Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>Chinese domestic and outbound air travel activity rebounded sharply in July - why?</li>
<li>If we're right about the reasons for July's recovery in traffic, bounce likely to be short-lived</li>
<li>We expect platform Trip.com to confirm a weak outlook when it reports Q226 results</li>
</ul>


Chinese domestic and outbound air travel activity rebounded sharply in July - why?
If we're right about the reasons for July's recovery in traffic, bounce likely to be short-lived
We expect platform Trip.com to confirm a weak outlook when it reports Q226 results


Monthly Chinese Tourism Tracker | Air Travel Growth Rebounded in July | Why? And Is It Sustainable?

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Data from <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> showed good improvement in travel demand for the 2024 New Year holidays. The volume of various orders has surged between 2x and 5x YoY. </li>
<li>Aggregate net profit for the tourism and hospitality sector has turned around to Rmb20.4bn in 3Q23, from losses of Rmb24.7bn a year ago, demonstrating solid profitability recovery.</li>
<li>An average of 32% drop in the sector's share price YTD is unjustified. We like <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel (780 HK)</a>, <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China (H) (753 HK)</a> and <a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>.  </li>
</ul>


Data from Trip.com Group (9961 HK) showed good improvement in travel demand for the 2024 New Year holidays. The volume of various orders has surged between 2x and 5x YoY. 
Aggregate net profit for the tourism and hospitality sector has turned around to Rmb20.4bn in 3Q23, from losses of Rmb24.7bn a year ago, demonstrating solid profitability recovery.
An average of 32% drop in the sector's share price YTD is unjustified. We like Tongcheng Travel (780 HK), Air China (H) (753 HK) and Fosun Tourism (1992 HK).  


China Tourism and Hospitality Industry: Boom in 2024 New Year Travel Demand

<ul>
<li>For segments we cover -- express, containers, tourism -- 2023 was challenging</li>
<li>In this note we highlight each segment's key trends and themes from 2023</li>
<li>We conclude with a look at 2023 share performance and a peak into 2024</li>
</ul>


For segments we cover -- express, containers, tourism -- 2023 was challenging
In this note we highlight each segment's key trends and themes from 2023
We conclude with a look at 2023 share performance and a peak into 2024


Key 2023 Trends & Themes in Asian Express, Containers, Tourism | Plus A Peak Into 2024

Equity Long-Short

Mo Aziz

<ul>
<li>FT article uncovers other contributors to surging air freight rates—Chinese online brands Temu and Shein are flooding Western nations with fast fashion and inexpensive e-commerce goods  </li>
<li>The biggest beneficiaries are Chinese carriers with significant air cargo exposure, and Cathay Pacific. This presents a potential catalyst for an earnings beat and a boost to the share price.</li>
<li>Carriers from Taiwan and South Korea will benefit from supply tightness to the U.S.. Logistics providers are unlikely to benefit much due to tight margins and volatile high freight rates </li>
</ul>


FT article uncovers other contributors to surging air freight rates—Chinese online brands Temu and Shein are flooding Western nations with fast fashion and inexpensive e-commerce goods  
The biggest beneficiaries are Chinese carriers with significant air cargo exposure, and Cathay Pacific. This presents a potential catalyst for an earnings beat and a boost to the share price.
Carriers from Taiwan and South Korea will benefit from supply tightness to the U.S.. Logistics providers are unlikely to benefit much due to tight margins and volatile high freight rates 


<ul>
<li>In early December 2022, Chinese authorities relaxed many Covid-19 restrictions</li>
<li>A year in, the recovery in Chinese tourism activity has disappointed, so far</li>
<li>Similarly, most Chinese tourism stocks have performed poorly over the last year</li>
</ul>


In early December 2022, Chinese authorities relaxed many Covid-19 restrictions
A year in, the recovery in Chinese tourism activity has disappointed, so far
Similarly, most Chinese tourism stocks have performed poorly over the last year


12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

China

China Eastern Airlines is a major Chinese airline providing domestic, regional, and international passenger flight services, along with air cargo, logistics, and ancillary services such as aircraft maintenance and in-flight catering. Headquartered in Shanghai, China, it was founded in 1988.

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China Eastern Airlines (670 HK)

Monthly Chinese Tourism Tracker | Air Travel Growth Rebounded in July | Why? And Is It Sustainable?

After weak growth in Q226, Chinese domestic and outbound air travel activity suddenly rebounded in July. But is the improvement sustainable? We...

Tracking Traffic

China Tourism and Hospitality Industry: Boom in 2024 New Year Travel Demand

China's National Immigration Administration estimates there will be 1.56m travelers passing through immigration during the 2024 Chinese New Year...

Osbert Tang, CFA

Key 2023 Trends & Themes in Asian Express, Containers, Tourism | Plus A Peak Into 2024

In this insight we look at the important trends and themes we've covered this year in the express, containers, and tourism sectors. We also...

Tracking Traffic

There's Something About Air Cargo

Chinese e-commerce platforms are driving up air freight rates, benefiting Chinese carriers and other North Asian carriers. This can be a catalyst...

Mo Aziz

12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

A year after most of China's pandemic-related travel restrictions were eased, we look back at the recovery in Chinese tourism activity in 2023.

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Monthly Chinese Tourism Tracker | Air Travel Growth Rebounded in July | Why? And Is It Sustainable?

After weak growth in Q226, Chinese domestic and outbound air travel activity suddenly rebounded in July. But is the improvement sustainable? We...

Tracking Traffic

China Tourism and Hospitality Industry: Boom in 2024 New Year Travel Demand

China's National Immigration Administration estimates there will be 1.56m travelers passing through immigration during the 2024 Chinese New Year...

Osbert Tang, CFA

Key 2023 Trends & Themes in Asian Express, Containers, Tourism | Plus A Peak Into 2024

In this insight we look at the important trends and themes we've covered this year in the express, containers, and tourism sectors. We also...

Tracking Traffic

There's Something About Air Cargo

​Chinese e-commerce platforms are driving up air freight rates, benefiting Chinese carriers and other North Asian carriers. This can be a catalyst...

Mo Aziz

12 Months In, China's Tourism Recovery & Performance of China Tourism Shares Have Both Disappointed

A year after most of China's pandemic-related travel restrictions were eased, we look back at the recovery in Chinese tourism activity in 2023.

Tracking Traffic

Chinese e-commerce platforms are driving up air freight rates, benefiting Chinese carriers and other North Asian carriers. This can be a catalyst...