According to the research report released by Puyin International, it is bullish on tongchengtravel (00780) benefiting from the growth of industry demand, maintains a "buy" rating, and adjusts the target price to HKD 18 considering the recent change in the industry's average valuation.

With the steady recovery of industry demand, the bank expects the company's second-quarter revenue to increase by 48% year-on-year to RMB 4.25 billion, which is basically in line with the bank's previous expectations. Among them, the bank expects lodging revenue to increase by 14% year-on-year, transportation ticket revenue to increase by 16% year-on-year, and vacation business revenue to reach RMB 0.72 billion. The bank expects net income to increase by 4.1% year-on-year to RMB 0.62 billion in the adjusted second quarter. With the fading of the high base effect, the bank expects the company's core OTA year-on-year growth rate in the second half of the year to be faster than the first half.

Summer tourism demand remains strong. According to the Civil Aviation Administration's forecast, the total number of summer passenger transport is expected to reach 1.33 billion, an increase of 10% from 2019. The demand for outbound tourism is strong, international airline capacity has significantly increased, and the international hotel supply chain has basically returned to the level of 2019. According to the big data of Air Travel Verticals, in the first half of the summer season, the number of inbound and outbound passenger transportation increased by about 70% year-on-year. With the rapid improvement of the supply side, the average prices of air tickets and hotels have gradually returned to normal, which also helps stimulate travel demand and is conducive to the sustainable growth of the industry.