I browsed the 2022 mid-year report of Songcheng Performing Arts in the evening, which is as appalling as today’s stock price. In the first half of this year, Songcheng Performing Arts barely recorded a revenue of over 100 million yuan. Except for the old-fashioned Hangzhou, Sanya, and Lijiang, the eight self-operated scenic spots have tens of millions of revenue, and other scenic spots basically have no revenue.
The epidemic has developed to the present, and the blow to domestic cultural and tourism enterprises is devastating. In Songcheng’s words, the company encountered an “unprecedented difficult situation.” Most of the scenic spots are closed most of the time, and the normal operation of the company is unsustainable. At the same time, tourism companies with fixed scenic spots like Songcheng Performing Arts also need to bear the daily maintenance costs. In this case, not losing money is simply a miracle.
The prolonged continuation and intensification of the epidemic caught the initially optimistic investors off guard. Public health safety has become a decisive factor in the operation of cultural tourism enterprises, which makes financial report analysis meaningless. Many of Songcheng’s investors held on in disappointment after disappointment. They also asked themselves over and over in their hearts whether such persistence was still meaningful.
Looking at several Songcheng performance analysis articles I wrote a year ago, I experienced from full confidence at the beginning of the epidemic to almost hopeless and neglected at the end. No one would have thought that a new crown epidemic has been raging for three years, and it is still one after another all over the world. The scene in science fiction movies that people are forced to wear masks to live due to environmental pollution and plagues has become a reality. Excessive development, excessive demand, human greed, selfishness and arrogance are accelerating the destruction and ruin of themselves. Perhaps this is also nature’s punishment to human beings.
The control of the epidemic is also fatal to the economy. The core of the economy is mobility, and the epidemic control has restricted the flow of materials and the flow of people, making economic development like being put on a heavy shackle and making it difficult to walk. The economic downturn, in turn, has caused a slump in consumption and investment demand. Therefore, in order to revitalize the economic game, it is imperative to gradually relax the epidemic control.
Now the global epidemic situation continues to improve, and the number of new cases in the world has dropped to a new low this year. Of course, there is still a possibility that the epidemic will recur, but people’s views on whether the epidemic is coming to an end has become more and more optimistic. At present, the epidemic control in Hong Kong has shown signs of relaxation, and the top student in mainland China is more qualified to gradually relax the control policy and shift the focus to economic recovery.
So if the epidemic is over, which industry will most likely become the vanguard of economic recovery? Generally speaking, economic recovery requires a process, just like a patient who is recovering from a serious illness needs time to recover before he can recover. However, compared with other industries that need to reorganize production factors to complete a new round of production and consumption cycles, the situation in tourism is slightly different. People’s pent-up demand for travel and travel may lead to a recovery in the tourism industry, or even an explosive growth. This is also one of the reasons why Songcheng Entertainment’s stock price is relatively strong in this round of bear market.
From a macro perspective, after 40 years of rapid development, China has shaken off poverty and weakness and has entered the ranks of middle- and high-income countries. The Chinese who have solved the problem of food and clothing have a higher spiritual pursuit. Cultural tourism has ushered in an era of great development. You don’t need to look for any statistics, just look at the huge crowds and overcrowding of the major scenic spots in the country during the holidays, and the long winding queues at the entrance of the scenic spots even require online reservations in advance, and you will know that the travel needs released by the wealthy Chinese are: How strong, you can realize how broad the development space of contemporary Chinese cultural tourism industry is.
With the continuous development of this sunrise industry, people’s cultural needs of different spiritual levels have been developed. People who come to tourist destinations are no longer satisfied with just taking pictures with scissors in front of scenic spots. They want to have a deeper understanding of and integrate into the local history, culture and customs. As a result, this higher-level cultural demand gave birth to the emergence of the performing arts industry.
The cultural and tourism performance track is a beautiful track: telling Chinese stories, promoting Chinese culture, bringing people the enjoyment of beauty, and delivering positive social energy, what a meaningful thing. The most important thing is that it is also a cultural undertaking. Cultural and tourism enterprises are not as criticized as Tencent games, but they can make a lot of money by piggybacking like Tencent games.
At that time, Huang Qiaoling was full of confidence and took Songcheng, a Song Culture theme park imitating the Qingming Riverside Map, into this golden track. Although the golden track is good for money, it is not easy to win. In order to attract more tourists, Huang Qiaoling borrowed the practice of Disney in the United States, introduced cultural performances into theme parks, and carefully created a performance – Songcheng Eternal Love.
It was this performance that unintentionally made Songcheng perform. This performance fully demonstrated Huang Qiaoling’s extraordinary artistic talent. Once launched, it was a great success and aroused strong repercussions among tourists. With the increasing popularity of the show, this play has rapidly grown from the “Take the Head” of the park to the company’s ace column. From the initial stage of buying tickets to the park to watch the performances, tourists gradually came to watch the performances from other places.
After more than ten years of rapid development, especially the capitalization operation after listing, Songcheng Performing Arts has grown into an out-and-out “performing arts mao”. Beautiful creativity, mature operation, strong brand effect, rapid expansion like a chain store, average high net profit rate of about 40%. If you put aside the factors of the epidemic, Songcheng is definitely an excellent company, an ideal and efficient money printing machine, and a perfect investment target in the eyes of investors.
However, the outbreak of the new crown epidemic finally changed the development track of Songcheng’s performing arts, slowing down the pace of Songcheng’s performing arts development. But any crisis is both a challenge and an opportunity, and the epidemic is no exception. After this major reshuffle of the industry, many cultural and tourism enterprises with tight capital chains and low profitability have closed down one after another in the cold winter of the industry, while those strong industry leaders that survived, such as Songcheng Performing Arts, have been closed because of the Matthew effect. And the strong stay strong.
Excellent companies are not due to their own business problems, but because of changes in the external macro environment or the industry’s cold winter, which creates a difficult situation. This is exactly the “Prince of Distress” that our long-term investors are looking for. Investing in the future of the company. If you believe that the new crown epidemic will eventually pass, just like the Black Death that ravaged Europe but suddenly disappeared, then in the face of the ups and downs of stock prices, you have nothing to panic.
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