Fosun Tourism Culture (01992) performed well in the first quarter of 2024. The turnover maintained a double-digit growth rate. On April 23, the intraday stock price rose sharply, opening high. At one point, the increase was more than 10%. Multiple factors drove the return to valuation.

The Zhitong Finance App learned that on April 22, Fosun Travel & Communications issued the 2024 Q1 operation announcement, achieving tourism operation turnover of 7.158 billion yuan, up 15.8% year on year, of which Club Med was 6.082 billion yuan, up 15.2% year on year, and Sanya Atlantis 576 million yuan, up 4.5% year on year, with turnover contributing 85% and 8% respectively; in addition, the resort asset management center also performed well. Among them, the turnover of Lijiang Mediterranean International Resort reached 25 million yuan, an increase of 19.9% year on year; the company's net share of shareholders Profits continued to increase year over year.

In fact, Fosun Travel & Communications is the operating carrier for Fosun International's lower travel sector. It includes core IPs such as Club Med and Sanya Atlantis, focusing on asset-light operations and driving steady growth in performance in multiple ways. In 2021-2023, Fosun's travel and culture revenue compound growth rate reached 36%. In 2023, tourism operating turnover reached 18.1 billion yuan, surpassing nearly 30% in 2019 before the pandemic, and profits turned losses into profits.

As the core IP, Club Med's average daily bed price, capacity, and room occupancy rate all continued to grow. In Q1 2024, the average daily bed price was 2,190 yuan, up 8.8% year on year; capacity increased 6.8% year on year; room occupancy rate reached 76.9%, up 1.4 percentage points year on year; Atlantis Sanya continued to reach new high levels in the same period of 23 years, and the average daily room price remained high at 2,500 yuan. The room occupancy rate reached 95%, up 0.8 percentage points year on year.

Notably, Club Med maintained double-digit growth in 2024 bookings. According to the announcement, as of April 13, Club Med recorded the cumulative number of bookings for the first half of 2024 (expressed in the turnover of accommodation, travel and services), with a year-on-year increase of 13%, and recorded a 10% year-on-year increase in cumulative bookings for the second half of 2024. In terms of domestic business, it is expected that during the upcoming May 1st and National Day golden holidays, the number of bookings will increase dynamically.

As Fosun International's core focus sector, future development can be expected

In recent years, Fosun International has proposed a “focus” strategy to focus on the main household consumer business and increase dominant industries. Guo Guangchang, chairman of Fosun International, once said that Fosun's most important focus is on two sectors: one is biomedicine and health; the other is the cultural tourism sector, especially snow and ice tourism.

As a core sector of Fosun International focusing on the cultural tourism industry, Fosun Travel & Culture has shown strong resilience in terms of performance over the past few years, and will continue to stabilize its advantage in the future to drive continued global business growth. As mentioned in its 2023 results disclosure, its core business Club Med will open 4 new villages around the world in 2024, 2 of which are located in China; it is expected that by 2026, the resort's capacity will increase by 19% or more compared to 2023.

It is favored by major investment banks, and the valuation is attractive

Major investment banks are also optimistic about Fosun's tourism culture (01992.HK). According to incomplete statistics, more than 10 investment banks have published optimistic research reports in 2024, reaffirming the “buy” rating. The main domestic and foreign investment research reports after Fosun Travel and Culture's 2023 results have been updated as follows:

Since the beginning of the year, due to multiple influences such as the macro environment, markets, and sectors, Fosun Travel & Culture's valuation has retreated to historic lows, and the stock price has fallen into a “golden pit.” As Guo Guangchang, chairman of Fosun International, said, “Dig deep and mine well,” Fosun Travel & Culture is the core focus of the business. Its fundamentals are strong, the prospects for a steady recovery in the industry are optimistic, and the performance has high room for imagination. As capital market sentiment picks up, the company's valuation is expected to return.