1H15 earnings grew steadily by 9% yoy to RMB121m。 Huangshan Tourism announced its 1H15 earnings today with net profitincreasing 9% yoy to RMB121m, in line with our estimate and accounted for40% of our full year 2015E forecast. Visitor volume to Huangshan grew slightlyby 2% yoy to 1.3 million in 1H15; nonetheless, we believe traffic growth willpick up in 2H15E and 2016E, thanks to Hefei-Fuzhou high speed railway. Thestock is currently trading at 21.5x 2016E PER. We reiterate our Buyrecommendation with a target price of RMB30 unchanged. Revenue increased 6% yoy thanks to solid hotel business。 Total revenue increased 6% yoy to RMB656m, driven mainly by 12% yoygrowth in hotel business to RMB214m. Cable car revenue decreased 5% yoy toRMB143m, due mainly to the operation suspension of Yuping cable car in1H15. As the operation resumed in mid-June 2015 with capacity more-thandoubled(to 2,400 passengers per hour from 1,000) and a price increase ofRMB10 to RMB90 per ride, we expect the company’s cable car business toreport strong growth in 2H15E. Revenue from ticketing admission and travelservice came in flat at RMB115m and RMB136m, respectively. Hefei-Fuzhou high speed railway to deliver 2H15 growth。 Hefei-Fuzhou high speed railway, which started operation on 28 June 2015,significantly shortens the travelling time from Hefei to Huangshan to 1 hourand the duration between Beijing and Huangshan to 5 hours. We expect therailway to stimulate traffic volume growth in 2H15E and 2016E to 2.0 millionand 3.6 million, respectively. (See our “Let’s visit Huangshan – Hefei-FuzhouHigh Speed Railway” report for traffic volume analysis.)。 26.85 million shares issued in August 2015。 We have modeled the dilution effect of a 40.2mn new share issuance in 2015E,and the company has issued 26.85mn shares in August at RMB18.55 per share.

1H15 earnings grew 27% yoy to RMB107m . LiJiang YuLong announced its 1H15 earnings today with net profit increasing 27% yoy to RMB107m, inline with our estimate and accounted for 48% of our full year 2015E forecast. Revenue increased 7% yoy to RMB350m due primarily to strong performance of Jade Dragon Snow Mountain cable car. We reiterate our Buy recommendation with target price RMB21 unchanged. Strong growth in cable car . Revenue from the three cable cars increased 34% yoy to RMB177m, driven by 13% yoy tourist volume growth. The main Jade Dragon Snow Mountain cable car outperformed the other two and reported 57% yoy volume growth to 0.94 million. Traffic volume to Spruce Meadow and Yak Meadow cable cars declined 17% yoy to 0.66 million and 18% yoy to 46k, respectively, due partially to cannibalization from the main cable car. Overall ASP improved 18% yoy to RMB108, thanks to a more favorable product mix (i.e. more tourists chose to take the premium Jade Dragon Snow Mountain cable car). We expect the overall ASP to continue to increase, as the main cable car (priced 3x higher than the other two cable cars) outperforming and attracting more visitors. Performance show facing pressure fr\om Songcheng’s Romantic Show . Revenue from performance show (i.e. Lijiang Impression) decreased 11% yoy to RMB109m, mainly due to intensified competition as Songcheng (300144.SZ, Buy, RMB43.04) entered the market in Mar-14. Average occupancy rate decreased 2.6ppts yoy to 79%. As a result, gross margin declined 1.6ppts and net profit came in at RMB 54m, down 15% yoy. Revenue from hotel business was flat yoy at RMB44m. 9M15 outlook . Management expects 9M15 net profit to improve 10-40% to RMB179-228m, driven by continuous growth in Jade Dragon Snow Mountain cable car. The company targets to achieve RMB181m in full year 2015.

Strong core ancient town business Albeit a 17% decline in overall net profit, CYTS’s core ancient town businesscontinued to deliver strong growth with Wuzhen’s net profit increasing 26%yoy to RMB 215m (i.e. with 66% ownership, net profit attributable to CYTScame in at RMB 142m.) Wuzhen and Gubei each reported 27% yoy and 135%yoy revenue growth in 1H15, respectively. The drop in earnings is due mainlyto seasonality effect in business exhibition and continuous investment inaoyou.com. We will attend CYTS’ 1H15 result conference call tomorrow (6-Aug) at 10am HK time, and bring further updates on CYTS’ 2H15 outlook. Growth driver – Wuzhen and Gubei Ancient Town Revenue from Wuzhen increased 27% yoy to RMB 539m, driven by 25% yoygrowth in number of visitors to 3.9 million. Tourism volume to east and westzone increased 17% and 34% yoy, respectively. West zone outperformed theeast as consumers’ needs on “leisure tourism” continue to rise, in our view.Gubei generated revenue of RMB 157m (up 135% yoy,) as the companybrought in more content to the site and continued to push forward marketingcampaigns. Entertainment shows recorded in Gubei and the new night-tourinitiative also helped attract more traffic. Going forward, we believe winning ofthe Winter Olympic right could be another catalyst for Gubei. Don’t be misled by the seasonality Total revenue decreased 2.5% yoy to RMB 4,772m, due primarily to a 32% yoydecline in the seasonal business exhibition segment. In our view, thesegment’s 2015E full year performance should still see positive growth, asmore large-scale events are expected to be held in the second half of the year.SG&A increased 22% yoy, as CYTS invested in aoyou.com following its“Aoyou+” strategy which aims for long-term sustainable growth. As a result,adjusted net profit came in at RMB 144m, down 17% yoy. Reported net profitdecreased 34% yoy, because of a RMB 63m non-recurring investment gain onGubei in 1H14. Aoyou.com introduced rushitour.com On 29 July, aoyou.com introduced its outdoor event platform “rushitour.com”(如是外), a project under CYTS’s “Aoyou+” strategy. Rushitou.com will beinitially focusing on organizing marathon, riding, hiking, snowboarding andother sports events. Rushi has introduced its first sport event, Wuzhen FunRun, which is a 4.2km mini marathon to take place in Wuzhen Ancient Townon 16 August. We believe Rushi enables CYTS to penetrate into this emergingniche market, and will also help bring additional tourism traffic to CYTS’ twoancient towns.

