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.