HK/China Equity Long-Short

Osbert Tang, CFA

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.


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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<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>’s IFA opines that the share buyback privatisation offer of HK$7.80 is fair and reasonable. The vote is on 4 March. </li>
<li>The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by &lt;10% of disinterested shareholders). No disinterested shareholder holds a blocking stake.</li>
<li>Despite disclosing a potential REIT listing, there are no signs of dissent. At the last close, the gross/annualised spread for a 26 March payment was 3.5%/30.2%.</li>
</ul>



Fosun Tourism (1992 HK)’s IFA opines that the share buyback privatisation offer of HK$7.80 is fair and reasonable. The vote is on 4 March. 
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by &lt;10% of disinterested shareholders). No disinterested shareholder holds a blocking stake.
Despite disclosing a potential REIT listing, there are no signs of dissent. At the last close, the gross/annualised spread for a 26 March payment was 3.5%/30.2%.


Fosun Tourism (1992 HK): Scheme Buyback a Done Deal with Vote on 4 March

<ul>
<li>
<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> disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00. </li>
<li>The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by &lt;10% of disinterested shareholders).</li>
<li>The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.    </li>
</ul>



Fosun Tourism (1992 HK) disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00. 
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by &lt;10% of disinterested shareholders).
The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.    


Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

<ul>
<li>A partial disposal of Club Med is positive 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>. The market is speculating <a href="https://www.smartkarma.com/entities/capitaland-investment-ltd-sing" target="_blank" data-smartkarma-citation="entities:33774:1" rel="noopener">CapitaLand Investment /Sing (CLI SP)</a> is paying EUR500m for a 20-30% stake.</li>
<li>Club Med generated 91.7% of its 1H24 operating profit. The rumoured valuation will boost its value by HK$6.9/share, 1.2x of the share price if true.</li>
<li>We see reasons for such disposal, and if happens, this will align the stock's valuation to international peers - 26.2x for FY24, vs. its 11.3x currently.</li>
</ul>


A partial disposal of Club Med is positive for Fosun Tourism (1992 HK). The market is speculating CapitaLand Investment /Sing (CLI SP) is paying EUR500m for a 20-30% stake.
Club Med generated 91.7% of its 1H24 operating profit. The rumoured valuation will boost its value by HK$6.9/share, 1.2x of the share price if true.
We see reasons for such disposal, and if happens, this will align the stock's valuation to international peers - 26.2x for FY24, vs. its 11.3x currently.


Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

China

BTG Hotels (Group) Co., Ltd. operates a tourism business.  The Company also invests in hotel and restaurant management, as well as provides advertising and exhibition center management services.

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Btg Hotels Group Co Ltd A (600258 CH)

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

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): Scheme Buyback a Done Deal with Vote on 4 March

Despite disclosing a potential REIT listing, there are no signs of dissent. At the last close, the gross/annualised spread for a 26 March payment...

Arun George

Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower...

Arun George

Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

Fosun Tourism remains suspended, and we are awaiting an announcement. Speculation is that it involves privatisation by its parent, Fosun Intl....

Osbert Tang, CFA

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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

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): Scheme Buyback a Done Deal with Vote on 4 March

Despite disclosing a potential REIT listing, there are no signs of dissent. At the last close, the gross/annualised spread for a 26 March payment...

Arun George

Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower...

Arun George

Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

Fosun Tourism remains suspended, and we are awaiting an announcement. Speculation is that it involves privatisation by its parent, Fosun Intl....

Osbert Tang, CFA

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

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