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

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<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

<ul>
<li>China's announcement of the third batch of international destinations for the resumption of outbound travel will serve as another important catalyst for the rebound of outbound tourism.</li>
<li>The generally weak performance of tourism-related stocks YTD is unjustified. <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> and <a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel International (308 HK)</a> have both issued positive profit alerts for 1H23.</li>
<li>
<a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> is also an important beneficiary as international passenger capacity recovers. The release of pent-up demand will have positive implications on passenger yield.</li>
</ul>


China's announcement of the third batch of international destinations for the resumption of outbound travel will serve as another important catalyst for the rebound of outbound tourism.
The generally weak performance of tourism-related stocks YTD is unjustified. Fosun Tourism (1992 HK) and China Travel International (308 HK) have both issued positive profit alerts for 1H23.

Air China Ltd (H) (753 HK) is also an important beneficiary as international passenger capacity recovers. The release of pent-up demand will have positive implications on passenger yield.


China Tourism Sector: Anticipating More Upward Strengths

China

China Southern Airlines is a major airline specializing in comprehensive air transportation services, including scheduled passenger flights and the transport of cargo and mail. The airline also provides complementary services such as aircraft maintenance, catering, and ground handling. It is headquartered in Guangzhou, Guangdong, China, and was founded in 1988.

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China Southern Airlines (1055 HK)

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

China Tourism Sector: Anticipating More Upward Strengths

China's recent policy to allow visa-free travel for citizens from France, Germany, Italy, the Netherlands, Spain, and Malaysia for up to 15 days...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

China Tourism Sector: Anticipating More Upward Strengths

China's recent policy to allow visa-free travel for citizens from France, Germany, Italy, the Netherlands, Spain, and Malaysia for up to 15 days...

Osbert Tang, CFA

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