1H15 earnings grew 66% yoy to RMB 263m。 Songcheng announced its 1H15 earnings today with net profit increasing 66% yoy to RMB 263m, in-line with company guidance and our estimate. Revenue grew 47% yoy to RMB 573m, driven by strong performance of cultural shows in Sanya, Lijiang and Jiuzhaigou Valley. We reiterate our Buy recommendation with a target price of RMB79. Strong growth in cultural shows。 Total revenue increased 47% yoy to RMB 573m, with number of visitors up 67% yoy to over 9 million. Romantic show of Songcheng and Romantic show of Sanya reported continuous growth of 21% yoy to RMB 213m and 46% yoy to RMB 143m, respectively. In our view, this could be attributable to the strong brand equity Songcheng has built over the years, as well as the popularity brought in by “Running Man,” a popular TV show and movie in China. Romantic shows of Lijiang, launched in Mar-2014, reported revenue of RMB 72m, up 65% yoy. EBIT margin improved 6ppts。 EBIT margin expanded 6ppts to 59%, thanks to 8% yoy decline in sales and marketing expenses and 4% yoy decrease in administrative expenses. We believe Songcheng is now benefiting from its brand equity, which supports high visitor volume growth with minimum marketing effort. Creative events, such as “Huachi Festival” and “Naked-Wedding” also drew lots of media attention and helped promote Songcheng. Accelerated expansion pace under asset-light model。 Songcheng now has 5 Romantic Show projects up and running, 1 in construction, and 6 more in the planning stage (with 1 project abroad in Singapore.) The company also started to expand on an asset-light model with the acquisition of Mystery of Tibet and the opening of Romantic Show of Mount Tai on 28 July. (See our recent report, Songcheng - Leader to consolidate the market, for details.) On the strategic level, Songcheng introduced a concept that will bring offline live entertainment (i.e. Romantic Shows), online entertainment (i.e. Six Rooms), tourism & leisure (i.e. 51dmq.com) and IP together to create a comprehensive eco-system. Six Rooms consolidation approved by CSRC。 In 1H15, Six Rooms’ page visit grew more than 40% yoy, and the number of active mobile users increased over 120% yoy. The consolidation of Six Rooms was approved by the CSRC on 24 July, which will bring additional revenue and earnings to Songcheng in 2H15E. In addition, we believe the consolidation of Songcheng and Six Rooms could potentially synergies and new products.

What’s new. Lijiang announced its 1H15 unaudited earning snapshot today with net profitincreasing 29.2% yoy to RMB 108m. 1H15 EPS came in at RMB 0.26. Revenuegrew 7% yoy to RMB 350m. Total tourist volume (to the three cable cars)increased 13.3% yoy to 1.64 million, with the main Jade Dragon SnowMountain cable car reporting 56.5% tourist volume growth to 0.94 million. The1H15 earning was in line with our estimate, and accounted for 48% of our2015E full year forecast. DB’s view. We believe earnings growth was driven primarily by the strongperformance in Jade Dragon Snow Mountain cable car. Performance show business (i.e. Lijiang Impression) reported 1.1% yoydecline in revenue and 16.8% yoy drop in net profit, which was mainly dueto the intensified competition as Songcheng (300144.SZ, Buy, CNY60.29)introduced the Romantic Show of Lijiang in March 2014. Revenue from hotel business decreased 17.5% yoy to RMB 42m, which islikely due to 1) anti-corruption measures which negatively impact theluxury hotel business (Lijiang Tourism has three luxury hotels with averageroom rate of RMB 800-1,200); and 2) an increasing number of low-end innsand B&B (average room rate of RMB 100-400) opened in Old Town ofLijiang. We reiterate our Buy rating on Lijiang Tourism, supported by its good earningsgrowth coupled with our recent channel checks in Lijiang which suggest asustainable growth potential in the Lijiang area.