From an increase of 18% to a decrease of 12%, Haichang Ocean Park (02255) after being excluded by MSCI staged a shocking 48H
When the epidemic is no longer an obstacle, the tourism industry is considered to be one of the fastest recovering industries after the epidemic, and it is a “catalyst” that can drive a faster recovery in a wide range of fields such as transportation, catering, accommodation, and large consumption. With the recovery of Spring Festival tourism, the tourism sector has also become a sought-after existence in the capital market, and many individual stocks have successively hit new highs in stages.
Among these stocks, Haichang Ocean Park (02255), which wears the concept of “theme park”, continues to be tepid and volatile. But on February 9, this “flatness” was suddenly broken.
In less than three months, I saw the “roller coaster” market again
The Zhitong Finance APP noticed that on February 9, the company’s stock price rose in the afternoon and rose by more than 18% throughout the day. The stock price closed at 2.22 Hong Kong dollars, setting a new high level this year. But on the next day, the company’s stock price opened low and went down repeatedly, falling by more than 12% throughout the day, recovering most of yesterday’s gains.
Judging from the news, this stock price fluctuation is related to MSCI’s quarterly review. It is reported that on the morning of February 10, MSCI, a world-renowned index company, announced the results of quarterly review changes. In this adjustment, Haichang Ocean Park was excluded from the MSCI China Index, and the adjustment will come into effect after the market closes on February 28. It is worth mentioning that this removal is less than three months after Haichang Ocean Park was included in the MSCI constituent stocks.
Dramatically, this trend happened once three months ago, and that time happened to be the second day after the company was included in the MSCI constituent stocks.
According to data from Zhitong Finance APP, since July 2021, the stock price of Haichang Ocean Park has been rising all the way. In just one year, the company’s cumulative increase once exceeded 17 times. Such an excellent trend has also attracted the attention of MSCI. On November 11 last year, MSCI announced the results of the semi-annual audit changes. Haichang Ocean Park was transferred. The effective date was November 30, and the company’s stock price soared by nearly 13% on that day. However, on the day after the inclusion of constituent stocks fell, that is, on December 1, 2022, the company’s stock price suddenly crashed in the intraday market, falling by more than 70% at one point. Although the decline narrowed, it still plunged 53.87% throughout the day, falling again. Into the ranks of “penny stocks”.
At that time, the market was in an uproar, and Haichang Ocean Park was also given the name of “Old Thousand Stocks”. Some analysts pointed out that the equity of Ocean Haichang Park is relatively concentrated, the market value is not large, and the chips are easy to collect. Previously, the company’s stock price soared or there were funds behind it deliberately increasing the market value, and the trading volume was maintained at a certain level. Finally, MSCI passive funds were harvested after MSCI took effect.
So what kind of company is Haichang Ocean Park?
Performance volatility, high debt
According to Zhitong Finance APP, Haichang Ocean Park is the largest ocean theme park operator in China. Since the opening of the first Ocean Park in Dalian in 2002, the company has been deeply involved in the industry for 20 years, realizing the national layout in North China, East China, South China, and Midwest China. As of June 30, 2022, there are 10 Ocean Park projects named after Haichang, and 6 projects held by the company itself. In addition, the Zhengzhou project is still under construction.
From the perspective of revenue performance, from 2012 to 2018, the company’s overall revenue has shown a steady growth, with a compound annual growth rate of 12.38% during the period. After the flagship projects in Shanghai and Sanya were put into operation in 2019, the company’s revenue increased by 57.07% year-on-year to 2.816 billion yuan (RMB, the same below). However, due to the impact of the epidemic in 2020, the total revenue will drop sharply to 1.176 billion yuan. However, in 2021, as the company adopts strategic transformation and the impact of the epidemic gradually weakens, the overall revenue will rebound to 2.474 billion yuan, returning to 87.86% of 2019.
At present, the company has three major business segments, namely theme park operations, cultural tourism services and solutions, and new retail business. Among them, theme park operation is the most traditional business segment of the company, and it is also the company’s main source of revenue.
As we all know, theme parks, as asset-heavy projects, have high thresholds such as large initial investment, long payback period, continuous equipment update, and high operational capability requirements. In this context, the company’s earnings performance is also quite volatile. According to the financial report, from 2017 to 2021, the company’s net profit attributable to the parent is 280 million yuan, 39 million yuan, 25 million yuan, -1.452 billion yuan, and 845 million yuan.
In fact, since its listing on the Hong Kong Stock Exchange in 2014, the debt ratio of Haichang Ocean Park has been rising all the way, from 55.80% in 2014 to 81.73% in the first half of 2020. Especially from 2018 to 2020, the company raised financing for the development and construction of projects in Shanghai and Sanya, resulting in an increase in the total amount of bank loans, which made the company’s financial expense ratio continue to rise rapidly, from 15.27% in 2018 to 51.28%. During the same period, the financial rates of other theme parks were maintained below 5%.
