Strong revenue growth thanks to new parks openingRevenue of Haichang increased by 65% to RMB1,087mn in 1H19,mainly thanks to the opening of Shanghai and Sanya projects in Nov18 and Jan 19 respectively, while the 8 existing parks recorded 6%sales growth. Core EBITDA grew by 46% yoy to RMB336mn, withEBITDA margin declined by 4.0ppt to 30.9% as Shanghai and Sanyaprojects were still ramping up. Haichang reported a net loss ofRMB93mn （versus RMB82mn net profit in 1H18）， primarily because i）D&A up by RMB139mn yoy after the opening of new parks, and ii）financing costs increased by RMB138mn as net debt surged fromRMB3.4bn/RMB4.6bn as of end FY17/1H18 to >RMB6.0bn as of endFY18/1H19 due to new parks CAPEX.
　　Slightly guide down Shanghai Park’s 2019 visitationShanghai Haichang Ocean Park contributed RMB387mn revenue in1H19, with ~1.3mn visitors and RMB284 revenue per visitor, amongwhich non-ticket spending represented ~1/3 of total revenue. ThePark recorded ~RMB50mn losses in 1H19 because of largely fixedoperating costs but back-loaded income. Shanghai Park is expectedto be profitable in FY19E according to management.
　　For Jul and Aug, management stated that Shanghai Park has ~1.2mnvisitors with RMB351 revenue per visitor. In view of current run rate,the Company now guide for 3.5-3.8mn visitors for 2019 （versusprevious guidance of 4.0mn）。 The Company has lowered group tourmix since May, while it slightly affect visitation figures, managementview that such initiative would improve customer experience andbrand image. Management remained confident for Shanghai Parkramp up and expect ~5.5mn annual visitors by 2021.
　　Sanya project still in early stage
　　Sanya Haichang Fantasy Town recorded RMB50mn revenue in1H19. Since Sanya project is the first attempt of Haichang to operatea park without admission tickets, the Company is still adjusting itsoperation model, and construction of some key attractions is stillpending for a clear subsidy payment schedule from local government.
　　Management expect Sanya project to report mild losses in FY19E.
　　We remain positive toward Shanghai Park, maintain BUYWe revised down our FY19E/20E EBITDA estimates by 20%/15%respectively to factor in slower ramp up and more conservativemargin assumptions for Shanghai Park. However, we remain positivetoward the prospect of Shanghai Park after a relatively slow start. Netgearing is also expected to peak out from 141% as of end 1H19. Withan unchanged 8.5X FY20E EV/EBITDA, new target price at HK$1.60.