After entering mid-April, the total market value of Tongcheng Travel (00780) has basically stabilized at over HK$50 billion (approximately RMB 46.682 billion), and reached a record high on April 15. The market capitalization reached a high of HK$51,189 billion on that day.

Since the beginning of 2024, the stock price of Tongcheng Travel has entered an upward cycle, driven by the continued strengthening of macroeconomic expectations and domestic and foreign forces to repair its own valuation, with a cumulative increase of more than 50% during the year, showing strong resilience compared to the Hong Kong stock market and peers.

The start of the domestic travel market exceeded expectations, and the continuous emergence of “influencer” destinations boosted the popularity of travel consumption

From the beginning of 2024 to mid-April, the benefits of the tourism industry continued to be unleashed during various holidays such as New Year's Day, Spring Festival Golden Week, and Qingming. “Influencer” destinations represented by Tianshui and Kaifeng also set off local tourism consumption fever. Among them, the popularity of Tianshui spicy hot pot has significantly boosted the local tourism industry. In the first quarter, Tianshui City's tourist reception volume and tourism revenue both increased by more than 40% year-on-year (data from the Tianshui Municipal Administration of Culture and Tourism). After becoming an influencer destination, Kaifeng also reaped the performance of travel spending that exceeded expectations. According to data released by relevant departments in Kaifeng, during the Qingming holiday this year, Kaifeng's tourist reception volume and tourism revenue increased by 28.96% and 51.8%, respectively, compared to 2023, and increased by 134.2% and 138.8%, respectively, compared to 2019.

The influencer effect of the destination leveled off the fluctuation in passenger traffic during the non-holiday period to a certain extent, and continued to create many travel consumption hotspots. Leading platform companies such as Tongcheng Travel have become one of the main beneficiaries. According to the data, in the week after Tianshui Spicy Hot Pot became popular on the Internet, the popularity of weekly travel searches related to Tianshui in Gansu on the Tongcheng Travel Platform increased by 186%. After Kaifeng became an emerging influencer destination due to “Grandma Wang's media,” the popularity of weekly travel searches for scenic spots related to Kaifeng on the Tongcheng travel platform increased more than 7 times month-on-month, and the number of ticket reservations increased more than 2 times month-on-month.

The holiday travel market has generally started well since the beginning of the year. In particular, the performance during the Spring Festival Golden Week and the Qingming holiday season was significantly better than expected. According to relevant statistics released by the Ministry of Culture and Tourism, the number of visitors on New Year's Day, Spring Festival, and Qingming in 2024 was 135 million, 474 million, and 119 million, respectively. Compared with the same period in 2019, the scale of tourism revenue also maintained positive growth compared to 2019, and overall continued the growth trend since the “May 1st” holiday in 2023. In particular, the average spending level of visitors during the Qingming holiday period exceeded the same period in 2019, the highest level since 2020, fully demonstrating the strong resilience of domestic travel consumption demand.

As an important point in the travel market for half a year, the “report card” for the 2024 Spring Festival travel season is also very impressive. According to statistics released by the Ministry of Transport, during the 2024 Spring Festival travel season, railways across the country sent a total of 484 million passengers, an increase of 17% over the same period in 2019, with an average of 1.089 million passengers per day, a record high; the passenger volume of civil aviation during the Spring Festival travel season exceeded 83.449 million, an increase of 51.1% year-on-year, and an increase of 14.5% over the same period in 2019. Furthermore, with the accelerated resumption of international flights and the rapid expansion of China's “visa-free circle of friends,” the inbound and outbound travel market is also recovering at an accelerated pace. According to statistics released by the National Civil Aviation Administration, the passenger volume of international civil aviation flights in February this year was 4.892 million, which has recovered to more than 80% of the same period in 2019. In March, capacity supply for international routes recovered at an accelerated pace, providing strong support for the recovery of the international travel market in the first half of the year. On April 15, Air China, China Southern Airlines, Juneyao Airlines, Spring Airlines, etc. revealed operating data for March. Overall capacity picked up further, and the capacity of international flights generally doubled and rebounded.

