Sante(SZ:002159) Guotai Junan Securities·2024-05-05 02:02Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 23.05 CNY, unchanged from the previous rating [2][20]. Core Views - The company's performance in Q1 2024 met expectations, and with the entry of state-owned capital, it is anticipated that the company will improve efficiency by divesting loss-making projects, enhancing cash flow, and reducing headquarters expenses [1]. - The report forecasts the company's net profit attributable to shareholders for 2024-2026 to be 170 million, 195 million, and 229 million CNY respectively [1]. Summary by Sections Performance Overview - In Q1 2024, the company achieved revenue of 142 million CNY, a decrease of 11.39%, recovering to 130% of the 2019 level. Gross profit was 88 million CNY, down 18.2%, recovering to 183% of the 2019 level, with a gross margin of 61.84%, down 5.15 percentage points [1]. - The net profit attributable to shareholders was 34 million CNY, an increase of 18%, with a profit margin of 23.88%, up 5.9 percentage points [1]. Revenue Drivers - The decline in revenue was primarily due to two factors: the implementation of a free ticket policy at Fanjing Mountain in March and July 2023, which did not affect Q1 2024, and adverse weather conditions in Guizhou leading to reduced visitor numbers [1]. - The report anticipates that the effects of project expansions will gradually manifest as the peak season approaches, with a projected 25% increase in project capacity [1]. Financial Forecasts - The financial summary indicates a significant recovery in revenue from 256 million CNY in 2022 to 719 million CNY in 2023, with projections of 813 million CNY in 2024 [23]. - The net profit is expected to rise from -77 million CNY in 2022 to 128 million CNY in 2023, and further to 170 million CNY in 2024 [23]. Valuation Metrics - The report highlights an expected operating profit margin of 40.6% in 2023, with projections of 40.2% in 2024 [23]. - The price-to-earnings (P/E) ratio is projected to decrease from 21.79 in 2023 to 16.32 in 2024, indicating improved valuation as profitability increases [23].