Zhongxin Tourism (002707): Outbound tourist flows are growing fast but Southeast Asia has not yet fully recovered
Performance preview predicts annual profit growth of 2%. We expect 1H19 company revenue to increase 3% and net profit to increase 2%.
Points of Attention The outbound tourism market as a whole has maintained rapid growth.
1) According to the data from the Civil Aviation Administration of China, passenger traffic on international airlines of civil aviation increased by 16% from January to April 2019, compared with the same period last year.
3% further increase by 1.
2) However, from the perspective of structure, Hong Kong, Macao and Taiwan, and Japan and South Korea are the fastest growing tourist destinations.
Therefore, the company benefits less.
3) From January to May 2019, the number of mainland tourists going to Hong Kong, Macau, and Taiwan will increase by 17 each.
5% / 22.
7% / 26.
Among them, from April to May, the number of mainland tourists visiting Taiwan increased by 48 each year.
7%, a rapid growth.
From January to May 2019, the number of tourists from mainland China to Japan and South Korea doubled 17.
6%, an increase of 8 over the same period in 2018.
4% showed 成都桑拿网 a marked recovery.
Affected by extreme events in 2018, the Southeast Asian market has not yet fully recovered.
1) The number of Chinese tourists to Vietnam decreased by 1H19.
3%, but a year-on-year increase of 7 from April to May.
2%, mainly benefited from Qingming, May Day holiday.
2) From January to May 2019, the number of Chinese tourists to Thailand decreased by 4.
3%, the number of tourists to Singapore is increasing by 3.
In the first quarter of 19, the number of Chinese tourists to Malaysia increased by 8 each year.
3) Overall, the Southeast Asian market has not yet fully recovered, and we expect the impact of extreme events to gradually change in 2H19.
In addition, Chinese students entering the summer vacation from July to August and the National Day holiday in early October can help boost the performance of outbound tourism in countries around 2H19.
The company recently announced: 1) Changes in total share capital.
On July 2, 2019, the company announced that a total of 6,302,689 shares of the repurchased consolidated shares had been reorganized, accounting for 0 before the repurchase.
The company’s total share capital (including preferred shares) has decreased to 879,114,512 shares.
2) On July 11, 2019, the company’s convertible bond-to-equity price was changed from 7.
93 yuan / share adjusted to 7.
91 yuan / share.
Estimates and recommendations maintain 2019 / 20e earnings forecast2.
We maintain our Outperform rating and, considering that the Southeast Asian market has not yet fully recovered, we lower our target price by 13% to 7.
98 yuan, corresponding to 33x / 25x 2019 / 20e P / E, compared with the current expected increase of 36%.
The company currently corresponds to 25x / 19x 2019 / 20e P / E.
Risks Natural disasters affect travel; risks of RMB exchange rate changes.