Zhongxin Tourism (002707): Q2’s high-baseline performance under pressure retail business continued to develop

Zhongxin Tourism (002707): Q2’s high-baseline performance under pressure retail business continued to develop

Event: The company released its 2019 Interim Report and achieved revenue of 57 in 19H1.

4.6 billion (-1.

16%), net profit attributable to mother 1.

100 million (-20.

37%), deducting non-net profit 1.

09 thousand yuan (-6.


Investment points: The performance in the first half of the year declined slightly, and Q2 was more significant in at least half a year.

The company achieved 57 in 19H1.

4.6 billion (-1.

16%), net profit attributable to mother 1.

100 million (-20.

37%), the decline in net profit attributable to mothers and non-recurring gains and losses in the first half of 2018 included the disposal of Club Med equity to obtain investment income of over 20 million, deducting non-net profit1.

09 thousand yuan (-6.


2Q19 achieved revenue of 32.

8.9 billion (-1.

33%). The slight increase in revenue from Q1 was related to the high base in 18Q2 and the incomplete recovery of the Asian market.

4.5 billion (-37.

6%), deducting non-net profit of 0.

4.5 billion (-20.

02%), the decline in profit is expected to be related to the decrease in gross profit margin.

The Southeast Asian market has not yet fully recovered, and outbound tourism retail continues to develop.

Revenue from outbound travel business 51.

7.4 billion (-3.

1%). From the perspective of destinations, revenue growth in European destinations has increased by more than 10%. Among them, competition in Western Europe has expanded fiercely. Northern European, Southern European, and British market revenues have maintained rapid growth. Asian revenues have also fallen by more than 10%, mainly due to 19 years.In the first half of the year, the Southeast Asian market has not yet fully recovered; the American market, the Australian market has been affected by the Sino-US trade war and the growth of free travel, 杭州桑拿 and the revenue scale has declined; the Middle East market has benefited from the continued hotness of the “Belt and Road” and the rapid growth of Internet celebrity destination Dubai;In addition, the company has also developed products in countries along the “Belt and Road” in the three countries of the Caucasus and Kazakhstan.

From the perspective of type, the outbound tourism wholesale business income42.

3.3 billion (-4.

68%), gross profit margin 8.

52% (-0.

12 points), the Southwest market has added hot products, and the newly established subsidiary in South China is on track to cultivate the source market; the outbound tourism retail business income9.

4.1 billion (+4.

72%), gross margin of 16.

29% (-1.

04pct), as of the middle of 19 years, the number of direct and partner stores of the company increased to 543, an increase of 108 in the previous 18 years, 北京养生会所 except for the net partner stores in Jiangxi, Inner Mongolia, Hebei and other provinces.

Newly entered Hubei, Tianjin, Henan, Fujian and other provinces and cities.

Domestic tourism and other businesses performed well and continued to cultivate.

Revenue from domestic tourism and single product business1.6.2 billion (+52.

30%), of which domestic tourism increased by about 70%, mainly due to the gradual increase in the variety of domestic tourism products, third-party tourism platform resources.

In addition, integrated marketing business income3.

61 ppm (+ 10%) with a gross profit margin of 10.

35% (+1.

33pct), business capabilities continued to improve; product revenue in other industries was 2,193.

710,000 yuan (+176.

42%), of which the income of resettlement industry (the growth rate exceeds 600%) and currency exchange income (the growth rate exceeds 200%) have increased significantly.

Pressure pressure affects profit margins, and Q2’s single-quarter gross margin declined.

Gross profit margin in the first half of 19 was 10.

9% (+0.

27pct), net interest rate 2.

03% (-0.

66 points).

Selling expense ratio 6.

92% (+0.

32pct); overhead cost rate 1.

30% (+0.

07pct); financial expense ratio is 0.

39% (+0.

21pct), primarily due to the increase in loan interest rates and the decrease in exchange gains for the current period; the decline in profitability in the single quarter of 19Q2 was mainly due to the decline in gross profit margin (9.

14%, -0.


In the first half of the year, operating cash flow increased by 149.

72%, mainly due to the increase in the company’s advance receipts and the decline in advance payments.

Profit forecast: Low base in the second half of the year, and the Southeast Asian market is expected to further recover. The growth pressure is expected to improve. Maintain the profit forecast. The company is expected to attribute net profit for the year 19-21.

09, 2.


8.3 billion, a growth rate of 788.

4%, 16.

4%, 16.

3%, EPS is 0.

24, 0.

28, 0.

32 yuan, corresponding to PE is 22, 19, 16 times.

Risk warning: outbound tourism recovery is less than expected, fierce competition in the industry, vicious events at the destination and other risks.