Fosun Tourism Group reported 1H23 revenue of Rmb8.898bn (+38.7% YoY), adjusted EBITDA of Rmb2.30bn (+92.4% YoY), The company realized a net profit of Rmb472m, compared to a loss of Rmb197m a year ago. The Group reclassified its business segments in 2023, with Club Med and Others/Atlantis Sanya/Resort Asset Management realizing revenue of Rmb7.51bn/938m/390m(+33.8%/+84.5%/+72.2% YoY). Restoration Club and related businesses recorded revenue growth of -12.3% YoY due to the Group’s strategic optimization of its business structure and the reduction of some of its less efficient businesses.
　　Club Med benefited from the significant growth of its mountain business and the full relaxation of travel restrictions, with a sustained recovery in all regions. Club Med’s turnover reached Rmb7,939m (+32.2%YoY, 119.6% of the same period in 2019). Compared to 2019, Club Med’s turnover in the Americas and Europe, Africa and Middle East increased 64.6% and 12.7% respectively. In Asia Pacific, turnover was -7.3% from 2019 due to the rebound of the epidemic after the reopening and some airline capacity constraints. Club Med’s turnover in Mainland China amounted to Rmb321m (+247.6% YoY), recovering to 83.1% in the same period of 2019. Club Med’s capacity basically recovered to the 2019 level, +13.4% YoY, recovering 99.2% of the 2019 level. Europe, Africa Middle East, Asia Pacific and Americas resorts’ capacity recovered to 91.4%, 109.8% and 102.2% respectively, of the same period in 2019.
　　The increase in exposure of Atlantis has boosted product value. Atlantis Sanya launched the unveiling of the “Aquaventure Pink Night” for its parent-child customer, with an exposure of more than 2.68bn across the network. In terms of social media, as of the end of 2Q23, Atlantis Sanya continued its premier first ranking on Douyin’s Eat, Drink and Play - Popularity List. The sales revenue of Fanxiu Performance reached Rmb34m (+137.0% YoY). In 1H23, the number of visits increased to 3.178m compared with 1.535m in the same period in 2022, with an average occupancy rate of 86.2% (+40.1% YoY).
　　IP operations upgraded the strategy of the Foryou Club. The “Alps Snow Live”, Club Med Urban Oasis Taicang Resort, the “Alps Time” and other projects in the Taicang Alps Resort will officially open in 2H23. Lijiang Club Med Resort experienced a peak passenger flow in 1H23, with approximately 64000 visitors. In 1H23, the Group repositioned Thomas Cook China to Foryou Club, relying on the group’s advantageous vacation IPs and products such as Club Med and Atlantis Sanya to revitalize its brand and create a scenic platform for high-quality holiday services for domestic and international holiday products. In 1H23, Foryou Club recorded a business volume of Rmb177m (+11.5% YoY), and an order volume of 413,000 units (+128.0% YoY).
　　Maintain BUY. Fosun’IP products and operational capabilities were highlighted. Taking into account the sluggish real estate market and the net income impact of the asset disposal in 23H1. We raised net profit forecast from Rmb467m to Rmb479m in 23E, and we maintain the 24-25E net profit of Rmb 793m and Rmb 887m. We maintain our BUY rating.
　　Risk. Weaker-than-expected demand recovery; lower-than-expected new projects sales.