Zhongxin Travel (002707) 2018 Annual Report and 2019 First Quarterly Report Comment: Events and Emergencies Slowed Down Performance and Bottom Line
This report reads: Destination emergencies and asset impairment dragged down performance. The industry bottomed out and went light. Accelerated expansion of channels and the deployment of destination resources will drive rapid growth.
Investment Highlights: The annual report and the first quarter results are in line with expectations, increasing holdings.
Reduce EPS for 2019/20 to 0.
33 yuan (0 / -0.
05) Add 20% profit forecast for 2021.
At 36 yuan, the company’s light-loaded company benefited from the increase in the outbound tourism penetration rate, giving the industry an average of 28xPE in 2019, and raised its target price to 8.
Brief description of results: Total operating income for 2018 was 122.
3.1 billion / + 1.
52%, net profit attributable to mother is 2,356.
610,000 / -89.
87%, attributed to mother deducted non-net profit 370.
420,000 / -98.
37%; 2019Q1 revenue 24.
5.8 billion / -0.
93%, net profit attributable to mother was 6,487.
30,000 / -1.
37%, deducting non-net profit of 6,448.
910,000 / + 6.
Unexpected destinations affect Asian outbound demand, and asset impairment is a drag on performance.
① The impact of unexpected events in destinations such as Thailand on demand disruption, and wholesale business revenues fell by 2 as well.
52%, some products are sold at reduced prices or gross profit margins are reduced by 0.
52pct; ② The channel layout has accelerated, with 435 stores, an increase of 300, driving retail business revenue +12.
39%; ③ Total assets impairment of the company in 2018 1.
13 trillion, of which 29.37 million are bad debt losses; 15.55 million long-term equity investment is impaired; 67.63 million goodwill is impaired, and the current book value of goodwill is 6.
93 ppm; ④ The market-oriented interest expense of convertible bonds was 36 million yuan, which led to a large increase in financial expenses in ten years, and the index cost improved after the price of conversion shares was reduced.
The acceleration of channels has driven the rapid growth of retail business, and the layout of destination resources has contributed incremental performance.
① The growth rate of outbound passenger flow is still under pressure under a high short-term base, Q2 May Day holiday is extended or ushering in marginal improvement; ② Retail store expansion is accelerating, it is expected to reach 2,000 stores in the next 3 years, which will benefit residents in third and fourth tier citiesThe penetration rate of tourism has increased; ③ Zhongxin has successively operated its destination resources in 深圳桑拿网 Japan and Switzerland, which will contribute incremental performance and improve profitability.
Risk reminder: the risk of emergencies at the destination and the risks of the macroeconomic outlook.