Zhongjin: Indoor skiing facilities have higher development potential, optimistic about investment opportunities in the industry chain enterprises.

Zhongjin released a research report stating that indoor ski resorts have become a new emerging product category in recent years, often integrated with commercial, hotel, and other aspects to form a cultural tourism complex. The shortage of high-quality ice and snow resources in China, coupled with the booming growth of the skiing population, has created a supply-demand contradiction. Indoor ski resorts can accurately address these pain points and promote the popularization of skiing, showing optimism for the development space of leading indoor ski resort operators and investment opportunities for the industry chain companies. Key points from Zhongjin include: The skiing market has rapidly expanded in recent years but the popularity rate is much lower than that of overseas markets, hindered by the lack of high-quality ski resort resources. Government Document [2024] No. 49 predicts that by 2030, China's ice and snow economy will reach 1.5 trillion yuan, with the core being ice and snow sports, among which skiing has higher potential for popularization. The number of skiing participants in China doubled to 26.05 million from 2014 to 2024, making it a major growth point in the global market, but with a participation rate of only 0.9%, lower than overseas markets such as Western Europe (5%-30%). International experience shows that the skiing participation rate is positively correlated with the level of economic development. Furthermore, China lacks high-quality ice and snow resources, which are concentrated in high latitudes far from economically developed regions. Moreover, the commercial operation of skiing is still in its early stages, leading to vast room for improvement in the popularization of skiing in China. The skiing market is expected to reach a billion-dollar scale in the medium to long term, with indoor ski resorts having higher development potential. The current narrow skiing market in China is estimated to be around 37 billion yuan; looking at the popularity rate and frequency of skiing in the United States, it could potentially reach 300 billion yuan in the medium to long term. Indoor ski resorts can meet the demand for skiing in the off-season at a lower cost, making them an accelerator for the industry's long-term development and possessing higher investment potential. High-quality indoor ski resorts need to consider advantageous locations, large capacities, and refined operations. Firstly, the demand for local parent-child and family skiing is the basic foundation for most indoor resorts, requiring a high population and developed economy in the selected locations. Secondly, the size determines the maximum individual revenue and the richness of the trails, affecting the fun and customer stickiness, but large venues have high initial investment and construction difficulties, posing certain barriers. Finally, refined operations are crucial, with leading operators in China and abroad focusing on member systems, professional skiing training, and event hosting to solidify the customer base, increase repeat purchases, and explore growth curves beyond ticket sales. Ski resort operations are typical economies of scale businesses, indicating the development potential of leading operators in China. High-quality ski resorts are irreplaceable resources, and skiing as an optional service consumption relies on brand premiums and customer loyalty to determine long-term growth and profitability, following the Matthew effect principle. The international market has entered a stage of consolidation, with the tail end being cleared out and high-quality resources concentrating on leading players. In the short term (one to two quarters), it is advised to look out for potential investment opportunities in the ice and snow economy related targets under the supportive policies and international events promotion. Risks The pace of macroeconomic recovery is slower than expected, and the increase in the popularization rate of skiing falls short of expectations.