Summary of the Conference Call for China International Industry and Company Overview - The conference call pertains to China International, a company engaged in engineering contracting, design consulting, and equipment manufacturing, with a focus on both domestic and international markets [2][3][4]. Key Points and Arguments Financial Performance - In the first half of 2025, China International reported revenue of 4.788 billion yuan, with a net profit attributable to shareholders of 177 million yuan, reflecting a year-on-year decline [3][10]. - The operating cash flow significantly improved to 797 million yuan, a substantial increase compared to the previous year's negative cash flow of 800 million yuan [3][14]. - The overall gross margin increased to 18.6%, attributed to refined operations and a focus on advantageous sectors [10][14]. Contractual Developments - New contract value for the first half of 2025 reached 2.139 billion USD, marking a 33% year-on-year increase [2][3]. - In the international engineering contracting sector, new contracts amounted to 126 million USD, with effective contracts growing by 36.66% to 973 million USD [4]. - Domestic engineering contracting saw new contracts of 2.275 billion yuan, while design consulting contracts totaled 947 million yuan [5]. Equipment Manufacturing Highlights - The equipment manufacturing segment expanded, with the cableway business entering the Japanese market and securing quality projects [6][15]. - The company is focusing on intelligent technology in the lifting and transportation sector, signing contracts for waste steel automation projects [6][15]. Engineering Investment and Operations - The company achieved breakthroughs in engineering investment and operations, signing a 475 million USD contract for waste-to-energy projects in Uzbekistan [7][8]. - The revenue from engineering investment and operations increased to 1.5% of total revenue, indicating a growing contribution from this segment [8][30]. Technological Innovation - China International established an innovation alliance within its research institutes, enhancing its technological capabilities [9]. - The company received multiple approvals for its cableway technology, which will support future development [9]. Future Outlook - The company anticipates a year-on-year increase in new contracts for the full year, despite facing some pressure on overall performance due to previous high revenue bases from completed projects [10][17]. - The outlook for gross margin remains positive, contingent on the successful execution of major projects and continued refined operations [10]. Additional Important Insights - The company is strategically focusing on high-demand markets, including Southeast Asia, Africa, and Latin America, while also monitoring opportunities in the Russian and Ukrainian markets [19][20]. - China International is cautious about overseas project funding risks, ensuring that projects are politically stable and financially viable before engagement [28]. - The company has not engaged in PPP projects but operates BOT projects, which have shown stable returns [29][30]. This summary encapsulates the key insights from the conference call, highlighting the company's performance, strategic direction, and market positioning.

Group 1: Tourism Growth in Xinjiang - Xinjiang tourism has experienced a significant surge, with 130 million visitors in the first half of the year, a year-on-year increase of 11.15%, and total spending reaching 142.56 billion yuan, up 11.59% [1] - The region has seen a notable influx of international hotel brands, including Ritz-Carlton, InterContinental, and Marriott, with over 10 new stores established by domestic brands like Huazhu and Jinjiang [1] - The tourism boom has positively impacted companies like Xiyu Tourism, which has seen some scenic spots receive over 10 million visitors, and overall profits nearing 10 million yuan [1] Group 2: Transportation and Travel Trends - The demand for self-driving tours has surged, leading to a significant increase in rental car prices, with some customers saving up to 50% by choosing self-drive over flying [2][3] - Traffic congestion has become a challenge due to the influx of tourists, with reports of long wait times at popular attractions [3] - The completion of new highways has improved travel efficiency, allowing tourists to visit multiple locations in a single day [5][6] Group 3: Cultural and Entertainment Impact - Cultural events, such as the China Xinjiang International Ethnic Dance Festival and various concerts, have boosted tourism and created a unique appeal for the region [4] - The rise of the "concert+" model has led to increased hotel bookings, with some hotels experiencing a 120% increase in reservations during major events [5] Group 4: Hotel Market Dynamics - The hotel market in Xinjiang is undergoing structural changes, with over 4,700 hotels and nearly 500 star-rated hotels, indicating a low chain rate of about 25% compared to the industry average of 85% [6][7] - Significant investments are being made in high-end hotel projects, with over 12.6 billion yuan allocated for new developments across key tourist cities [7][8] - A total of 15 international high-end brands have initiated construction projects in Xinjiang, reflecting strong market demand [8] Group 5: Infrastructure Development - The ongoing construction of 33 new and expanded airports is expected to enhance transportation networks and alleviate bottlenecks in the region [9] - The Tianshan International Airport has seen record passenger throughput, with over 2.69 million passengers during the summer travel period, marking a 9.01% increase year-on-year [8][9]

