Lijiang Yulong Tourism realized total revenues of 560 million yuan

The performance of the Lijiang Yulong Tourism Co in 2011 realized total revenues of 560 million yuan ($88.83 million) exhibiting a year-on-year increase of 49 percent. They achieved a net profit of 120 million yuan, with a year-on-year increase of 159 percent.

The earnings per share (EPS) were 0.71 yuan and are in line with the anticipated amount made on Feb 24, 2012. The closing price on March 21, 2012 was 23.13 yuan, equaling a price to earnings (P/E) ratio of 32.6x.

The company also announced cash dividends of 1.5 yuan (including tax) for every 10 shares held.

Yulong tourism attributes the surge in performance to the consistent growth of its ropeway business, its hotel business and the acquisition of a 51 percent stake in Lijiang Impression Travel.

The ropeway has attracted 2.68 million tourists in total, a year-on-year increase of 39 percent, with tourists reaching 900,000 in 2011.

Its Crowne Plaza Lijiang Ancient Town hotel realized a net profit of 7.70 million yuan. The second phase of construction is expected to be completed by the end of 2012 and the new hotel will open at the beginning of 2013.

The 51 percent stake in the Lijiang Impression Travel enables Yulong tourism to obtain profit of 49.75 million yuan, accounting for 43 percent of Yulong's net profit in 2011.

The company expects to realize a total revenue of 600 million yuan and a net profit of 130 million yuan in 2012 with the establishment of five projects. This includes the second phase of the Crowne Plaza Lijiang Ancient Town construction, Xueshan dining center, investment in developing tourism surrounding Lijiang, maca planting and growth fostering.

The EPS is estimated at 0.82 in 2012 and 0.93 in 2013. The P/E relative to the closing price on March 21, 2012 was 32.4x in 2011, 28.2x in 2012 and will be 24.8 in 2013. An "outperform" rating is maintained.

However, risks exist in potential natural disasters, fierce competition in the hotel business and performing arts, and the elimination of preferential rates.