GALAXY ENT(US:GXYYY) Yin He Zheng Quan·2024-07-01 04:37Investment Rating - The report maintains a "Buy" rating for companies such as Galaxy, TCOM, H World, and COSCO, indicating a positive outlook for these stocks in the travel and leisure sector [6][7][8]. Core Insights - The summer forward booking data suggests healthy travel volumes but indicates weak pricing trends, with airfares down approximately 30% year-over-year [3][4]. - Outbound travel from China has seen a decline to 64-65% of FY19 levels recently, primarily due to weaker trends in Macau and Hong Kong, attributed to poor weather [2][3]. - Chinese airlines are recovering faster than international carriers, with international traffic back to around 75% of pre-pandemic levels, although airfares are still soft [3][4]. - The report highlights a mixed outlook for the leisure and travel sectors, with airlines expecting weaker-than-expected airfares and hotels facing volatility in domestic revenue per available room (RevPAR) [5][6]. - The report notes that the pullback in travel stock prices is driven by concerns over domestic travel slowdowns and pricing pressures, particularly in the context of tough year-over-year comparisons [6][7]. Summary by Category Lodging - Jinjiang's domestic RevPAR showed volatility, remaining flat year-over-year, while new hotel additions are on track to exceed guidance [9]. - The outlook for the summer season is cautiously optimistic, with expectations of high base effects impacting performance [9]. Online Travel Agencies (OTA) - TCOM and Tongcheng maintain steady guidance for 2Q24, with TCOM seeing potential profit margin upside due to disciplined spending [9]. - Both companies are optimistic about overseas business contributions, despite Tongcheng facing margin pressure from new investments [9]. Macau Gaming - Recent trends show a softening in gross gaming revenue (GGR), with operators expecting steady operating expenses and gradual rollout of smart tables [9]. - The GGR market share dynamics indicate that Galaxy and MLCO gained shares at the expense of Wynn and MGM [9]. Airlines - Domestic air traffic is projected to reach 130% of 2019 levels, but airfares are expected to remain flat compared to 2019 [9]. - International routes are seeing a decline in forward booking load factors, attributed to higher airfares [9]. Airports - DFS spending per head at Shenzhen Airport has decreased significantly, attributed to increased competition from online channels [9]. Air Freight & Shipping - Strong demand is expected to sustain through at least 3Q24, with low visibility for 4Q [9]. - Port operators are benefiting from robust export demand, with throughput growth of 9% year-to-date [9]. Travel Luggage - The outlook for travel luggage demand is cautious, with slower-than-expected recovery in outbound travel, particularly to long-haul destinations [9]. Duty-Free Sales - Hainan's duty-free sales have remained weak, with significant declines in high-value product categories due to competition from overseas [13][14]. Overall Market Trends - The report forecasts that domestic and international air traffic will recover to 112% and 83% of FY19 levels, respectively, in FY24 [24][25]. - The overall sentiment in the travel and leisure sector remains mixed, with some segments showing resilience while others face challenges [9][10].