Text: Milestone
The hot cultural tourism market in 2023 has not been able to change the dilemma of the difficulty of listing cultural and tourism enterprises. However, mergers and acquisitions have opened a "window" for state-owned cultural tourism. It's just that listing should not become the ultimate goal of state-owned cultural tourism that is "coerced" by policies.
01 Tangshan Cultural Tourism Group's "Curve Listing"
Recently, Dasheng Culture (SH: 600892) announced that the company's controlling shareholder and actual controller Zhou Zhenke and its concerted action Dasheng Assets signed the "Share Transfer Agreement" with Tangshan Cultural Tourism Group, intending to transfer a total of 17.35% of Dasheng Culture's equity to Tangshan Cultural Tourism Group at a price of 7.35 yuan per share, and give up the voting rights corresponding to the remaining shares held. After the completion of the transaction, the controlling shareholder and actual controller of Dasheng Culture will be changed to Tangshan Cultural Tourism Group and Tangshan State-owned Assets Supervision and Administration Commission.
It is worth noting that this is not the first time that Dasheng Culture has changed its flag. According to public information, Dasheng Culture, which was listed in 1996, has experienced many eras such as "Shiquanye", "Huda Science and Education", and "Baocheng Shares" after several changes. Among them, in the "Baocheng era", it has become a member of the "Baoneng Department". In 2014, Zhou Zhenke bought Baocheng shares from Yao Zhenhua and renamed it "Dasheng Culture".
Since Zhou Zhenke became the owner, Dasheng Culture, which has transformed from the steel industry to the cultural industry, has continued to operate as before, and it is still not improving, but it has been short-lived in some years, but then it was soon revealed. According to the financial report data, in 2016, Dasheng Culture's non-net profit reached 104 million yuan, creating a record high since its listing, but in the following two years, it lost 1.284 billion yuan and 635 million yuan respectively.
According to Milestone's observation, Dasheng Culture, whose main business is "film and television drama + online game", has a considerable gross profit margin, but high operating expenses eat up profits. According to the financial report data, as of the third quarter of 2023, the gross profit margin of Dasheng Culture is 89.66%, but the operating expense ratio is as high as 106.17%. In the past five years, the gross profit margin of Dasheng Culture has never been lower than 60%, but the operating expense ratio has mostly exceeded 70%.
After Tangshan Cultural Tourism Group became the owner, whether it can reverse the decline in the performance of Dasheng Culture has also become a major attraction. On the one hand, Dasheng Culture has considerable gross profit space, and the new owner has enough room for performance optimization; On the other hand, in the future, Tangshan Cultural Tourism Group may also place cultural and tourism assets for listed companies or businesses with poor operating performance and bleak development prospects through asset restructuring.
According to the official website, Tangshan Cultural Tourism Group was established in 2008, formerly known as Nanhu Investment Group, and was established as a key state-owned enterprise in Tangshan City in 2018. In the first three quarters of 2023, Tangshan Cultural Tourism Group achieved revenue of 4.4 billion yuan, net profit of 77.59 million yuan, and total assets of 97.9 billion yuan.
In this regard, industry insiders pointed out that "Tangshan Cultural Tourism Group's acquisition of Dasheng Culture is bound to realize the integration and listing of cultural and tourism assets through asset restructuring in the future".
02 The road ahead is not an easy one
In fact, before this, Jiang Tourism Group and Chengdu Cultural Tourism Group have become "pioneers", but after the completion of mergers and acquisitions, the two have not been smooth in the process of asset restructuring.
In 2019, Jianglv Group spent 600 million yuan to bring CITS United (SH: 600358) under its command, and the State-owned Assets Supervision and Administration Commission of Jiangxi Province also became the actual controller of CITS United. According to the official website, Jianglu Group carries the strategic mission of Jiangxi Province to build a "strong tourism province" and the innovative mission of state-owned enterprise reform, and sits on six business segments: hotels, scenic spots, catering management, tourism operations, FMCG and tourism and health care.
After the completion of the acquisition, Jianglu Group has made it clear that when the conditions are ripe, it will actively promote the acquisition and integration of the group's high-quality cultural and tourism assets by listed companies. However, due to the impact of the public health incident, it was not until the beginning of 2023 that Jianglu Group officially launched the asset restructuring. According to the announcement, CITS United intends to purchase 100% of the shares of Yueyi Hotel, Cultural Tourism Technology, Unique Scenery, Convention and Exhibition Company, Tavern Company and 47.5% Equity of Aviation Industry under Jianglv Group by issuing shares, and gradually build a complete business format covering the comprehensive sector of cultural tourism consumption.
However, it is quite surprising that Jianglu Group took the initiative to terminate the asset restructuring, and the Jiangxi Provincial State-owned Assets Supervision and Administration Commission has approved the restructuring. In this regard, CITS United said in the announcement that due to the long duration of this transaction, the relevant market environment has changed to a certain extent compared with the beginning of the planning. However, the explanation of the CITS United is obviously somewhat untenable, and Titanium Media has written an article pointing out that behind the aborted death of the plan lies in the personnel turmoil of the Jianglu Group, and Zeng Shaoxiong, the former party secretary and chairman of the board, was reviewed and investigated for suspected serious violations.
