Summary of China Travel & Leisure Industry Conference Call Industry Overview - The conference call focused on the **China travel and leisure industry**, particularly the performance of various companies in the sector during **3Q25** [1][2]. Key Points and Arguments General Market Trends - **Weaker Disposable Income**: Disposable income growth slowed to **4.5%** in 3Q25 from **5.1%** in 2Q25, impacting consumption trends which fell to **3.4%** from **5.2%** [2][3]. - **Domestic Air Traffic**: Increased by **3%** year-over-year (yoy) in 3Q25, down from **6%** in 2Q25 [2]. - **Outbound Travel**: Normalized to **15%** yoy growth, significantly lower than **34%** and **24%** in 1Q and 2Q25 respectively, as flight capacity returned to pre-pandemic levels [2]. Company Performance Highlights - **Songcheng**: Reported a **10%** yoy revenue decline due to competition and health issues [3]. - **CTGDF**: Revenue decline narrowed to flat yoy in 3Q25 from **-11%** and **-8%** in previous quarters, with a **14%** increase during the Golden Week holidays [3][6]. - **Jinjiang and BTG**: RevPar improved to declines of **-2%** and **-3%** yoy, respectively, compared to **-5%** and **-6%** in 2Q25 [3][6]. - **Chinese Airlines**: Benefited from lower fuel costs and traffic recovery, with domestic traffic up **13%** and international traffic up **11%** [6]. - **Shiji**: Revenue increased by **7%** yoy, but net loss widened to **Rmb12 million** due to higher impairment losses [6]. Macau Casino Performance - **Macau GGR**: Increased by **13%** yoy in 3Q25, up from **8%** in 2Q25, driven by factors such as the wealth effect from the stock market and reduced diversion of travelers to other destinations [7]. - **Sands China and MGM**: Results exceeded expectations, with Sands China expected to report **US$1.901 billion** and MGM **US$1.091 billion** in revenue for 3Q25 [7][10]. Samsonite Expectations - Expected to report a narrower revenue decline of **-2%** yoy in 3Q25, improved from **-5%** in 2Q25, driven by better performance in the US and Asia [7][10]. Hotel Operators - **H World and Atour**: Both expected to report better-than-expected results due to stabilizing hotel RevPar and robust retail sales growth [7][10]. - **RevPar Forecasts**: H World and Atour projected declines of **-0.4%** and **-3%** yoy, respectively, with revenue growth forecasts of **+7%** and **+35%** yoy [8][10]. OTA Performance - **Trip.com and Tongcheng**: Expected to meet revenue guidance with Trip.com projected to grow **+15%** and Tongcheng **+9%** [9][10]. - **Profit Margins**: Potential for improved profit margins due to favorable revenue mix shifts towards higher-margin businesses [9]. Other Important Insights - **Investor Focus**: Investors are expected to pay close attention to companies' forward guidance during their 3Q25 results to assess the sustainability of the recovery [2][10]. - **Valuation Considerations**: Despite recent performance, share prices of US-listed chain hotels are still trading below mid-cycle valuations, indicating potential for upward earnings revisions [10][11]. Conclusion - The China travel and leisure industry is showing signs of recovery, although challenges remain due to weaker consumer spending and competition. Companies like H World, Atour, and TCOM are positioned well for growth, while Macau casinos are benefiting from a rebound in gaming revenue. Investors should remain cautious but optimistic about the sector's trajectory moving forward.

Core Insights - Morgan Stanley reports that Macau's total gaming revenue for October reached 24 billion MOP, marking a year-on-year increase of 16% and a month-on-month increase of 32%, representing the strongest gaming performance in six years [1] - The recovery of mass and VIP gaming revenues has returned to approximately 125% and 35% of pre-pandemic levels, respectively [1] - Despite a lackluster performance during the Golden Week, October's gaming revenue exceeded market expectations by 11% to 12% [1] Revenue Breakdown - VIP and high-end mass gaming segments drove VIP business growth of 40% to 45%, while mass gaming grew by 12% to 13% [1] - The outlook for November suggests a more challenging base compared to October, with growth expected to slow to 8% to 10% [1] - Starting in December, the base will become more favorable, with anticipated gaming revenue growth accelerating to 15% to 17%, and at least low double-digit growth expected in the first quarter of next year [1] Stock Recommendations - The company is optimistic about Wynn Macau (01128) in the short term due to attractive valuation and high leverage [1] - In the medium term, Sands China (01928) is favored as there is an opportunity to increase dividends in February next year, with expectations of continued market share expansion in Q4 of this year [1] - Long-term prospects are positive for Galaxy Entertainment (00027), which combines value advantages with long-term growth potential [1] - All mentioned stocks are rated "Buy" with target prices set at HKD 8, HKD 24.5, and HKD 48.5, respectively [1]

Core Viewpoint - Morgan Stanley reports that Macau's total gaming revenue for October reached 24 billion MOP, representing a year-on-year increase of 16% and a month-on-month increase of 32%, marking the strongest gaming performance in six years, exceeding market expectations by 11% to 12% [1] Group 1: Short-term Outlook - The bank anticipates that the growth rate may slow to 8% to 10% in November due to a tougher comparison base compared to October [1] - Wynn Macau is viewed positively in the short term due to attractive valuation and high leverage [1] Group 2: Mid-term Outlook - Sands China is favored in the mid-term as there is an opportunity to increase dividends in February next year, and it is expected to continue expanding market share in Q4 of this year [1] Group 3: Long-term Outlook - Galaxy Entertainment is seen as a long-term investment opportunity due to its value advantage and long-term growth potential [1] - All mentioned stocks are rated as "Overweight" with target prices set at HKD 8, HKD 24.5, and HKD 48.5 respectively [1]

