The Zhitong Finance App learned that the Bank of China Securities released a research report saying that the 23Q3 social service sector as a whole achieved a relatively good recovery in performance under the influence of the peak summer travel season, and that the performance of multiple standards in the travel industry chain achieved high growth. 23Q3 continued the recovery trend in the first half of the year. Looking ahead to the whole year, Q4 is mostly a low season for cultural tourism travel. The performance of Q3 may have preliminarily determined the general recovery of performance throughout the year. In the long run, the bank believes that the further release of industry demand and supply has brought about a continuous increase in the operating performance of companies in the social service industry, maintaining the industry's “better than the market” rating.

The views of Bank of China Securities are as follows:

The 23Q3 performance continued to recover, and the peak summer season catalyzed accelerated growth in performance. 23Q1-3 achieved total revenue of 98.405 billion yuan, a year-on-year increase of 29.68%, and recovered to 94.36% in the same period in '19; driven by rapid demand growth, net profit of 5.984 billion yuan was achieved, reversing losses to 6.288 billion yuan over the same period last year. 23Q3 achieved total revenue of 37.448 billion yuan, up 28.36% year on year, and recovered to 96.44% in the same period in '19; realized net profit of 3.882 billion yuan, up 107.18% year on year, and recovered to 97.17% in the same period in '19. Catalyzed by the peak summer season in the third quarter, tourism demand led the recovery of the industry, the tourist base further returned to normal, the sector achieved a good recovery, and the recovery expectations were implemented in stages. Among them, tourism, scenic spots, hotels, restaurants, etc. related to the travel chain increased significantly over the same period last year.

The holding ratio declined month-on-month and is still at a historically low level. Among Shenwan's 31 tier-1 industries, the social service sector's heavy holdings of funds reached 506 house/+1; the total market value of the fund's heavy holdings was 16.24 billion yuan/-4.66% month-on-month; the market value of the stock holdings accounted for 0.27% of the fund's stock investment by 0.27% /-0.01pct month-on-month. There was a slight month-on-month increase in the holdings of tax exemptions and human services in heavy stock holdings, while holdings in the hotel and travel sectors were reduced as a whole.

Duty-free: During the Q3 and National Day holidays, passenger traffic in Hainan grew rapidly, while duty-free sales on the outlying islands were slightly under pressure. The level of customer orders declined month-on-month. Follow-up recommendations focus on the driving effect of luxury entry on leading companies in China; continued restoration of the cross-border travel supply chain is expected to accelerate the recovery of airport duty-free channels, and the introduction of a new duty-free policy in the city is also expected to accelerate.

Hotels: Benefiting from the recovery of the travel chain and the diversification of customer base attributes, revenue and profit have achieved good growth. Influenced by the 23Q3 peak season, many hotel RevPAR has surpassed the same period in '19. Looking forward to the future, various hotels are also actively deploying high-end transformation in the context of continuous store expansion. The increase in room prices after the upgrade is expected to drive a further increase in business performance, and there is still room for recovery in the current occupancy rate.

Catering: Food and beverage consumption continues to pick up, and investment and consumption tend to be rational. Due to its own high-frequency offline consumption attributes, the performance of restaurants increased significantly after the travel scenario was further repaired, and expectations of a recovery in performance were fulfilled. In the current environment, consumers pay more attention to the price/quality ratio, and their investments tend to be more rational.

Tourism & attractions: The peak summer season boosts passenger flow growth. The domestic travel market continues to be hot. The recovery of passenger flow in Q3 many scenic spots exceeded pre-epidemic levels, and the number of visitors received by some scenic spots and reached record levels of profit. The logic of restoration of scenic spots has basically been implemented, and the subsequent focus will return to the endogenous growth of enterprises.

Human service: There is still pressure on the job market, and the willingness to recruit still needs time to be repaired. The demand driven by enterprises going overseas is worth paying attention to. We look forward to a recovery in industry confidence dominated by favorable factors such as subsequent policies.

Exhibition & Event Performances: 1) Exhibitions: The domestic and international exhibition markets were booming in the first three quarters, and the performance of related companies also achieved rapid growth. It is expected that the recovery of the global exhibition market will accelerate next year. 2) Performance: Demand for summer entertainment performances is hot. Cultural tourism integration and in-depth experience demand have become new trends after the epidemic, promoting the accelerated release of the performance of enterprises in related industry chains.

Investment advice:

Recommended tourist attractions such as Huangshan Tourism (600054.SH), Song Cheng Performing Arts (300144.SZ), Tianmu Lake (603136.SH), etc.;

Recommended duty-free sections in China (601888.SH) and Wangfujing (600859.SH);

We recommend Junting Hotel (301073.SZ), Jin Jiang Hotel (600754.SH), and First Trip Hotel (600258.SH) in the hotel sector;

Cree International (300662.SZ), which recommended the human services sector;

Tongqinglou (605108.SH) is recommended for the catering sector;

We recommend Yuyuan Garden Co., Ltd. (600655.SH) in the retail sector and Miao Exhibition (300795.SZ) in the exhibition sector; recommend Fengshang Culture (300860.SZ) and Dafeng Industrial (603081.SH) in the performing arts industry chain.

Risk warning: Demand recovery falls short of expectations, industry confidence recovery falls short of expectations, and policy implementation and implementation falls short of expectations.