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New ProjectsFared Strongly,Focus on Asset-Light Expansion BUY10.88 Huatai Research Annual Results Review 18 May 2025│China (Mainland) Scenic Spots AnalystFAN JunhaoSAC No. S0570524050001SFC No. BDO986fanjunhao@htsc.com+(852) 3658 6000 Songcheng Performance’s 2024 revenue was RMB2,417mn (+25.49% yoy) withattributablenetprofit(NP) swingingtoRMB1,049mnfromlosses.Excludinginvestment gains&impairments from long-term equity holdings in Huafang Group,net profit reached RMB1,039mn (+25.24% yoy on comparable basis), aligning withguidance(revenue:RMB2.3-2.5bn;attributableNP:RMB0.93-1.2bn).1Q25revenuestood at RMB561mn (+0.26% yoy) with attributable NP at RMB246mn(-2.18% yoy), showing operational resilience. While legacy projects face cyclicalpressures from shifting tourism consumption patterns and intensified competition,new Foshan and Xi’an projects outperformed alongside accelerated light-assetexpansion, emerging asfresh earningsgrowth drivers.It proposed 2024 cashdividends of RMB525mn (+100.2% yoy) with 50.01% payout ratio, enhancingshareholder returns. Coupled with its equity incentive scheme to incentivize coreteams, these moves underscore long-term confidence. Maintain BUY. AnalystZENG JunSAC No. S0570523120004SFC No. BTM417zengjun@htsc.com+(86) 21 2897 2228 Key data New projects shine,legacy assetsundercyclical pressuresSongcheng’s2024 live performance revenue (9 parks) reached RMB 1,959mn(+17.5% yoy). Legacy projects including Hangzhou/Sanya/Lijiang saw revenuedecline 3/9/10%yoy dueto intensified competitionand slower group touristrecovery. The newly-opened Foshan project achieved profitability in its debut year,withThe Show of Guangdongstaging 1,386 performances generating RMB256mn(10.59% of total revenue). Xi’an project demonstrated strongrevenuegrowth(RMB1.45bn, +178.02% yoy)after launching dual-theater operations (6,000-seatcapacity) in summer 2024. Guilin/Shanghai projects maintained stablerevenuegrowth(+7.94/+18.25%yoy).Overallgrossmarginimproved1.26ppyoyto67.61%, with Hangzhou/Lijiang/Guangdong park margins at 64/76.4/60.94%. Source:Wind Asset-lightexpansion continues;product/marketing upgradingAs of 2024, the company’s operational asset-light projects include TanheAncient City,MingyueRomance Park, Huangdi Romance Park, andSanxia Romance Park(openedinJuly 2024 with over RMB160mn one-off service fees recognized).Itsigned the Silk RoadRomance Parkproject in January 2025 (scheduled for July2026 opening with potential RMB260mn service fees).Asset-lightexpansion drove2024 tourism service revenue up 76.79% yoy.The company strengthened brandequity by diversifying offerings across familytours, youth-oriented social activities,corporate team-building, and senior wellness, creating a‘experience-poweredcontent,content-driven customertrafficconversion,andexperience enhancement’loop. This positions it as a replicable benchmark in experiential tourism. 1Q25sales/administrativeratioschangedby+2.3/-1.5ppyoy,reflectingoptimizedresource allocation towards marketing and operational efficiencyenhancements. MaintainBUY with target price of RMB10.88Considering shifting cultural tourism consumption patterns may continue to weigh on existing project operations, we cut our 2025/2026 EPS estimates by 15/12% toRMB0.44/0.51 and introduce 2027estimateof RMB0.55.Applying 25x 2025E PEvsWind consensus-basedpeeraverageof22x, we deriveatarget price ofRMB10.88 (previous:RMB13at 25x 25E PE vs peer average of 18x), to factorinSongcheng’sreplicable‘park+performance’model and new project catalystsbutlegacy projects’operational uncertainties. Risks:travelrecoveryfallingshortofourexpectations;intensifiedmarketcompetition;disappointing new business development. Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, FAN Junhao, ZENG Jun, hereby certify that the views expressed in this report accurately reflect the personal views of theanalyst(s) about the subject securities or issuers; and no part of the compensation of the analyst(s) was, is, or will be, directly orindirectly, related to the inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) Limited (hereinafter referred to as “HFHL”). The information herein is strictly confidential to the recipient. Thisreport is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter “Huatai”) makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. Huataimay issue research reports that contain inconsistent views,