groups in the upstream cultural tourism industry chain (landscape gardening), the remaining performing arts, facilities and equipment, and outdoor sports industry chain groups all made profits.

The financial performance characteristics of 11 cultural tourism industry chain enterprises in the first half of the year are as follows: four upstream planning, design, and landscape gardening groups incurred losses; driven by the hot wave of cultural tourism performing arts consumption, among the three midstream cultural tourism performing arts industry chain enterprises, except for Dafeng Industry, Sanxiang Impression and Fengshang Culture saw exponential growth in both revenue and net profit; among the four facilities and equipment and outdoor sports industry chain enterprises, half saw reduced profits and half saw increased profits. Specifically, the "outdoor + chip" dual-main business strategy of Explorer was significantly effective, with significant increases in both revenue and net profit; San Te Cableway achieved further growth in profit levels due to a significant overall decrease in expenses this period, with cableway operation accounting for approximately 77% of its revenue.

Summary and Outlook

In the first half of the year, the cultural tourism market continued to warm up, with "strong supply and demand," frequent highlights and hot spots, and domestic and cross-border tourism maintaining high prosperity. Against this backdrop, the performance of major listed cultural tourism companies was good, with approximately 66% of companies experiencing revenue growth and approximately 67% experiencing profitability. Performance differentiation and the phenomenon of "the strong getting stronger" became increasingly prominent, with leading groups achieving impressive results. However, while encouraging, some concerns also emerged: the average year-on-year net profit of 61 cultural tourism groups was negative (-4%); one-third of companies experienced negative revenue growth; and only one-third experienced simultaneous growth in revenue and net profit. This shows that the low-base effect has weakened, the revenue growth momentum of cultural tourism enterprises is insufficient, profitability is weak, and operating pressures and challenges are apparent.

Looking ahead to the second half of the year, the summer tourism peak season and the economic stimulus of the Mid-Autumn Festival and National Day holidays will continue to stimulate the enthusiasm of the public for cultural tourism consumption and ignite the vitality of the cultural tourism industry. At the same time, the recent issuance of the "Opinions on Promoting the High-Quality Development of Service Consumption" by the State Council provides policy support for industries such as cultural tourism, hotels, catering, education, and sports. Policy support will further help the tourism industry continuously advance the process of high-quality development. In the future, major cultural tourism groups urgently need to seize market opportunities and embrace policy dividends, through continuous product research and development, technological innovation, brand building, marketing promotion, cultivation of new growth points, cost reduction and efficiency improvement, and other measures, to increase "traffic" and maintain "retention," increasing both revenue and profit, thereby maintaining stable growth and building strong competitiveness in the industry's involution.

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