Summary of Key Points from the Conference Call Industry and Company Overview - **Industry**: Inbound Travel in China, specifically focusing on Beijing's tourism data post-COVID - **Company**: Morgan Stanley Asia Limited, with analysts involved in the research Core Insights and Arguments 1. **Growth Drivers**: - Inbound visitation growth is driven by emerging markets, which are expected to remain the major growth driver [7] - Visa-free coverage expansion is a significant factor, with Europe recovering to above pre-COVID levels despite soft visitation from the UK, France, and Germany [7] 2. **Tourist Breakdown**: - In 2019, 76% of foreign visitors to China were from Asia, 13% from Europe, 8% from the Americas, 2% from Oceania, and 1% from Africa [10] - In 1H25, the breakdown of foreign tourists in Beijing showed a shift, with Asia accounting for 35%, Europe 31%, Americas 26%, Oceania 5%, and Africa 3% [13] 3. **Recovery Status**: - Different regions show varying recovery statuses compared to 2019: - **Fully Recovered**: Asia, Europe, Oceania, and Africa with growth rates over 30% YoY in 1H25 - **Strong Recovery**: Korea and Canada with growth rates over 40% YoY - **Sluggish Recovery**: USA, Japan, India, UK, France, and Germany with growth rates below 20% YoY [7] 4. **Visitor Trends**: - The acceleration of US visitation is noted as encouraging despite trade frictions and geopolitical tensions affecting overall inbound visitation [2] - Emerging markets are expected to continue driving growth, with specific countries like Vietnam, Mongolia, and Indonesia showing significant increases in tourist numbers [19] 5. **Statistical Adjustments**: - Beijing's post-COVID tourist statistics are not fully comparable with pre-COVID levels due to the inclusion of same-day travelers and the exclusion of certain visitor categories [7] Additional Important Insights - **Geopolitical Impact**: Trade frictions and geopolitical tensions have negatively impacted inbound visitation, but the recovery of US visitation is a positive sign [2] - **Data Limitations**: The analysis relies on Beijing's data due to the lack of national-level international visitor breakdown post-COVID, which may limit the comprehensiveness of the insights [1] - **Future Outlook**: The trends observed suggest a potential for continued growth in inbound tourism, particularly from emerging markets and regions with expanding visa-free access [7] This summary encapsulates the key points discussed in the conference call regarding the inbound travel industry in China, particularly focusing on the recovery trends and statistical insights from Beijing's tourism data.

Financial Performance - Ocean Transportation revenue for the second quarter of 2025 decreased by 2.1% year-over-year to $675.6 million[49] - Logistics revenue for the second quarter of 2025 decreased by 1.7% year-over-year to $154.9 million[49] - Net income for the second quarter of 2025 decreased by 16.3% year-over-year to $94.7 million[49] - The terminal joint venture contribution was $7.3 million, a year-over-year increase of $6.1 million[42] - Approximately 0.9 million shares were repurchased in 2Q25 for a total cost of $93.7 million[57] Volume Trends - Hawaii container volume increased by 2.6% year-over-year due to higher general demand[8] - China container volume decreased by 14.6% year-over-year primarily due to market uncertainty and tariffs[22] - Guam container volume decreased by 2.2% year-over-year[25] - Alaska container volume increased by 0.9% year-over-year[35] Outlook - The company expects full year 2025 Ocean Transportation operating income to be moderately lower than the $500.9 million achieved in 2024[62] - The company expects full year 2025 Logistics operating income to be comparable to the $50.4 million achieved in 2024[62]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies Core Insights - The China Export Tracker focuses on the dynamics of China exports to the US amid tariff escalations, analyzing data from 48 corporates representing nearly 70% of China export value to the US [2][41] - Export orders from the US to Chinese corporates have stabilized at 92% of pre-tariff levels as of April 28, 2025, showing a slight recovery from 90% in mid-April [3][12] - The report indicates that nearly 20% of corporates have seen improvements in exports to non-US regions, particularly in sectors like pet treats and construction machinery [4] - China shipments and production are in substantial decline, with 35% of US orders being filled from China and 57% from ex-China facilities [11][17] - Corporates report that 40% of their products are experiencing high impacts on shipments to the US, with a significant portion seeing declines of over 50% [12][18] Summary by Sections Export Orders and Shipments - Export orders from the US have largely remained unchanged, with a slight increase noted [3] - Shipments from China are significantly impacted, with many corporates reporting a decline in production and shipments [5][12] Supply Chain Adjustments - Corporates are adjusting supply chains, with many utilizing ex-China production facilities to fulfill US orders [11][13] - Nearly half of the corporates have reported stable or increasing inventory levels in the US, providing a buffer against supply chain disruptions [21][23] Pricing Discussions - Approximately 60% of corporates are engaged in pricing negotiations, with expectations that end users will absorb most tariff costs [25][29] - There is a consensus that tariffs above 30-40% could become unmanageable for the global supply chain [26][31] Capital Allocation and Expansion Plans - Nearly 60% of corporates have ex-China production facilities, with 63% planning to expand or establish overseas capacity despite tariff uncertainties [32] - Corporates are cautious about capital expansion plans, particularly in Mexico and the US, due to ongoing uncertainties [59][61] Container Shipping and Import Data - US container imports from China showed a year-on-year increase of 9% in Q1 2025, but projections indicate a decline of 15% in Q2 and 27% in Q3 2025 [33][35] - Container shipping data has not yet reflected the anticipated decline, with current volumes still showing positive growth [35][36]

Q1 2025 Performance - Consolidated operating income significantly increased year-over-year, driven primarily by the China service due to elevated freight rates from Q4 2024 and healthy demand[7] - Hawaii container volume increased by 32% year-over-year due to a competitor's vessel dry-docking[8] - Alaska container volume increased by 48% year-over-year, driven by higher northbound volume[41] - Guam container volume decreased by 143% year-over-year due to lower demand from retail and food and beverage segments[34] - Matson Logistics operating income decreased by approximately $08 million year-over-year to $85 million, due to lower contribution from freight forwarding and transportation brokerage[54] - SSAT joint venture contributed $66 million, a year-over-year increase of $62 million, primarily due to higher lift volume[48] - Net income was $723 million, a 1003% increase compared to $361 million in the first quarter of 2024[55] - Approximately 05 million shares were repurchased for a total cost of $692 million in Q1 2025[61] Outlook - The company is lowering its 2025 outlook due to uncertainty in the market regarding tariffs, global trade, regulatory measures, the U S economy, and geopolitical factors[7] - The company expects full year 2025 container volume in Hawaii to be comparable to the level achieved last year[12] - The company expects full year 2025 container volume in Guam to approach the level achieved last year[35] - The company expects full year 2025 container volume in Alaska to be comparable to the level achieved last year[42] - The company expects the contribution from SSAT to be lower than the $174 million achieved last year, excluding the $184 million impairment charge in Q4 2024[44] - The company expects Logistics operating income to be lower than the level achieved last year due to a challenging environment for all business lines[50] - The company expects approximately $225 million in milestone payments during the balance of 2025 from the Capital Construction Fund (CCF)[69]