The Zhitong Finance App learned that Guotai Junan released a research report saying that airlines in the transportation sector are optimistic for the Spring Festival travel season, and it is expected that high-speed will benefit market preferences. Recently, airline companies continued to reduce losses sharply year-on-year during the off-season. Domestic flight increases are expected to be limited during the 2025 Spring Festival travel season, and the industry expects supply and demand for the Spring Festival travel season to be optimistic. Considering that oil transportation market expectations have fallen to a low level, it suggests that future oil supply and demand are still expected to be better than expected, and undervaluation increases dividend rates. High dividends on highways continue to have stable cash flow and will continue to benefit from market risk appetite. Future market preferences will continue to dominate revenue space.

Guotai Junan's main views are as follows:

Aviation: Domestic flight increases during the Spring Festival travel season are limited, and the industry's pre-sale strategy is active

Recently, airline revenue management strategies have begun to change positively. Domestic passenger occupancy rates have returned to normal levels during the off-season, and domestic ticket prices have increased by about 10% month-on-month. It is estimated that domestic fuel deduction ticket prices increased or reached 30% year on year in December, and airlines continued to reduce losses sharply year over year during the off-season. Domestic flight increases are expected to be limited during the 2025 Spring Festival travel season, and the additional flights will mainly be on international routes such as Japan, South Korea, and Southeast Asia. The industry expects supply and demand for the Spring Festival travel season to be optimistic. Currently, pre-sale progress is faster than the same period of the lunar calendar in 2024. Pre-sale ticket prices will continue the same period strategy in 2024, and active revenue management will help peak season performance.

On December 31, 2024, railways will open pre-sales for the Spring Festival travel season. After that, airline pre-sale trends and strategies for the Spring Festival travel season will be more indicative. Reiterating the strong logic of aviation, the recovery trend of supply and demand was determined in 2025. Considering the marketization of ticket prices and the slowdown in fleet growth, an increase in the profit center will begin.

Oil Transportation: Market expectations fall back to a low level, and undervaluation increases dividend rates

The Middle East-China VLCC TCE rose slightly to 0.02 million US dollars last week, and the MR TCE for the New Zealand and Australia route remained low at 0.014 million dollars. The 2024Q4 peak season was not strong, and oil transportation companies' single-quarter performance was under year-on-year pressure, and the market already had full expectations. Considering that market expectations have fallen back to a low level, it suggests that future oil supply and demand are still expected to be better than expected, and there are options for falling oil prices. The world will enter a cycle of increasing crude oil production in the next two years, and it is reiterated that increased crude oil production will benefit oil transportation demand. Reminder that if oil prices drop sharply, it may stimulate stock replenishment or even floating warehouses to stock up on oil. Dividends from China Ship Leasing and COSCO Marine Energy have been determined.

Expressway: High dividends, stable cash flow, continuing to benefit market risk appetite

Highways are preferred for transportation with high dividends. Over the past three years, they have been favored by the A-share market and have had significant excess returns. Traffic in the highway industry declined year-on-year in the first half of 2024 due to freezing rain and snow, an increase in the number of free days, and a high base. The year-on-year trend did not improve as planned in the second half of the year due to fluctuations in demand. The market fully anticipates industry trends. It is expected that high dividends will continue to be high and cash flow will continue to benefit from market risk appetite. It suggests that future market preferences will continue to dominate earnings space.

It is recommended to be optimistic about two types of targets: 1) The country selects and acquires shares in high-quality road products. Traffic is in line with industry trends, but additional profits are formed through epitaxial acquisitions to guarantee performance resilience. 2) Location advantage is clearly the target. Excluding the impact of renovation and expansion, the location advantage guarantees that traffic flow still has positive year-on-year growth, and resilience is superior to the industry. In the future, industry policies are expected to be optimized, or the return on new building/renovation and expansion will be raised to a reasonable level by extending the charging period, etc.

Strategy: Maintain the increase in aviation oil transportation

1) Aviation: Focus on super cycle long logic. Recently, it has been observed that the airline's profit strategy is beginning to change positively, and losses are expected to be drastically reduced during the off-season. Domestic increases during the Spring Festival travel season are limited. The industry's supply and demand expectations are optimistic and the pre-sale strategy is positive. The performance can be expected during the peak season of falling oil prices.

2) Oil transportation: Market expectations fell back to a low level, and undervaluation increased dividends. Future supply and demand may be better than expected, and there are options for falling oil prices.

3) High speed: The market fully anticipates industry trends. High dividends are expected to continue to have stable cash flow and continue to benefit market risk appetite.

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