According to a HSBC research report, this year's nine-day Lunar New Year holiday in mainland China was the longest on record. Official data showed that during this period, domestic trips reached 596 million, with total tourism spending exceeding RMB 800 billion (hereinafter the same), and average per capita spending at RMB 1,348, which remained roughly flat compared to last year but was 8.9% higher than in 2019.
During this period, daily average air passenger volume increased by 7.3%, while air capacity grew by 4.6%, reflecting further improvement in seat occupancy rates. Domestic and international route capacities grew by 4.6% and 3.3%, respectively. Driven by an increase in long-haul travel and improved seat occupancy rates, the average airfare for domestic routes reached RMB 1,027, up 6.6% year-on-year and 7.6% higher than in 2019.
The bank assigned a 'Buy' rating to Trip.com (TCOM.US) with a target price of $90, citing its benefit from long-haul and cross-border travel growth. Tujia (00780.HK) also received a 'Buy' rating with a target price of HKD 26, based on its robust growth prospects in lower-tier domestic markets and margin recovery.
Regarding airline stocks, the bank assigned a 'Reduce' rating to Air China (00753.HK) and China Southern Airlines (01055.HK) due to their share prices having risen between 2% and 26% over the past three months, resulting in relatively expensive valuations. Additionally, normalization of ticket prices after the holidays and rising oil prices could present headwinds. The respective target prices are set at HKD 4.3 and HKD 3.3.
