HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Various statistics suggested that China's tourism and hospitality industry has staged a significant recovery during the 2024 CNY holidays, with traffic surging high double-digit.</li>
<li>While consumers are more cautious about retail product spending, they are willing to spend more on traveling. Such a trend will continue to bode well for the sector.</li>
<li>We like OTAs including <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> and <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 (9961 HK)</a> despite their YTD surge in share prices. Meanwhile, <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> stays as the top pick.</li>
</ul>


Various statistics suggested that China's tourism and hospitality industry has staged a significant recovery during the 2024 CNY holidays, with traffic surging high double-digit.
While consumers are more cautious about retail product spending, they are willing to spend more on traveling. Such a trend will continue to bode well for the sector.
We like OTAs including Tongcheng Travel (780 HK) and Trip.com (9961 HK) despite their YTD surge in share prices. Meanwhile, Air China Ltd (H) (753 HK) stays as the top pick.


China Tourism and Hospitality Industry: Roundup of a Solid CNY

Equity Bottom-Up

<ul>
<li>It is difficult for <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> to return to its peak and IPO share prices over the next two years. The buyback proposal represents a good exit opportunity.</li>
<li>Net profit is unlikely to go back to FY19 level even in FY26F. The derating of the Chinese equities and Fosun Group, as well as its high gearing, are barriers.</li>
<li>Its PER multiples have already aligned back to the sector average from the extremely depressed level previously. Relative to global names, it is now only at slight discounts.</li>
</ul>


It is difficult for Fosun Tourism (1992 HK) to return to its peak and IPO share prices over the next two years. The buyback proposal represents a good exit opportunity.
Net profit is unlikely to go back to FY19 level even in FY26F. The derating of the Chinese equities and Fosun Group, as well as its high gearing, are barriers.
Its PER multiples have already aligned back to the sector average from the extremely depressed level previously. Relative to global names, it is now only at slight discounts.


Asia Real Estate News Tracker, Asia Real Estate Tracker

Asia Real Estate Tracker

Asia Real Estate News Tracker

Tracking developments across Asia's regional real estate markets

<ul>
<li>PDG's acquisition of 210MW data center capacity in India marks a significant milestone in APAC real estate.</li>
<li>Lendlease REIT in Singapore struggled to raise $153 million for a mall purchase, achieving only 62% of its goal.</li>
<li>Kerry Properties in Hong Kong saw a 16% profit increase to $120 million, aided by lower valuation losses.</li>
</ul>


PDG's acquisition of 210MW data center capacity in India marks a significant milestone in APAC real estate.
Lendlease REIT in Singapore struggled to raise $153 million for a mall purchase, achieving only 62% of its goal.
Kerry Properties in Hong Kong saw a 16% profit increase to $120 million, aided by lower valuation losses.


Asia Real Estate Tracker (24-Mar-2026): PDG buys 210MW India data center capacity and more.

<ul>
<li>The appreciation of Rmb will bring benefits to some companies. With a lower USD rate and an inflow of funds to China, this trend is expected to continue into 2026.</li>
<li>
<a href="https://www.smartkarma.com/entities/h-world-group-ltd" target="_blank" data-smartkarma-citation="entities:33487:1" rel="noopener">H World Group (1179 HK)</a>, <a href="https://www.smartkarma.com/entities/china-everbright-environment-group-limited" target="_blank" data-smartkarma-citation="entities:15946:1" rel="noopener">China Everbright Environment (257 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a> are the most likely ones to gain the most.</li>
<li>The newly listed companies in Hong Kong are exposed due to the translation of massive HKD proceeds to Rmb, with the impact on <a href="https://www.smartkarma.com/entities/sicc-co-ltd-e5b2bacc-ed46-4d8e-bfb1-ff952e730eae" target="_blank" data-smartkarma-citation="entities:45752:1" rel="noopener">SICC (2631 HK)</a> being the heaviest. </li>
</ul>


The appreciation of Rmb will bring benefits to some companies. With a lower USD rate and an inflow of funds to China, this trend is expected to continue into 2026.

H World Group (1179 HK), China Everbright Environment (257 HK), and China National Building Material (3323 HK) are the most likely ones to gain the most.
The newly listed companies in Hong Kong are exposed due to the translation of massive HKD proceeds to Rmb, with the impact on SICC (2631 HK) being the heaviest. 