Core Viewpoint - The company reported a net revenue of $1.9 billion for Q3 2025, representing a year-on-year increase of 7.5%, and a net profit of $272 million, up 1.5% year-on-year, marking the first quarter of positive growth in net profit for the year [1][2] Financial Performance - The adjusted EBITDA for Q3 2025 was $601 million, reflecting a year-on-year increase of approximately 2.7% [1] - The total revenue for the Londoner property reached $686 million, a significant year-on-year increase of 49.1%, driven by the completion of its Phase II renovation [2] - The overall gaming win for the company in Q3 2025 was approximately $1.837 billion, recovering to 90.2% of the 2019 level, with a quarter-on-quarter increase of 9.0 percentage points [2] Market Position and Growth Potential - The company’s market share in Macau's gross gaming revenue (GGR) is expected to improve, supported by the high-end supply structure enhancement [2][3] - The high-end gaming tables are projected to contribute significantly to revenue and EBITDA, with the potential for increased income elasticity if high-end demand remains stable [3] - The company is expected to benefit from upcoming major events, such as the NBA China Games and various concerts, which are likely to support customer traffic in Q4 [3] Capital Expenditure and Dividend Policy - Capital expenditure in Macau for Q3 2025 was $99 million, showing a notable decrease from previous quarters during the renovation peak [2] - The company maintains a high dividend payout ratio, with expectations for continued improvement in dividend yield [3]

Core Insights - UBS report indicates that Sands China’s adjusted property EBITDA for Q3 is $601 million, representing a year-on-year increase of approximately 3% and a quarter-on-quarter increase of about 6% [1] - Excluding the impact of VIP room commissions, EBITDA stands at $599 million, aligning with UBS and market forecasts [1] - Sands China management anticipates that the momentum for market share growth will continue into Q4, driven by the reinvestment plan's product mix and the restructuring of the market distribution team [1] - UBS maintains a "Neutral" rating on Sands China with a target price of HKD 21.6 [1]

Core Viewpoint - Goldman Sachs reports that Sands China’s Q3 performance is robust, indicating a reversal of the declining trend in EBITDA and market share observed earlier this year [1] Financial Performance - EBITDA for the period reached $601 million, aligning with market expectations [1] - Total revenue increased by 7% quarter-on-quarter [1] Management Outlook - Management has become more confident compared to previous quarters, revealing that the total gaming revenue share has been increasing for several consecutive months since mid-year [1] - The expectation for Macau's total gaming revenue next year is projected to reach between $33 billion to $34 billion, slightly above Goldman Sachs' forecast [1] Investment Recommendation - Goldman Sachs has slightly adjusted its EBITDA forecasts for Sands China for 2025 to 2027 by 0% to 2% and raised the target price from HKD 23.6 to HKD 24.2, maintaining a "Buy" rating [1] - The recent stock price correction is viewed as a good buying opportunity, with attractive valuations expected to drive potential dividend growth and re-rating of the shares [1]

Core Viewpoint - UBS reported that Sands China’s adjusted property EBITDA for Q3 was $601 million, representing a year-on-year increase of approximately 3% and a quarter-on-quarter increase of about 6% [1] Financial Performance - The EBITDA, excluding the impact of VIP room commissions, would reach $599 million, aligning with UBS and market expectations of $596 million [1] - The management of Sands China anticipates that the momentum for market share growth will continue into Q4, primarily benefiting from the product mix provided by the reinvestment plan [1] Strategic Initiatives - The positive performance is attributed to the restructuring of the market distribution team, which includes adjustments to personnel structure and staffing [1] Analyst Rating - UBS maintains a "Neutral" rating on Sands China with a target price of HKD 21.6 [1]

Group 1 - Morgan Stanley forecasts a 9% growth in Sands China’s free cash flow to equity (FCFE) for next year [1] - Target price raised by 10% to HKD 23, maintaining an "Overweight" rating [1] - EBITDA forecasts for 2025, 2026, and 2027 increased by 1%, 6%, and 8% respectively, with earnings per share estimates rising by 1%, 12%, and 14% during the same period [1]

Core Viewpoint - Morgan Stanley forecasts a 9% growth in Free Cash Flow to Equity (FCFE) for Sands China (01928) next year and raises the target price for the stock by 10%, from HKD 21 to HKD 23, while maintaining an "Overweight" rating [1] Financial Projections - Morgan Stanley has increased its EBITDA forecasts for Sands China for the years 2025 to 2027 by 1%, 6%, and 8% respectively [1] - Consequently, the earnings per share estimates for the same period have been raised by 1%, 12%, and 14% respectively [1]

Group 1 - Morgan Stanley forecasts a 9% growth in Free Cash Flow to Equity (FCFE) for Sands China (01928) next year [1] - The target price for Sands China has been raised by 10%, from HKD 21 to HKD 23, while maintaining an "Overweight" rating [1] - EBITDA forecasts for Sands China have been increased by 1%, 6%, and 8% for the years 2025 to 2027, leading to per-share earnings estimates rising by 1%, 12%, and 14% respectively [1]