HSBC Research published a report indicating that China's Ministry of Transportation expects this year's Spring Festival period (January 14 to February 22) to see a total passenger flow increase of 7% year-on-year, reaching 9 billion passenger trips, setting a new historical record. However, TONGCHENGTRAVEL (09961.HK) pointed out that this year the ticket prices are relatively weak, with over 30% of domestic routes experiencing a year-on-year decline in ticket prices.

HSBC Research anticipates that while Airlines will continue to be hindered by rigid cost structures, OTAs (Online Travel Agents) can better monetize consumer spending through combination conversions. On the other hand, the bank expects domestic ticket prices to remain weak and to become even more apparent after the peak season, which should drag down Airlines' profitability, thereby affecting their valuations.

The bank reaffirmed TONGCHENGTRAVEL's 'Buy' rating, raising the Target Price from 585 yuan to 608.4 yuan, bullish on its leading position in the domestic and outbound tourism markets, as well as its rapidly expanding international footprint; TONGCHENGTRAVEL (00780.HK) has robust growth prospects in the domestic and outbound tourism markets, and its shareholder returns are continuously improving, thus upgrading the rating from 'Hold' to 'Buy', raising the Target Price from 19 yuan to 21 yuan.