Zhitong Finance learned from Huatai Securities' research report that the June SW transportation index fell by 4.4%, underperforming the CSI 300 index by 1.1 percentage points. The overall market performance was weak, and sectors with hedge attributes performed better. Among them, the railway sector led the gains with a 2.1% increase, of which the Beijing-Shanghai high-speed railway rose by 6.1% due to the approaching peak season of summer transportation and the company's implementation of share buybacks. The highway/port sectors displayed hedge attributes and fell by 3.1%/1.6% respectively, outperforming the CSI 300. The aviation/airport sectors fell by 6.8%/7.2% respectively due to the weak off-season and duty-free consumption. The logistics sector fell by 7.3%, ranking last, mainly due to the intensification of short-term express delivery competition and insufficient demand for supply chain logistics. Looking ahead to July, there are opportunities in the travel chain in the peak season, and we continue to recommend integrated transportation and cross-border logistics with high dividend yield for allocation.
Recommended targets: China Southern Airlines (600029.SH, 01055), Juneyao Airlines (603885.SH), Beijing-Shanghai high-speed railway (601816.SH), COSCO shipping holdings (601919.SH, 01919), Eastern Air Logistics (601156.SH), Jiayou International Logistics (603871.SH), Shenzhen International (00152), Anhui Expressway (00995), Zhejiang Express (00576), and ZTO Express (02057).
Here are the main points of HuaTai Securities:
Aviation airports: officially entered the peak season of summer transportation, looking forward to actual performance data.
In June, market performance was weak, dragging down the stock prices of aviation and airport sectors. Looking ahead, as July enters the peak season of summer transportation, travel data during the Dragon Boat Festival and other holidays showed that private demand remains relatively strong. High-frequency data has marginally improved in the second half of June, and airlines are expected to usher in a profit peak in the peak season. According to Flight Master's forecast, the number of civil aviation passengers during the summer transportation period in 2024 will reach 135 million, a year-on-year increase of 7.0%, which is a 12.2% increase compared to the same period in 2019. In the short term, focus on the actual performance data during the peak season. In the long run, supply tightening will eventually be reflected in airlines' profit margins. As for airports, the peak season is also expected to catalyze the high point of traffic, but the decline in commission rates may slow down the airport's profit recovery to the level of 2019, and valuation still needs time to digest.
Shipping ports: The freight rates for each sector rose both month-on-month and year-on-year in June, and the freight rates for the peak season in the third quarter are expected to further increase month-on-month.
In June, the freight rates for all shipping sectors increased both month-on-month and year-on-year, with the Shanghai Containerized Freight Index (SCFI), crude oil BDTI index and dry bulk BDI index up by 30.1%, 3.5% and 1.4% respectively month-on-month. They increased by 256.6%, 13.0% and 77.7% respectively year-on-year. Looking ahead to July: 1) integrated transportation: Traditional peak season + Red Sea detour + port congestion disruption, freight rates are expected to continue to rise month-on-month. 2) Oil shipping: entering the second half of the year, oil shipping peak season, freight rates are expected to rise month-on-month; the industry supply and demand structure will improve as the medium- and long-term progresses, and the central freight rate will rise. 3) Bulk cargo: the market supply and demand are stable, and it is expected that the freight rates will increase month-on-month during the peak season. 4) Ports: export demand is good, and throughput is expected to maintain an increase month-on-month in July.
Highway and railway: significant impact on dividend assets before major meetings due to style preferences.
In May, passenger cars grew steadily, but freight cars did not perform well. According to the Planning Institute of the Ministry of Transport, the traffic volume of highway passenger cars/freight trucks on main routes increased by 3%/0% year-on-year in May. Among them, the freight transportation growth in major export provinces such as Zhejiang and Jiangsu is prominent. The third plenary session is scheduled to be held from July 15 to 18. Major meetings may affect market risk appetite, while the People's Bank of China announced that it will conduct national bond borrowing operations, which may affect interest rate-sensitive sectors. Huatai Securities stated that compared with A-share highways, it is more bullish on the valuation repair of Hong Kong stock highways under the background of "asset shortage." High-speed rail enters the peak season of summer transportation, and the business climate is on the rise. China State Railway Group predicts that railway passenger flow in July and August will increase by about 3.6% year-on-year, and return to 117% of the same period in 2019. Railway passenger flows during the Spring Festival/Qingming Festival/Labor Day/Dragon Boat Festival holidays have recovered to 144/121/123/119% of the same period in 2019 respectively. The current railway transportation of coal is still at the bottom of the business cycle.
Logistics express delivery: Express delivery competition is on the rise during the off-season, while cross-border e-commerce maintains a high business cycle.
Express delivery volume growth slowed in June, mainly due to the cancellation of pre-sale for the 24th year's e-commerce promotion, with some volume dispersed to May; but the growth rate still exceeded 20%, mainly benefiting from the rapid development of sinking e-commerce and live e-commerce. HTSC pointed out that in the short term, entering the off-season, express delivery companies focus on consolidating market share and price wars reappear in some areas; in the medium term, the performance of package volume has been strong since the beginning of the year, and it is expected that the price decrease for the whole year will be the same as the cost reduction, and the profit per package is expected to remain stable; in the long term, leading companies will continue to reduce costs and increase efficiency based on scale advantages and digitalization, and are expected to promote profit center upward. The cross-border logistics market maintains high prosperity, cross-border e-commerce platforms develop rapidly, and coupled with limited elasticity of air transportation capacity, freight rates are expected to remain high. In other sub-sectors, it is recommended to choose Jiayou International Logistics, which has short-term performance stability and medium-to-long-term growth potential.
Risk reminder: economic growth slowing down, trade frictions, oil and exchange rate risks, intensified competition.