Also in 2019, Chengdu SASAC successfully acquired Rhine Sports (SZ:000558). According to the plan, Rheinland Sports will become a transformation platform for the asset securitization of Chengdu Cultural Tourism Group, providing a direct, convenient and efficient capital operation channel for the securitization of its high-quality assets.
In the following year, Rhine Sports launched an asset restructuring plan, planning to purchase 63.34% of the shares of Chengdu Cultural Tourism Co., Ltd., a subsidiary of Chengdu Cultural Tourism Group, by issuing shares, and planned to inject the ice and snow tourism business related to Xiling Snow Mountain Scenic Area into the listed company. However, due to the impact of public health events, the performance of the underlying assets declined significantly, and the asset restructuring plan was eventually stillborn.
After entering 2023, with the strong recovery of the cultural tourism market, Rheinland Sports has finally completed the asset restructuring, and at the same time as placing Chengdu Cultural Tourism shares, it has also placed the real estate business that has become a "drag oil bottle". Rheinland Sports pointed out in the announcement that through this transaction, the listed company will achieve business transformation and focus on stable operation and profitable tourism business.
03 The road is long
Behind the choice of local state-owned assets to land on the A-share market through mergers and acquisitions, there is more helplessness.
On the one hand, since entering the "14th Five-Year Plan", provincial and municipal governments have established or reorganized state-owned cultural tourism groups, aiming to coordinate the development of all-for-one tourism and strengthen and expand the local tourism industry. However, at the same time, due to the "asset-heavy" and "long-cycle" characteristics of the cultural and tourism industry, it is particularly important to determine the exit mechanism of capital, so asset securitization has also become the top priority.
On the other hand, cultural and tourism enterprises have long been in the dilemma of "difficulty in listing". Even, in the past three years, a total of nearly 2,000 companies have successfully landed on the A-share market, and only one of them has successfully broken through. And companies such as Hubei Travel Co., Ltd. and Qingdu Co., Ltd. have failed IPOs one after another. Therefore, under the pressure of the listing target, the state-owned cultural tourism has to "find another way".
"Compliance, information disclosure, and performance are the core issues of the difficulty of listing cultural and tourism enterprises", an industry veteran analyzed, especially the performance problem, the market share of the cultural and tourism industry is highly dispersed, the market competition is fierce, and there are many resource-based and regional enterprises, and most of the business models are still based on "ticket + passenger transport", and the performance lacks growth, such as the Hubei Travel Shares and Qingdu Shares that failed to IPO during the year. Moreover, affected by economic, natural, political and other factors, the profitability of cultural and tourism enterprises is not stable enough, and the operating risk is high. In addition, due to the impact of policies, the ticket revenue of scenic spots cannot be included in the listed company, which also invisibly lowers the valuation of cultural and tourism enterprises.
Referring to the stock price trend of CITS United and Rheinland Sports after the state-owned cultural tourism became the owner, the above views have also been verified to a certain extent. Since 2019 (as of the close of trading on December 26, 2023), Rheinland Sports has gained only 1.03%. Although the increase of CITS United reached 37.78%, it was still more than 40% away from the original purchase price of 8.29 yuan per share of Jianglv Group. You must know that both have experienced a sharp decline from 2016 to 2018, and the stock price has been "cut off on the knee" from the high point of the "bull market".
Therefore, some people in the industry believe that local governments and state-owned cultural tourism should also think about how to create greater value for investors while completing their listing goals with the help of mergers and acquisitions. Especially since the beginning of 2023, the demand for cultural tourism market has shown diversification, personalization, and experience, and with the blessing of "cultural tourism +" and technology, new formats have been emerging, which essentially provides the "soil" for cultural tourism enterprises to build differentiated competitiveness.
"Listing is not the ultimate goal of state-owned cultural tourism. Referring to the experience of developed countries in Europe and the United States, with the continuous improvement of per capita disposable income of residents, the cultural tourism industry will gradually become one of the important pillars of national economic development. Although the current argument about 'consumption downgrading' is very loud, it can be seen from the popularity of ice and snow tourism with a higher per capita consumption level that the consumption power of Chinese people is undoubted, and the key lies in whether the product supply can impress tourists and whether it can bring tourists a high-quality travel experience. ”
Luo Qin, COO of Milestone, further pointed out that for a long time, due to the lack of overall planning of cultural and tourism products, there have been problems such as blind construction, insufficient supporting facilities, and lack of service awareness, which have lowered the user experience. The intervention of state-owned cultural tourism can use administrative power to coordinate various departments to strengthen industry supervision and standardize market behavior. At the same time, with the deepening of the reform of state-owned enterprises, the marketization of the business thinking of state-owned cultural tourism is also constantly improving, which will be conducive to the continuous improvement of the market competitiveness of state-owned cultural tourism.
As Luo Qin said, listing should not be the ultimate goal of state-owned cultural tourism, and in Milestone's view, listing is just a starting point. First of all, the listed company platform can improve the ability of resource integration and financing, and then promote the development of the local cultural and tourism industry; Secondly, the listing will help enhance the brand awareness of its cultural and tourism assets, strengthen its innovation capabilities, and provide tourists with better tourism products. Third, listing can standardize management capabilities, improve governance structure, and create value for investors.