BOC International: Stable Recovery in Annual Social Retail Sales in 2024, Partial Resumption of Team Tours to Taiwan

BOC International released a research report stating that according to data from the National Bureau of Statistics, in 2024, the total retail sales of consumer goods in China is estimated to be around 48.79 trillion yuan, an increase of 3.5% year-on-year. Overall, the retail market has maintained a steady recovery trend throughout the year. In addition, policies such as trade-in promotions have also helped drive good growth in the consumption market. The Qunar Index Mini Program shows that on January 17th, the search volume for the Shanghai-Taipei route increased by 16% compared to the previous week, with the search volume for the Fuzhou-Taipei route showing the most significant increase, nearly 6 times, and Xiamen showing a 1.2 times increase. In addition, there has also been a noticeable increase in search volume for flights from Shenzhen and Chongqing to Taipei. Looking back at 2024, retail consumption has steadily improved, and the travel market has maintained a high level of activity. It is hoped that in 2025, residents' income and consumer confidence will continue to increase. BOC International suggests focusing on companies in the travel industry with strong certainty of future performance growth, such as Huangshan Tourism Development (600054.SH), as well as hotel brands like SSAW Hotels & Resorts Group (301073.SZ) that benefit from the recovery of business travel and increased market share post-pandemic, and companies like Beijing Career International (300662.SZ) benefiting from policies promoting employment. Additionally, the recovery of the cross-border tourism market is expected to drive the recovery of airport duty-free sales and the accelerated implementation of new local duty-free policies. Recommendations include China Tourism Group Duty Free Corporation (01880), Tongqinglou Catering Corporation (605108.SH) benefiting from the recovery of dining and banquet demand, Shanghai Yuyuan Tourist Mart (600655.SH) representing traditional local consumption brands, Zhejiang Meorient Commerce & Exhibition Inc. (300795.SZ) benefiting from the recovery of business exhibitions, and Funshine Culture Group (300860.SZ) in the performing arts industry chain. Main points of BOC International: In the first two trading weeks (January 6, 2025 to January 17, 2025), the social services sector increased by 2.79%, ranking 11th out of 31 industries in the Shanghai Stock Exchange. The social services sector outperformed the Shanghai and Shenzhen 300 Index by 1.80%. With the Spring Festival approaching, travel demand is gradually increasing. We maintain a rating of industry outperforming the overall market. Market review & industry dynamics data In the first two trading weeks, the Shanghai Composite Index rose by 0.95% to close at 3241.82. The Shanghai and Shenzhen 300 Index rose by 0.98% to close at 3812.34. The social services sector increased by 2.79%, ranking 11th out of 31 industries in the Shanghai Stock Exchange. The social services sector outperformed the Shanghai and Shenzhen 300 Index by 1.80%. Among the sub-sectors of social services and tourism retail, three sectors increased, with the percentage change from highest to lowest being: education (+5.29%), professional services (+3.10%), tourism and attractions (+2.99%), hotels and restaurants (-1.67%), tourism retail (-2.88%). According to Flight Butler, from January 6 to January 12, the civil aviation sector in China operated 105,209 passenger flights, an increase of 3.32% compared to the previous week, reaching 109.97% of the level in the same period last year. Among those, there were 13,017 international flights, reaching 91.71% of the level in 2019, with a week-on-week increase of 0.35%. Bi-weekly news Retail consumption steadily recovered in 2024. According to data from the National Bureau of Statistics, in 2024, the total retail sales of consumer goods in China reached around 48.79 trillion yuan, an increase of 3.5% year-on-year. Broken down by consumption type, retail sales of goods reached around 43.22 trillion yuan, an increase of 3.2% year-on-year, while catering revenue reached around 5.57 trillion yuan, an increase of 5.3% year-on-year. Overall, retail consumption has maintained a steady recovery trend throughout the year, with policies such as trade-in promotions contributing to the good growth of the consumption market. As the Spring Festival approaches, the expected number of travelers during the Spring Festival is estimated to reach 9 billion. With the Spring Festival holiday approaching, travel demand is gradually increasing. In addition, the number of days for the 2025 Spring Festival holiday has increased by one day, leading to further growth in demand for long-distance travel and outbound tourism. Overall, according to departments of transportation and other related sectors, it is expected that the total number of inter-regional population movements during the Spring Festival will reach 9 billion, with railway and civil aviation passenger volumes expected to exceed 510 million and 90 million respectively, both reaching historical highs. Some group tours to Taiwan are resuming. On January 17, the Ministry of Culture and Tourism announced that mainland China will soon resume group tours to Taiwan for residents of Fujian and Shanghai, with related work actively being prepared. The Qunar Index Mini Program shows that on January 17th, the search volume for the Shanghai-Taipei route increased by 16% compared to the previous week, with the search volume for the Fuzhou-Taipei route showing the most significant increase, nearly 6 times, and Xiamen showing a 1.2 times increase. In addition, there has also been a noticeable increase in search volume for flights from Shenzhen and Chongqing to Taipei. Following the announcement, Ctrip stated that three hours after the news was released, searches related to Taiwan on their platform increased by 48%. Shanghai and Fujian are the main sources of tourists from the mainland to Taiwan, accounting for 30% in 2019. Investment advice Looking back at 2024, retail consumption has steadily improved and the travel market has maintained high activity. In 2025, it is expected that residents' income and consumer confidence will continue to increase. The research also suggests focusing on companies in the travel industry with strong certainty of future performance growth, such as Huangshan Tourism Development, Lijiang Yulong Tourism, Songcheng Performance Development, Guangzhou Lingnan Group Holdings, UTour Group, China Cyts Tours Holding, and HAICHANG HLD.G, Jiangsu Tianmu Lake Tourism, Changbai Mountain Tourism, etc.; hotel brands such as SSAW Hotels & Resorts Group, Shanghai Jin Jiang International Hotels, and BTG Hotels benefiting from the recovery of business and travel flows and increased market share post-pandemic; Beijing Career International benefiting from job creation policies; the recovery of cross-border tourism market expected to drive the recovery of airport duty-free shops and the acceleration of new city duty-free policies, suggested to pay attention to China Tourism Group Duty Free Corporation and Wangfujing Group; Tongqinglou Catering Corporation catering to the resurgence of dining and banquet demand; local life consumption classic brands like Shanghai Yuyuan Tourist Mart; exhibition brands benefiting from the revival of business like Zhejiang Meorient Commerce & Exhibition Inc. and DLG Exhibitions & Events Corporation; and entertainment performance companies in the industry chain like Funshine Culture Group and Zhejiang Dafeng Industry benefiting from the recovery of business.I am not feeling well.