China Strategy: Revisiting the Rmb Appreciation Story

China Travel International Investment Hong Kong / Equity Bottom-Up

China Travel International Investment Hong Kong (308 HK)

China Travel International Investment Hong Kong

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong-limited" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel Intl Invest (308 HK)</a>'s spin-off of CTG HK and Macao Culture and Tourism (CTCT) is value-enhancing. Its adjusted net profit growth of 101% in 1Q26 is encouraging.</li>
<li>We valued CTCT at HK$2.8bn, using the 17.8x average FY26 PER of the HK-listed hotel companies. </li>
<li>Implied valuation of the new CTII is HK$4.1bn, or just 0.6x P/B. There are good growth prospects, and a re-rating to 0.7x P/B will give 16% upside to CTII.</li>
</ul>



China Travel Intl Invest (308 HK)'s spin-off of CTG HK and Macao Culture and Tourism (CTCT) is value-enhancing. Its adjusted net profit growth of 101% in 1Q26 is encouraging.
We valued CTCT at HK$2.8bn, using the 17.8x average FY26 PER of the HK-listed hotel companies. 
Implied valuation of the new CTII is HK$4.1bn, or just 0.6x P/B. There are good growth prospects, and a re-rating to 0.7x P/B will give 16% upside to CTII.


China Travel Intl Inv (308 HK): Assessing the Spin-Off

China

H World Group is a leading global hospitality company that manages a diverse portfolio of hotel brands, ranging from economy to luxury segments. It provides quality accommodation and hospitality experiences through its leased and owned, manachised, and franchised hotel models. The company was founded in 2005 and is headquartered in Jiading District, Shanghai, China.

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H World Group (1179 HK)

China Tourism and Hospitality Industry: Roundup of a Solid CNY

China's tourism industry sees a strong recovery during the 2024 CNY holidays, with a high double-digit traffic surge. OTAs like Tongcheng and...

Osbert Tang, CFA

Fosun Tourism (1992 HK): Giving In

Fosun Tourism faces challenges in returning to peak and IPO share prices, making the buyback proposal a good exit opportunity due to barriers like...

Osbert Tang, CFA

Asia Real Estate Tracker (24-Mar-2026): PDG buys 210MW India data center capacity and more.

PDG acquired 210MW of data center capacity in India, while Lendlease REIT's mall funding fell short, Kerry Properties saw profits rise, and Hulic...

Asia Real Estate Tracker

China Strategy: Revisiting the Rmb Appreciation Story

The Rmb has accelerated its appreciation this year, with a gain of 1.1% against the USD in just under 1.5 months. In 2025, it appreciated 4.3%,...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): Assessing the Spin-Off

CTII's spin-off of CTG HK and Macao Culture and Tourism enhances value and clarifies business separation. CTCT is valued at HK$2.7bn, giving the...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Tourism and Hospitality Industry: Roundup of a Solid CNY

​China's tourism industry sees a strong recovery during the 2024 CNY holidays, with a high double-digit traffic surge. OTAs like Tongcheng and...

Osbert Tang, CFA

Fosun Tourism (1992 HK): Giving In

​Fosun Tourism faces challenges in returning to peak and IPO share prices, making the buyback proposal a good exit opportunity due to barriers like...

Osbert Tang, CFA

Asia Real Estate Tracker (24-Mar-2026): PDG buys 210MW India data center capacity and more.

PDG acquired 210MW of data center capacity in India, while Lendlease REIT's mall funding fell short, Kerry Properties saw profits rise, and Hulic...

Asia Real Estate Tracker

China Strategy: Revisiting the Rmb Appreciation Story

The Rmb has accelerated its appreciation this year, with a gain of 1.1% against the USD in just under 1.5 months. In 2025, it appreciated 4.3%,...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): Assessing the Spin-Off

​CTII's spin-off of CTG HK and Macao Culture and Tourism enhances value and clarifies business separation. CTCT is valued at HK$2.7bn, giving the...

Osbert Tang, CFA

China's tourism industry sees a strong recovery during the 2024 CNY holidays, with a high double-digit traffic surge. OTAs like Tongcheng and...

Fosun Tourism faces challenges in returning to peak and IPO share prices, making the buyback proposal a good exit opportunity due to barriers like...

CTII's spin-off of CTG HK and Macao Culture and Tourism enhances value and clarifies business separation. CTCT is valued at HK$2.7bn, giving the...