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>"Pent-Up demand"? No signs of it anywhere in outbound or domestic metrics</li>
<li>Sluggish outbound demand, capacity trajectories continued to lag in November</li>
<li>YTD share performance weak, mirrors disappointing recovery in travel activity</li>
</ul>


"Pent-Up demand"? No signs of it anywhere in outbound or domestic metrics
Sluggish outbound demand, capacity trajectories continued to lag in November
YTD share performance weak, mirrors disappointing recovery in travel activity


Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

Thematic (Sector/Industry)

<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

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<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> has been over-penalised by market weakness as its share price was off 16.8% YTD. It turned around in 3Q23 and guidance for 4Q23 is solid.</li>
<li>Surge in operating and adjusted EBITDA margins indicated high operating leverage. Occupancy has not returned to 2019 level, but there will be more margin expansion when this happens.</li>
<li>55% of rooms in China are of economy type, and 82% are in tier-2 and below cities. Such characteristics allow it to benefit from the prevailing consumption downgrade. </li>
</ul>



H World Group (1179 HK) has been over-penalised by market weakness as its share price was off 16.8% YTD. It turned around in 3Q23 and guidance for 4Q23 is solid.
Surge in operating and adjusted EBITDA margins indicated high operating leverage. Occupancy has not returned to 2019 level, but there will be more margin expansion when this happens.
55% of rooms in China are of economy type, and 82% are in tier-2 and below cities. Such characteristics allow it to benefit from the prevailing consumption downgrade. 


H World Group (1179 HK): Uniquely Well-Placed for Lower-Tier Markets

<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

<ul>
<li>In October, the sluggish recovery in outbound tourism demand continued</li>
<li>Outbound capacity growth also timid; but domestic recovery is mostly complete</li>
<li>As growth stock, Trip.com's disappointed; maybe it can attract value investors?</li>
</ul>


In October, the sluggish recovery in outbound tourism demand continued
Outbound capacity growth also timid; but domestic recovery is mostly complete
As growth stock, Trip.com's disappointed; maybe it can attract value investors?


Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)

China

Tongcheng Travel Holdings Limited operates as an online travel agency. The Company provides transportation ticketing, accommodation reservation, value added travel products sales, and other services. Tongcheng Travel Holdings provides its services throughout China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Tongcheng Travel Holdings (780 HK)

Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

November outbound data were disappointing, and even domestic travel activity metrics appeared to move in the wrong direction. Not surprisingly,...

Tracking Traffic

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

H World Group (1179 HK): Uniquely Well-Placed for Lower-Tier Markets

H World has solid guidance for 4Q23, allowing it to realise operating leverage and margin expansion. Its focus on economy rooms and tier-2 and...

Osbert Tang, CFA

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

Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)

October outbound demand increased vs September but remains below pre-pandemic levels. We've long viewed Trip.com negatively as a growth stock, but...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Monthly Chinese Tourism Tracker | No "Pent-Up Demand"! | Weak YTD Returns, Too | (December 2023)

November outbound data were disappointing, and even domestic travel activity metrics appeared to move in the wrong direction. Not surprisingly,...

Tracking Traffic

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

H World Group (1179 HK): Uniquely Well-Placed for Lower-Tier Markets

​H World has solid guidance for 4Q23, allowing it to realise operating leverage and margin expansion. Its focus on economy rooms and tier-2 and...

Osbert Tang, CFA

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

Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)

October outbound demand increased vs September but remains below pre-pandemic levels. We've long viewed Trip.com negatively as a growth stock, but...

Tracking Traffic

H World has solid guidance for 4Q23, allowing it to realise operating leverage and margin expansion. Its focus on economy rooms and tier-2 and...