The highly anticipated trillion-yuan package to prevent and resolve local government implicit debt risks has recently been unveiled. Starting this year, for five consecutive years, an allocation of one trillion yuan will be made annually from the new local government special bonds to supplement government fund financial resources, specifically for debt resolution, with a cumulative total of one trillion yuan available for replacing implicit debt. Overall, this will directly increase local debt resolution resources by one trillion yuan.

First Financial News reporters recently, through interviews with industry insiders and analysis of financial reports from tourism-related listed companies, learned that some tourism enterprises have significant accounts receivable, especially the financial pressures faced by some local tourism groups are not small. The trillion-yuan debt relief policy as a whole is conducive to the development of the tourism industry, but regarding large-scale project investments, the specific situation in each region needs to be considered.

From the recently released series of third-quarter reports, many tourism enterprises, especially those involving scenic area investments, have seen a decline in profits. Guilin Tourism (.SZ) reported third-quarter revenue of . billion yuan, a decrease of .% year-on-year; net profit attributable to shareholders of the listed company was . million yuan, down .% year-on-year. Jiuhua Tourism (.SH) saw third-quarter revenue of approximately . billion yuan, a decrease of .% year-on-year; net profit attributable to the parent company was about . million yuan, down .% year-on-year. Xi'an Tourism (.SZ) achieved revenue of . billion yuan in the first three quarters, a decrease of .% year-on-year; net profit attributable to the parent company was a loss of . million yuan. Lijiang Tourism (.SZ) reported a net profit attributable to the parent company of approximately . million yuan in the third quarter, a decrease of .% year-on-year. CYTS (.SH) saw a net profit attributable to shareholders of the listed company of . million yuan in the third quarter, a decrease of .% year-on-year.

The costs incurred from investing in and operating scenic areas, hotels, and new facilities are a major reason for the decline in profits of the aforementioned enterprises. For example, Lijiang Co. pointed out that the decrease in net profit attributable to the parent company in the first three quarters was greater than the decrease in operating income, primarily due to the trial operation of the Lugu Lake Indigo Hotel from a certain date, with ten million yuan in start-up expenses being recorded in the current period's profit and loss.

It is worth noting that accounts receivable is also one of the burdens for these enterprises. According to CYTS's third quarter report, the accounts receivable as of the end of last year was . billion yuan, while the accounts receivable as of January of this year increased to . billion yuan. BTG Homeinns (.) reported a net profit attributable to the parent company of . billion yuan for the third quarter, a year-on-year decrease of .%, with the company facing increased short-term debt pressure during the reporting period, a current ratio of ., and accounts receivable exceeding . billion yuan. Jinjiang Hotels (.) had a third quarter revenue of . billion yuan, a year-on-year decrease of .%; net profit attributable to shareholders of listed companies was . billion yuan, a year-on-year decrease of .%, with accounts receivable at . billion yuan. Huatian Hotel (.) had approximately . billion yuan in third quarter revenue, a year-on-year decrease of .%; a net loss attributable to the parent company of approximately . million yuan, a year-on-year increase in loss of .%, with accounts receivable at . million yuan.

First Financial News reporters previously learned through interviews that tourism and hotel businesses, which involve a model of consuming before paying, generate a portion of accounts receivable, meaning sales revenue has not yet been collected within the credit period; tourism destination businesses also involve investing in new projects, where local governments participate, involving partial investments and special subsidies, and if funds are not fully disbursed, it can lead to accounts receivable or deferred income; during the pandemic, some hotels became quarantine facilities, also involving government procurement by various local authorities, with varying payment timelines, resulting in accounts receivable.

Increasing the efforts to localize debt is undoubtedly beneficial for these hotels and tourism enterprises to reduce pressure. Overall, it is conducive to the cultural and tourism sectors in various regions. It is worth noting that many local cultural and tourism groups are involved in investing and integrating local cultural and tourism resources such as scenic spots, transportation, accommodation, and catering. Some cultural and tourism groups also undertake the financing functions of urban investment enterprises, simultaneously responsible for the development, investment, and operation of cultural and tourism projects.

Based on comprehensive public information and insights from industry insiders, there are three types of local cultural tourism groups in China. The first type primarily holds and operates cultural tourism assets, with the main task of managing and developing local cultural tourism industries. The second type is a development-oriented enterprise that uses the cultural tourism label, with its main revenue sources being engineering projects and land consolidation. The third type is a cultural tourism-focused urban investment company, which combines the attributes of a financing platform with the development and operation of cultural tourism projects.

Some financially overburdened local cultural and tourism sectors are in trouble. For example, by the end of this month, the Mengjin State-owned Cultural Tourism Group of Luoyang, Henan, was ruled bankrupt by the court. The ruling document shows that the company had liabilities of 100 million yuan and physical assets worth 10 million yuan. Additionally, the Zhenjiang Cultural Tourism Group frequently resorted to debt financing. In January, the first ultra-short-term financing bonds of the Zhenjiang Cultural Tourism Group for the year began trading in the interbank bond market, with an issuance amount of 1 billion yuan; on January 10, the first privately placed corporate bonds of the Zhenjiang Cultural Tourism Group for the year, targeting professional investors, were listed for trading on the Shanghai Stock Exchange.

Public data shows that the total principal and interest due on urban investment bonds each year is approximately in the trillions, with "cultural, tourism, sports, and agriculture" urban investment bonds accounting for a high percentage of the total issued urban investment bonds. Industry views suggest that the additional trillion yuan in local debt resolution resources can transform all existing hidden debts from implicit to explicit, which is a significant boon for the cultural and tourism industry.

The trillion-yuan debt relief policy can benefit local cultural tourism, especially enterprises like Zhenjiang Cultural Tourism Group, by alleviating their debt pressure. The new policy can ease the financial pressure on local cultural tourism, promote corporate investment and local consumption, offering cultural tourism groups an opportunity to restructure their business and improve investment. Previously, the Ministry of Culture and Tourism and four other departments jointly issued the "Smart Tourism Innovation Development Action Plan," which explicitly proposed exploring the inclusion of qualified smart tourism supporting projects within the scope of local government bond support. Special bonds are an effective measure for current fiscal revenue and expenditure coordination and optimizing government investment, and they are also an important financing channel for the cultural tourism industry. Combined with this debt relief policy, it will be even more conducive to the development of cultural tourism groups, according to Wei Changren, founder of Jinglv.com.

However, some industry insiders also point out that local cultural tourism groups should consider the local situation. In regions where the overall fiscal budget is tight, local cultural tourism groups need to enhance their competitiveness when seeking special cultural tourism bonds.