The overall performance of the travel chain company in the first half of the year was relatively flat, but the leading operations with the advantage of online platform traffic still significantly outperformed the industry's large cap. At the same time, the high-quality leading chains with brand and membership traffic advantages, and efficient operations, still achieved good alpha growth.
China International Securities released a research report stating that the overall performance of the travel chain companies in the first half of 2024 was relatively flat, but the leading operations with the advantage of online platform traffic still significantly outperformed the industry's large cap. At the moment, it is suggested to allocate Ctrip Group-S (09961), Meituan-W (03690), Tongcheng Travel (00780), H World Group-S (01179), Yum China (09987), Haidilao (06862), Anhui Jiuhuashan Tourism Development (603199.SH), Emei Shan Tourism (000888.SZ), Changbai Mountain Tourism (603099.SH), Jin Jiang International Hotels, and others in the economic environment and market style.
Industry: Domestic travel in the first half of the year saw stable growth, and inbound and outbound tourist flows experienced strong recovery. In the first half of the year, the number of domestic travelers increased by 14%, with a 19% increase in revenue, demonstrating stable growth. In the first half of the year, the number of inbound and outbound travelers increased by 71%, returning to 83% of 2019 levels; the scale of international flight passenger flows in the first half of the year recovered to 80% of 2019 levels, a 254% increase; strong recovery of inbound and outbound tourist flows.
Sector: Overall operation of A-share travel chain companies in the first half of the year was flat, with some overseas listed leading travel chains outperforming due to the advantage of traffic (membership). In the first half of the year, A-share travel chain companies saw a year-on-year decrease in revenue, net profit, and adjusted performance of 2%, 7%, and 11% respectively, with a 6%, 18%, and 29% decline in revenue, net profit, and adjusted performance in the second quarter, overall remaining flat. An overview of the performance of A-share and overseas listed leading travel chains in the first half of the year are as follows: leading online travel or local service platform chains performed well, leveraging the advantage of online traffic and operational efficiency; some scenic area chains demonstrated relative resilience in passenger flow and revenue; outbound travel and entertainment saw recovery growth; hotel chains recorded stable or robust growth; the majority of sectors such as duty-free, dining, and comprehensive experienced pressure, with only some strong brand dining chains performing well. Social services overall lagged behind the large cap from January to August, with only some leading scenic area and OTA chains experiencing structural market trends.
Leading online traffic advantage: The accelerated penetration of online traffic and increased bargaining power have boosted the operational efficiency of leading chains, leading to alpha growth. Despite facing certain pressure from a high base in the first half of the year, the leading online travel (OTA) and local life service chains still performed well: the accelerated online penetration drove better booking volumes than the large cap, and under reduced competition and increased bargaining power, the realization rate (commission rate) is expected to increase year-on-year. Meituan, Ctrip, and Tongcheng's revenue in Q2 2024 increased by 21%, 14%, and 48% (OTA business +23%), respectively, with good revenue growth; cost control improvement, increased operational efficiency accelerated profit growth, with Meituan, Ctrip, and Tongcheng posting adjusted performance growth of 78%, 45%, and 11% in Q2 2024, demonstrating overall strong performance.
Hotels: The industry's RevPAR was under pressure in the second quarter, but leading chains still recorded stable growth in adjusted performance, aided by scale expansion and operational efficiency. The industry's RevPAR was under pressure, declining by approximately 10% in Q2 2024, while the leading RevPAR continued to outperform the industry; and with the expansion of franchises and improved operations, leading hotel chains saw a 15-32% year-on-year growth in adjusted performance in Q2 2024, overall performing well. H World, Atour, and other brand-dominant chains with traffic advantage have increased the full-year store opening guidance, confirming alpha. In addition, leading hotel chains continue to enjoy good cash flow under the dominant growth of franchises, with ongoing expectations for long-term capital return.
Outbound travel experiences recovery growth, with some natural scenic areas demonstrating good defensive capabilities, while dining shows significant differentiation. Most outbound travel chains experienced recovery growth on a low base; scenic areas: the passenger flow and revenue of famous mountains and rivers show resilience, with varying performance on the profit end, with Changbai Mountain, Anhui Jiuhuashan Tourism Development performing relatively well, and overall stability at Emei Shan Tourism. Dining chains as a whole are under pressure, with only Yum China and Haidilao relatively performing well.
Risk Warning: Systemic risks such as macroeconomic and political factors, intensified industry competition, policy risks, underperformance of heavy asset new projects compared to expectations, and other risks.
