New Stock Preview | Slender West Lake Tourism: From selling boat tickets to selling experiences, "cash cow" also has hidden worries.

When "Fireworks in March in Yangzhou" becomes a collective memory for Chinese spring outings, the ambition of Slender West Lake Cultural Tourism may not just be limited to a boat ticket. Recently, Jiangsu Slender West Lake Cultural Tourism Co., Ltd. (hereinafter referred to as "Slender West Lake Tourism") submitted its second application for listing to the Hong Kong Stock Exchange, intending to list on the main board of Hong Kong, with EB SECURITIES International as the exclusive sponsor. Relying on the exclusive operation rights of the two world cultural heritage sites of Slender West Lake and the Grand Canal in Yangzhou, this state-owned cultural tourism enterprise that makes over a billion annually by "rowing boats" is trying to tell a "Chinese version of water tourism" story in the Hong Kong stock market. However, the capital market has never lacked good stories, but lacks stories that can be consistently realized. From selling boat tickets to selling experiences, "cash cow" also has hidden concerns GMTEight observed that Slender West Lake Tourism is a state-owned comprehensive water tourism service provider headquartered in Yangzhou, Jiangsu Province. It mainly consists of three main business segments, providing water sightseeing services (including value-added boat services and charter services, as well as the Grand Canal night tour in Yangzhou), providing sightseeing car services, and providing management services. From September 10, 2015, to September 9, 2035, the company has a 20-year exclusive operating rights for water sightseeing services in the Shu Hill-Slender West Lake scenic area; based on ticket sales in 2024, it ranks second in the water sightseeing service market in Jiangsu Province with a market share of about 16.0%. At the same time, the company currently has 221 boats, with a total passenger capacity of 3,892 under standard operating conditions, and a maximum daily capacity of over 35,000 during peak tourism periods. From the financial data disclosed in the prospectus, Slender West Lake Tourism has achieved steady growth in revenue and profit by leveraging the essential nature of its core business and monopoly advantage, with profit levels and cash flow performance far exceeding the industry average. From 2023 to 2025, the company achieved operating revenues of 109 million yuan, 111 million yuan, and 141 million yuan respectively, with a compound annual growth rate of 13.8% for three years, with a year-on-year increase of 26.8% in 2025. In terms of profits, the net profits for the same period were 46.43 million yuan, 42.88 million yuan, and 51.99 million yuan, with a slight fluctuation in 2024 due to the initial investment in new business, but seeing a significant rebound in 2025, indicating a recovery in profit levels. At the same time, the company's gross profit margin has remained above 54% for three consecutive years, reaching 58.2% in 2025, well above the industry average gross profit margin level of 30%-40%. Its net profit margin has also been maintained above 36% year-round, with profit quality superior to the industry average. With stable revenue and profit growth, Slender West Lake Tourism's operating cash flow has also remained positive, reaching 66.82 million yuan in 2025, far exceeding net profits for the same period. With a strong cash flow recirculation capability, the company has sufficient self-owned funds to support business operations and expansion capability. With high gross profit margin, high net profit margin, and strong operating cash flow recirculation capabilities, Slender West Lake Tourism has become known as a "cash cow" in the eyes of the outside world. However, behind the impressive performance, Slender West Lake Tourism also has obvious operational weaknesses that pose certain constraints on the long-term stability of its performance. The "large dominant ship" is a double-edged sword. As the core of the company's core business, water sightseeing contributed 87.2%, 86.2%, and 83.7% of total revenue during the reporting period, meaning that the company mainly depends on "selling boat tickets" to make a living. This highly concentrated business structure has built a clear moatthere is no direct competition in Yangzhou, but it also means that the company's performance is highly dependent on the flow of visitors to the scenic area and the sustainability of exclusive permits, making its risk resistance relatively weak. Any fluctuations in visitor flow or boat operations will directly affect the overall performance of the company. To break away from the reliance on a single business, Slender West Lake Tourism is also trying to explore new growth paths. In October 2024, the company launched the "Grand Canal Yangzhou" nighttime boat performance project, integrating outdoor theaters, narrative scenes, and light art, attempting to upgrade the traditional boat sightseeing experience to an immersive theatrical experience. Since its debut, the project has accumulated over 4,000 performances, with a 65% year-on-year increase in boat tourist reception in 2025, a 99% increase in revenue, creating a market frenzy where tickets are hard to come by. In 2025 as a whole, the "Grand Canal Yangzhou" project contributed revenue of 29.489 million yuan, accounting for 20.9% of total revenue. In