Investment Rating - The report assigns a rating of "Buy" to the company with a target price of 9.45 CNY [5][16]. Core Insights - The company is expected to benefit from the recovery in demand and the advancement of its inter-provincial cruise project, which is anticipated to open new business growth and profit flexibility [2][12]. - The company aims to transition from a purely sightseeing model to a vacation-oriented model, enhancing overall customer spending and profit levels through the introduction of four inter-provincial cruise ships [12][16]. - The projected net profits for the company from 2025 to 2027 are estimated to be 112 million CNY, 153 million CNY, and 206 million CNY respectively, with corresponding EPS of 0.16 CNY, 0.21 CNY, and 0.28 CNY [16][19]. Financial Summary - Total revenue is projected to decline from 1,600 million CNY in 2023 to 741 million CNY in 2024, followed by a gradual increase to 1,326 million CNY by 2027 [4][13]. - The net profit attributable to the parent company is expected to show significant growth from 130 million CNY in 2023 to 206 million CNY in 2027, reflecting a substantial increase in profitability [4][13]. - The company’s return on equity (ROE) is projected to rise from 4.2% in 2023 to 6.3% in 2027, indicating improved financial performance [4][13]. Demand Analysis - The company reported a 20.20% year-on-year increase in tourism revenue to 286 million CNY in the first half of 2025, driven by a rise in visitor numbers and product price adjustments [22][23]. - The number of tourists served by the cruise products reached 1.2525 million, marking a 10.96% increase compared to the previous year, indicating a strong recovery in demand [22][23]. Supply Analysis - The regulatory environment has tightened, with new restrictions on the establishment of inter-provincial passenger transport companies, which is expected to stabilize the competitive landscape [26][28]. - The company plans to build and operate four large leisure cruise ships, with the first two expected to be operational by June and December 2026, respectively [29][30].

Group 1: Visitor Reception Growth - The company experienced a significant increase in visitor reception in the first three quarters of 2025 due to enhanced marketing efforts, product supply expansion, increased transportation capacity, and favorable weather conditions [3][4]. - The marketing team actively promoted brand awareness and product offerings, making core products essential for tourists visiting Yichang [3]. - New products such as "Premium All-Region Tour" and "Sturgeon VIP Experience" were introduced, contributing to the growth [3]. Group 2: Cruise Development - The first two inter-provincial cruise ships are under construction, with expected operational dates by June 2026 and December 2026 [3][4]. - The company has established a management and marketing system for the inter-provincial cruise business, with a focus on building a competent operational management team [3]. Group 3: Financial Performance and Dividend Policy - The company has maintained a high cash dividend ratio, with a cash dividend of CNY 68.94 million in 2024, representing 58.63% of the net profit [5]. - The annual cash distribution ratio has been increased from 10% to 30%, and the cumulative cash distribution over the last three years will be at least 50% of the average distributable profit [5]. Group 4: Asset Depreciation and Infrastructure - The depreciation period for the company's tourism vessels is set at 20 years, in line with industry standards [6]. - Yichang has seen improvements in transportation infrastructure, including expanded airport routes and new high-speed rail connections, enhancing accessibility for tourists [7][8]. Group 5: Strategic Goals - The company aims to become a leader in Yangtze River Three Gorges tourism and a pioneer in China's inland cruise tourism [8]. - Strategies include leveraging the parent company's resources for mergers and partnerships, and expanding the cruise fleet to enhance tourism offerings [8].

Group 1: Company Performance - The company achieved a total revenue of 2.86 billion yuan in the first half of 2025, representing a year-on-year growth of 20.20% [2] - The number of tourists received by the company's cruise products reached 125.25 thousand, marking a 10.96% increase compared to the same period in 2024 [2] - The gross profit margin of the travel agency business reached 26%, significantly higher than the industry average [3] Group 2: Factors Driving Growth - The increase in tourist reception was attributed to favorable weather conditions in the first quarter, which led to an earlier market activation compared to last year [3] - The company expanded its capacity by adding new cruise ships, including the Xiling Gorge Harmony and Joy [3] - New product offerings, such as the Premium All-Region Tour and Sturgeon VIP Experience, contributed to the growth in tourist numbers [3] - Enhanced marketing efforts in various target cities improved brand recognition and product awareness [3] Group 3: Strategic Goals - The company aims to become the leader in tourism for the Three Gorges region and a pioneer in China's inland cruise tourism [5] - Implementation strategies include leveraging the advantages of the controlling shareholder for resource integration and expanding the cruise industry scale through self-built and external growth [5] Group 4: Market Conditions - In 2024, the Three Gorges cruise market saw a total of 5,396 ship departures, with a cumulative passenger volume of 1.2359 million, of which 1.1767 million were domestic tourists, accounting for 95.21% of total reception [6][7] - The elderly population (60 years and above) constituted 50.88% of the total passenger volume [7] Group 5: Regulatory Environment - The Yangtze River Navigation Administration issued regulations on May 31, 2024, regarding market access for inter-provincial passenger transport, including restrictions on establishing new companies and conditions for new ship construction [9]