Core Viewpoint - Jiangsu Shouxihu Cultural Tourism Co., Ltd. is preparing to enter the Hong Kong capital market, leveraging its unique waterway tourism operations in Yangzhou, which have shown significant revenue growth from RMB 0.31 billion in 2022 to RMB 1.11 billion in 2024, with net profit increasing from RMB 2.98 million to RMB 42.88 million [1][2] Company Overview - The company has a 20-year exclusive operating right for the Shugang-Shouxihu scenic area, expiring in 2035, and indefinite exclusive rights in the ancient canal area, which constitutes a significant competitive barrier [1][2] - The majority of the company's revenue, over 85%, comes from its waterway sightseeing services, which is expected to remain at 85.6% in the first half of 2025 [1] Business Risks - The company's revenue is highly concentrated in the Yangzhou area, making it vulnerable to regional economic fluctuations, adverse weather conditions, and local regulatory changes [2] - The expiration of the exclusive operating rights in 2035 poses a risk of increased renewal costs or changes in the operating model, which could significantly impact net profit margins [2] - The tourism industry is characterized by intense competition and rising customer service expectations, which could challenge profitability in the future [2] Business Structure - The core income source is from waterway sightseeing, with 206 boats in operation, including rowing boats and themed boats, and a maximum daily capacity of over 35,000 passengers during peak seasons [3] - The company has begun diversifying its revenue streams, with new services such as sightseeing bus operations contributing 11.6% of revenue in the first half of 2025, and a new immersive night tour project generating RMB 18.44 million, accounting for 21.8% of total revenue [3][4] Financial Considerations - The introduction of new services has increased fixed costs, with sales costs rising approximately 22% year-on-year in the first half of 2025 [4] - The company's light asset management service revenue is minimal, contributing only 5.1% of total revenue in 2024, with a significant drop in gross margin from 38.4% in 2023 to 16.4% in the first half of 2025 [4] Fundraising and Future Plans - The company plans to use the funds raised to develop more innovative immersive projects, upgrade facilities, and expand its light asset management services to create a nationwide waterway tourism management network [6] - The fundraising is seen as a critical step for the company to transition from a single scenic area operator to a comprehensive tourism service provider [6] Industry Landscape - The waterway tourism market in China is highly fragmented, with over 270 service providers and the top ten accounting for less than 30% market share [7] - Experts suggest that merely increasing assets and equipment will not significantly alter the competitive landscape; instead, strategic mergers and acquisitions of smaller operators are necessary for substantial market impact [7]

Core Viewpoint - Jiangsu Shouxihu Cultural Tourism Co., Ltd. has officially submitted its IPO application to the Hong Kong Stock Exchange, aiming to expand its market presence and diversify its business model beyond its core water-based tourism services [2][10]. Group 1: Business Overview - The company was established in 2006, originally focusing on water-based sightseeing services at Shouxihu Scenic Area, and has since evolved into a comprehensive water tourism company [3]. - As of the reporting periods, the revenue generated from the water-based sightseeing business was approximately 27.566 million RMB, 95.099 million RMB, 96.046 million RMB, and 72.342 million RMB, accounting for about 88.3%, 87.2%, 86.2%, and 85.6% of total revenue respectively [5][9]. - The company has developed a diversified service model that includes standard sightseeing services, value-added services, and the upcoming "Grand Canal Yangzhou" night tour, which has seen a visitor increase of over 110% [5][8]. Group 2: Market Position and Competition - In the Jiangsu province, the company holds a market share of 16.0%, ranking second in the water sightseeing service market, while its national market share is only 1.0%, ranking 10th [6][7]. - The leading competitor in Jiangsu has a market share of 34.2%, indicating a significant gap that the company needs to address [6][7]. - The water-based sightseeing business is seen as a double-edged sword, providing stable cash flow but also exposing the company to risks due to its reliance on a single scenic area [6][11]. Group 3: Future Growth and Challenges - The company plans to use the funds raised from the IPO to explore new water tourism routes and projects in major cities in Jiangsu, as well as to develop partnerships with other scenic areas along the Grand Canal [10]. - The company’s growth is currently driven by the recovery of regional tourism post-COVID-19 and the popularity of related media, but there are concerns about the sustainability of this growth [8][9]. - The company faces challenges in expanding beyond its current operational limits, and its future success may depend on acquiring broader operational rights and integrating with other regional operators [7][11].