After repeated verification of key data windows such as New Year's Day, Spring Festival, Qingming holiday, and Spring Festival travel, the capital market's expectations for the domestic travel sector continued to improve. From the beginning of January this year to around the Ching Ming Festival, the A-share travel sector rose by more than 40%, while the stock prices of leading platforms such as Tongcheng Travel generally increased by more than 50%.

The core indicators reached a record high and paid dividends for the first time, highlighting the long-term investment value of Tongcheng Travel

In an overall situation where macroeconomic expectations continue to improve, Tongcheng Travel's beautiful 2023 earnings report became the biggest internal factor supporting the continued rise in its stock price. According to financial data, Tongcheng Travel achieved revenue of 11.896 billion yuan in 2023, an increase of 80.7% over the previous year, and an increase of 60.7% over 2019, reaching a record high. Adjusted net profit was $2.2 billion, up 240.3% year on year and 42.4% higher than the same period in 2019. In terms of core business, revenue from the lodging business was 3.9 billion yuan, up 61.5% year on year, up 65.4% from the same period in 2019; revenue from transportation business was 6.03 billion, up 78.5% year on year, up 33.5% from the same period in 2019.

In 2023, Tongcheng Travel's operating efficiency was also greatly improved. On the one hand, the transaction volume reached a record high of 241.5 billion yuan, an increase of 96.8% year-on-year, and an increase of 45.4% over the same period in 2019. On the other hand, there is a significant increase in the number of paying users. Among them, MPU reached 41.3 million, up 39.1% year on year, up 53.5% from the same period in 2019, and the APU (12 months ending December 31, 2023) was 235 million, up 25.2% year on year, up 54% from the same period in 2019.

With revenue and profit and other indicators reaching record highs, Tongcheng Travel announced its first dividend payment plan since listing. Strong performance combined with the first dividend payment can be described as a strong internal driving force for Tongcheng Travel's stock price to continue to rise. Since March 2024, institutions such as Damo, Goldman Sachs, Bank of China International, and BOC International have raised their target prices for the same trip and are looking forward positively to their future trends. Institutional investors are optimistic about Tongcheng Travel's future growth prospects, mainly from two aspects: first, the domestic travel market started more than expected and the demand side was resilient; second, Tongcheng Travel's core financial indicators showed strong performance, especially the potential for continued growth saved by operational efficiency and diversified business structures.

Demand for travel consumption during the “May 1st” holiday is strong, and the travel market is expected to strengthen in the first half of the year

After entering mid-late April, travel itinerary reservations for the “May 1st” holiday picked up rapidly. Train tickets were once again “hard to find”, and ticket prices for popular tourist destinations also rose markedly. According to the “May Day” related data released by Tongcheng Travel, the popularity of “May Day” related travel searches increased more than 7 times month-on-month in the week after the Qingming holiday. The medium- and long-term travel and outbound travel markets grew rapidly, and the travel distance and number of travel days for tourists increased significantly. Judging from data released by various sources, the “May 1st” performance during the first half of the year is likely to continue the good trend of the Spring Festival and Qingming Festival, and the holiday travel market in the first half of the year is likely to reap good results.

Holiday travel is an important “window” for the industry and investors to observe the overall performance of the travel market. The high popularity of travel consumption during the “May 1st” holiday further strengthened everyone's confidence in the travel market in the first half of the year. This can also be seen from the trend in the travel sector after Qingming: in the two weeks after the Qingming holiday, the travel sector of A-shares and Hong Kong stocks both rose by varying degrees. Furthermore, in the face of recent fluctuations in the capital market, the travel sector of the Hong Kong stock market is one of the relatively “fall-resistant” sectors. The stock price performance of leading platform companies such as Tongcheng Travel is generally stable and has basically maintained the previous increase. This also proves from the side that capital is firmly optimistic about the future prospects of the domestic tourism industry.