addition, the company has also developed value-added services for boat tours, such as morning tea experiences, study projects, and customized corporate activities, with these value-added services contributing 35.3% of total revenue in 2024. For a project that has only been operating for one year, this percentage is indeed significant. It reflects the transformation path that Slender West Lake Tourism is attempting: from selling boat tickets to selling experiences, extending from daytime economy to nighttime economy. However, whether this new business can carry the weight remains a topic that requires long-term verification. Standing on the wave of recovery, there are still challenges ahead From a macro perspective, Slender West Lake Tourism is currently in a period of policy dividends for industry recovery. In 2025, the Chinese cultural tourism market delivered remarkable results. Public data shows that in 2025, the number of domestic tourist trips reached 6.522 billion, with a year-on-year increase of 16.2%; total tourism expenditure reached 6.30 trillion yuan, with a year-on-year increase of 9.5%, both reaching historical highs. During the 9-day Chinese New Year holiday in 2026, domestic tourism trips reached 596 million, and consumption exceeded 800 billion yuan, breaking historical records. Minister of Culture and Tourism Sun Yao-li revealed during the 2026 two sessions that in 2025, the number of domestic tourist trips exceeded 6.5 billion, an increase of over 16%, and total tourism expenditure reached 6.3 trillion yuan, an increase of 9.5%, also reaching historical highs. At the policy level, there are also favorable developments. The 2026 Government Work Report places the cultural tourism industry in a key position for expanding domestic demand, strengthening consumption, promoting culture, and benefiting the people. The General Office of the State Council explicitly stated to "promote the sustainable and healthy development of nighttime boat tours, and promote the upgrading and innovative development of nighttime boat tours." The Ministry of Culture and Tourism in 2026 also explicitly stated its intention to promote the development of integrated formats such as culture, tourism, and commerce, creating diverse cultural tourism consumption scenarios, developing ticket-based economy, experiential economy, and nighttime economy. On the consumption end, tourism is shifting from the core of "ticket economy" focused on sightseeing to the characteristics of "experiential economy" and "content economy" focused on participation and immersion. From January to October 2025, nighttime consumer spending by national tourists accounted for 32.9% of total daily spending, with a nighttime opening rate of 66.9% in 5A-grade scenic spots. During the "14th Five-Year Plan" period, the demands of tourists for cultural participation, experiential depth, and artistic expression will further increase, making immersive, emotional, and interactive experiences the core competitive advantage for attracting tourists. Frost & Sullivan predicts that the compound annual growth rate of the Chinese water tourism market from 2024 to 2029 will reach 13%, indicating that there is still industry dividend. However, the recovery dividends of the cultural tourism market are not exclusive to Slender West Lake Tourism. Looking at the competitive landscape, the water sightseeing service industry is characterized by being "large but not strong, and diverse but not focused." According to Frost & Sullivan data, among the over 270 service providers nationwide in 2024, the top ten companies accounted for less than 30% of the market share. Slender West Lake Tourism has a certain advantage in the region: ranking second in ticket sales for water sightseeing in Jiangsu Province with a 16.0% market share; but on a national scale, its share of boat ticket revenue is only about 1.0%, ranking tenth. The gap is still significant compared to the leading company in the province (with a market share of 34.2%). Although there is no direct competition in Yangzhou, the core scenic areas of other cities in the province still divert visitors from the water sightseeing projects; at the same time, new immersive experience projects emerging in the industry continue to squeeze market space. In addition, the proportion of water sightseeing ticket revenue sold through OTA channels by Slender West Lake Tourism continues to risefrom 12.8% in 2023 to 33.2% in the first half of 2025limiting channel bargaining power. Facing the challenges mentioned above, Slender West Lake Tourism has already made plans. If successfully listed, the company will focus on four main areas with the funds raised, namely deepening innovation in core scenic area water projects, developing new routes, expanding management service portfolios, and promoting asset upgrades. In summary, it is not difficult to see that Slender West Lake Tourism is a regional monopoly tourism leader that is a "cash cow + small and beautiful," but due to factors such as scale and business layout, its investment value still needs to be viewed dialectically. On the one hand, the company, relying on the exclusive operation rights of world cultural heritaghes, has a solid cash flow and differentiated brand barriers; on the other hand, with weaknesses such as a concentrated business region and a single income structure, its long-term growth story still needs to undergo multiple tests.