Core Viewpoint - The overall performance in 25H1 is stable and meets expectations, with a slight decline in cable car passenger numbers due to weather conditions, but 25Q2 revenue reached a record high, demonstrating robust operational performance [1] Financial Performance - In 25H1, the company achieved revenue of 378 million yuan, a year-on-year decrease of 1.85%, and a net profit attributable to shareholders of 95 million yuan, a year-on-year decrease of 15.86%, which is in line with expectations [1] - For 25Q2, the company reported revenue of 215 million yuan, a year-on-year increase of 5.04%, marking a historical high for the second quarter, with a net profit of 60 million yuan, a year-on-year increase of 6.26% [1] Business Segments - The cable car business experienced a year-on-year decline in passenger numbers due to weather, with a total of 3.088 million visitors across three cable cars in 25H1, down 4.6% year-on-year; the "Impression Lijiang" show received 707,000 visitors, down 18.0% year-on-year [1] - Conversely, the hotel business showed positive growth, with Lijiang Hefu Hotel generating revenue of 61.64 million yuan, up 5.5% year-on-year, and Diqing Xiangbala Hotel generating 14.56 million yuan, up 25.1% year-on-year [2] Ticketing Optimization - In 25H1, the company optimized the ticket purchasing process for cable cars, which is expected to positively impact future visitor numbers. Changes include allowing ticket purchases up to 7 days in advance, limiting purchases to once per ID within 90 days, and supporting self-rescheduling [2]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, primarily due to adverse weather conditions and the ongoing costs associated with new projects that have not yet become profitable [5][4][3]. Financial Performance - The company achieved total operating revenue of 377.70 million yuan, a decrease of 1.85% compared to the same period last year [5]. - The net profit attributable to shareholders was 94.50 million yuan, down 15.86% year-on-year [5]. - The decline in revenue and profit was attributed to increased downtime of cable cars due to bad weather and the trial operation of the Lugu Lake Indigo Hotel, which has not yet turned a profit [5]. Business Segments - The company’s three cable cars received a total of 3.09 million visitors, a decrease of 148,400 visitors or 4.58% year-on-year [5]. - The Impression Lijiang show attracted 707,000 visitors, down 15.48% year-on-year [5]. - The hotel business, including various properties, generated revenue of 61.64 million yuan, an increase of 5.48% year-on-year [5]. - The Diquing Shangri-La Tourism Investment Company reported revenue of 14.56 million yuan, a year-on-year increase of 25.08% [5]. Corporate Governance - All board members attended the meeting to review the report [2]. - The board approved the half-year report without any cash dividends or stock bonuses [3]. - The company’s controlling shareholder and actual controller did not change during the reporting period [5]. Related Party Transactions - The company plans to engage in daily related party transactions with Lijiang Tourism Investment Group in 2025, which were approved by the board [14][21]. - The transactions are deemed necessary for the company's operations and are conducted at fair market prices [19][16].

Core Insights - Lijiang Co., Ltd. (002033.SZ) reported a revenue of 378 million yuan for the first half of 2025, representing a year-on-year decrease of 1.85% [1] - The net profit attributable to shareholders of the listed company was 94.5 million yuan, down 15.86% year-on-year [1] - The net profit attributable to shareholders after deducting non-recurring gains and losses was 96.1 million yuan, a decrease of 14.31% compared to the previous year [1] - Basic earnings per share were 0.172 yuan [1] Revenue and Profit Analysis - The decline in revenue and profit was attributed to increased weather-related disruptions and downtime, which negatively impacted the income and profit from the company's cableway and performance businesses [1] - Conversely, the hotel business saw revenue growth, and the extent of losses in this segment narrowed [1]

Group 1: Company Strategy and Development - Company emphasizes the importance of low-altitude economy and is exploring a "low-altitude + technology + tourism" development model to enhance visitor experience and management efficiency [1] - Company plans to increase market expansion efforts based on market demand, aiming to establish new performance support points and promote diversified development [2] - Company intends to deepen its presence in the cultural tourism market by scientifically planning tourism elements and enhancing brand recognition and reputation [2] Group 2: Market Trends and Consumer Behavior - The domestic tourism market is experiencing a downward trend and demand upgrade, with lower-tier cities and rural areas becoming significant new growth points for tourism [1] - The tourism industry is entering a new era characterized by diversified, personalized, and quality consumption, with a focus on local and short-distance travel [1] - There is a growing interest in senior tourism, health and wellness travel, and educational and family trips [1] Group 3: International Market Expansion - Company is actively working to expand the inbound tourism market through various strategies, including promoting in regions like Hong Kong and Thailand, and hosting discussions with local government on inbound tourism policies [3] - Company is leveraging visa exemption policies to attract more inbound tourists [3]