However, since 2021, Haichang Ocean Park has divested its assets and plans to go into battle lightly. The one-time investment income generated by the company’s sale of four heavy asset projects is about 2.474 billion yuan, which reversed the performance decline in one fell swoop and comprehensively promoted cultural tourism services and solutions. The company Started to raise the asset-light business to a strategic height. At the same time, the asset-liability ratio dropped significantly to 67.31%, effectively reducing the company’s cash flow pressure and financial risks.
However, in the first half of 2022, due to repeated epidemics, Haichang Ocean Park only recorded an operating income of 258 million yuan, and the net loss attributable to the parent reached 539 million yuan, which shows that the company has once again fallen into the quagmire of losses.
The industry is recovering, and the company’s prospects are favored by institutions
Regarding the future trend of Haichang Ocean Park, some people believe that with the recovery of the industry, theme parks are expected to return to the crowded scene in the past, and Haichang Ocean Park is expected to usher in a recovery.
The Zhitong Finance APP noticed that with the optimization of epidemic prevention policies, the tourism industry has shown gratifying signs of recovery. The data shows that during the Spring Festival holiday in 2023, domestic tourist arrivals and domestic tourism revenue across the country will recover to 88.6% and 73.1% of the same period in 2019, respectively. At the same time, the sales revenue of travel agencies and related services increased by 1.3 times year-on-year, and has recovered to 80.7% of the 2019 Spring Festival holiday.
As tourists’ tourism consumption confidence and consumption potential will be released at an accelerated rate, it is foreseeable that in the next mid-year tourism season, cultural and tourism consumption demand is expected to be further released, and the tourism market will recover and develop strongly in 2023.
CICC predicts that travel demand is expected to be re-released during the “May 1st” small holiday in the second quarter, especially long-distance travel that was suppressed in the early stage. At the same time, Dai Bin, president of the China Tourism Academy, also pointed out that the tourism market will enter a new channel of expected strengthening and supply optimization in the second quarter, and the summer is expected to usher in a full recovery. It is estimated that domestic tourist arrivals and domestic tourism revenue will recover to 70% to 75% of the pre-epidemic levels in 2023.
In addition, with the liberalization of the two-child policy and the three-child policy in recent years, as well as the changes in the concept of parenting of the new generation of parents, the parent-child travel market in my country has risen rapidly. According to a report released by the China Tourism Association, the scale of my country’s parent-child travel market in 2020 is close to 60 billion yuan, and is still in a stage of rapid growth. Theme parks have become the first choice for parent-child travel consumption due to their natural nature of play. According to a 2021 survey by the China Tourism Association, nearly 70% of parent-child families will regard theme parks as a priority product. According to the parent-child travel trend report in the post-epidemic era released by Lvmama, the top 10 most popular domestic attractions are theme park-type attractions.
The active development of the industry is good for Haichang Ocean Park.
According to the company’s latest data, five days before the Spring Festival holiday, Haichang Ocean Park received a total of nearly 250,000 people. Among them, the flagship project Shanghai Park has the highest single-day admissions of 45,000, and the number of admissions in the five days before the small holiday increased by more than 120% year-on-year. The national Ultraman themed hotel and Haichang Ocean Resort “Double Hotel” are fully booked.
In this regard, Bank of China Securities pointed out that in the first half of 2022, affected by the epidemic, offline operations will be blocked, the overall recovery will be poor, and the level of profitability will be low. As the impact of the epidemic weakens in 2023, the passenger flow of the company’s existing projects is expected to rebound sharply. At the same time, the opening of the new project in Zhengzhou and the construction of the second phase of the Shanghai project are gradually implemented, and the company’s product supply is becoming more and more perfect. Superimposed on popular IPs such as Ultraman, it shows strong appeal, and the proportion of secondary consumption continues to increase. It is believed that the company’s subsequent gross profit rate still has room for growth.
Tianfeng Securities emphasized that Haichang Ocean Park has mastered rare marine biological resources and has full-process service operation capabilities, and is optimistic about the company’s future operating performance.
On the whole, the fluctuation of Haichang Ocean Park’s stock price is related to the adjustment of MSCI constituent stocks. In the short term, under the background of MSCI-related index fund rebalancing, the company’s stock price may continue to fluctuate. But in the long run, for Haichang Ocean Park, which is in the theme park industry, benefiting from the rapid recovery of the industry’s prosperity, the company’s fundamentals are expected to improve. At the same time, under the active layout of the asset-light model, the company’s future performance growth space can be expected.