Market review last week:
Last week (April 25-april 29), the social service sector (Shenwan) fell by 2.37%, the Shanghai Composite Index fell by 1.29%, the Shenzhen Component Index fell by 0.27%, and the Shanghai and Shenzhen 300 rose by 0.07%. The social service sector lost 1.07 percentage points to the Shanghai composite index last week, ranking 21st among the weekly rises and falls of Shenwan’s 34 primary sub industries.
Core view:
Affected by the scattered recurrence of the epidemic in some areas of China, the performance of civil aviation passenger flow and travel during the May Day holiday reappeared in the doldrums. According to the production data of March disclosed at the second press conference of the Civil Aviation Administration in April on April 28, the national passenger transport volume reached 15.37 million in March, a year-on-year decrease of 67.9%. Among them, the passenger volume of Air China, China Eastern Airlines and China Southern Airlines decreased by 70.2% / 70.9% / 63.6% year-on-year respectively. During the five-day “May Day” holiday in 2022, 160 million people traveled in China, a year-on-year decrease of 30.2%, and recovered to 66.8% in the same period before the epidemic according to comparable standards; China’s tourism revenue reached 64.68 billion yuan, a year-on-year decrease of 42.9%, returning to 44.0% in the same period before the epidemic.
We believe that the impact of the epidemic has made the passenger flow performance sluggish again, and the travel during the May Day holiday has been negatively affected, which has a further impact on the consumption scenes of sub sectors of the social service industry, such as duty-free, hotels and catering. However, the short-term impact does not change the overall long-term growth logic of the industry. From the tax-free sector, with the continuous relaxation of China’s outlying islands tax-free policy and the construction of Hainan free trade port, China’s outlying islands tax-free industry is on the track of rapid growth. The short-term impact of the epidemic has limited the off-line consumer flow of duty-free on outlying islands. However, in the long run, major enterprises continue to make efforts to expand categories and upgrade product structure, focusing on the overall improvement of experience and service quality. In the future, there is broad room for improvement and sufficient power in terms of shopping conversion rate and customer unit price. With the continuous improvement of the epidemic situation in the future, major tax-free enterprises are expected to gradually reduce discounts, and the proportion of offline consumption may rise rapidly, boosting the overall profitability of the industry. On April 25, the general office of the State Council issued the opinions on further releasing consumption potential and promoting sustainable recovery of consumption, proposing to improve the policy of duty-free shops in the city and plan to build a number of duty-free shops in the city with Chinese characteristics. The deregulation of the policy of duty-free shops in the city is expected to rise again. In the future, duty-free shops in the city are expected to become a new force in China’s duty-free industry and help the industry show more brilliant performance as a whole.
Announcement and industry information:
Jiangsu Tianmu Lake Tourism Co.Ltd(603136) : the company plans to use idle raised funds to temporarily supplement the company’s working capital for production and operation related to the company’s main business, with an amount of no more than RMB 80 million and a service life of no more than 12 months from the date of deliberation and approval by the board of directors Btg Hotels (Group) Co.Ltd(600258) : on April 27, 2022, the company issued the second phase of ultra short-term financing bonds in 2022. The actual issuance amount of this phase is 300 million yuan, the term is 180 days, the issuance price is 100 yuan per face value, and the issuance interest rate is 2.40%. The raised funds have arrived in the account on April 28, 2022 Hainan Dadonghai Tourism Centre (Holdings) Co.Ltd(000613) : during the audit in 2021, it was found that the room and meal expenses and moon cake income without commercial substantive transactions were reduced, the amount of overdue consumption cards of related units listed in operating income was reduced, and accounting errors were corrected Emei Shan Tourism Company Limited(000888) : the impairment test was conducted on various receivables, goodwill and other assets within the scope of the company’s consolidated statements in 2021, and the impairment provision was made for the assets with impairment signs according to the impairment test results. After the preliminary calculation of the asset scope and estimated amount of the impairment loss, the company plans to withdraw the credit impairment loss of accounts receivable and other receivables with impairment signs of RMB 150301 million in 2021.
Investment suggestions:
Duty free industry: we are optimistic about the relatively clear recovery trend of the duty-free industry supported by the recovery of passenger flow. The related targets are China Tourism Group Duty Free Corporation Limited(601888) , which is expected to show a recovery in revenue and profit after the recovery of passenger flow. Hotel Industry: the upgrading of industry structure and chain trend are obvious, the brand, scale and management advantages of leading hotel groups are obvious, and there is good growth space in the future. Related targets include leading enterprises Shanghai Jin Jiang International Hotels Co.Ltd(600754) , Btg Hotels (Group) Co.Ltd(600258) , Huazhu group. Catering and Tourism: the trend of industry chain is obvious, and attention is paid to the expansion and business performance of leading catering enterprises. The relevant targets include seabed fishing, sipping and sipping.
Risk tips:
Repeated epidemic impact; Macroeconomic fluctuations; Policy supervision risk.