Core Viewpoint - The report highlights the financial performance of SanTe Cableway, indicating a decline in revenue but an increase in net profit, showcasing the company's resilience in a challenging market environment [2][3]. Financial Performance - In 2024, SanTe Cableway achieved a total revenue of approximately 6.92 billion yuan, a year-on-year decrease of 3.69% [2]. - The net profit attributable to shareholders was about 1.42 billion yuan, reflecting a year-on-year increase of 11.34% [2]. - The net cash flow from operating activities was 2.85 billion yuan, down 13.76% compared to the previous year [2]. - The company decided to increase its dividend payout, distributing 2.5 yuan per 10 shares, totaling 44.32 million yuan [2]. Business Segmentation - The cableway business is the dominant segment, accounting for 79.6% of total revenue with an income of 5.5 billion yuan in 2024 [3]. - The cableway segment demonstrated strong profitability with a gross margin of 70.98%, although it decreased by 0.36% year-on-year [3]. Project Performance - The Guizhou Fanjing Mountain project received 1.77 million visitors in 2024, a 1.99% increase, generating revenue of 237 million yuan, up 1.01% [4]. - The Huashan Cableway project also saw growth, with 1.99 million visitors, revenue of 136 million yuan, and net profit of 46.37 million yuan, reflecting increases of 9.65%, 6.54%, and 8.64% respectively [4]. - However, four out of eleven core scenic projects reported losses, with a total net loss of 57.29 million yuan, primarily due to adverse weather conditions affecting visitor numbers [4]. Industry Context - The cableway business is often referred to as the "cash cow" of the tourism industry due to its high gross margins, with some projects achieving margins above 80% [5][6]. - The industry faces challenges such as dependency on scenic areas and the trend towards lower ticket prices, which could impact revenue [5]. - Companies are exploring new growth avenues, such as themed cable cars and high-altitude viewing experiences, to adapt to market changes [5].

Investment Rating - The report maintains an "Accumulate" rating for Lijiang Co., indicating a forecasted relative performance increase of 5% to 15% over the next 6 to 12 months [2][8]. Core Views - The company is expected to achieve stable operations in 2024, with Q4 revenue performance showing double growth. The dividend proposal remains consistent with the previous year, yielding a dividend rate of 3.5% based on the closing price on March 18 [3][5]. - The company’s 2024 revenue is projected at 808 million yuan, reflecting a year-on-year growth of 1.2%, while the net profit attributable to shareholders is expected to be 211 million yuan, down 7.3% year-on-year due to fluctuations in gross margin and expense ratios [5][6]. Financial Performance Summary - **Revenue Forecast**: - 2023A: 799 million yuan - 2024A: 808 million yuan - 2025E: 866 million yuan - 2026E: 936 million yuan - 2027E: 967 million yuan - Year-on-year growth rates: 152% (2023A), 1% (2024A), 7% (2025E), 8% (2026E), 3% (2027E) [2][5]. - **Net Profit Forecast**: - 2023A: 227 million yuan - 2024A: 211 million yuan - 2025E: 250 million yuan - 2026E: 283 million yuan - 2027E: 303 million yuan - Year-on-year growth rates: 6072% (2023A), -7% (2024A), 18% (2025E), 13% (2026E), 7% (2027E) [2][5]. - **Earnings Per Share (EPS)**: - 2023A: 0.41 yuan - 2024A: 0.38 yuan - 2025E: 0.45 yuan - 2026E: 0.52 yuan - 2027E: 0.55 yuan [2][5]. - **Valuation Ratios**: - P/E: 24.0 (2023A), 25.9 (2024A), 21.9 (2025E), 19.3 (2026E), 18.0 (2027E) - P/B: 2.2 (2023A), 2.2 (2024A), 2.0 (2025E), 1.9 (2026E), 1.8 (2027E) [2][5]. Business Segment Performance - The company’s core business segments, including cableway and performance services, continue to show growth. In 2024, the total number of visitors to the three cableways reached 6.6684 million, an increase of 8.9% year-on-year. The revenue from cableway services was 410 million yuan, up 7.0% year-on-year, while performance revenue was 140 million yuan, reflecting a 2.5% increase [5][6]. - The hotel business remains under pressure, with a revenue of 167 million yuan in 2024, down 11.1% year-on-year. The company continues to expand its hotel offerings, including the opening of a luxury hotel in July 2024 [5][6].