Guotai Haitong: Oil prices fall, Summer travel season begins, the opening of the Taiwan Straits removes restrictions and opens up valuation space.

Guotai Haitong released a research report stating that it maintains a buy rating for aviation fuel transportation. The aviation industry continues to be optimistic about the long-term super cycle logic, with market-based ticket prices and low supply growth boosting demand. The recovery in oil transportation capacity utilization in the strait returning to high levels, the lifting of sanctions on Iran is expected to achieve a super high prosperity and sustainable growth, opening up valuation space. Short-term speculation provides an opportunity for long-term strategic layout. Guotai Haitong's main points are as follows: Aviation: International oil prices fall rapidly, optimistic about summer travel demand International oil prices fell as a result of the US-Iran talks, and the decline was faster than expected. Last week, Brent crude oil/Singapore aviation oil prices had fallen to around $70/$110 per barrel, respectively. Considering the one-month lag in domestic aviation fuel adjustments, it is expected that the fuel prices for domestic airlines will gradually decrease, with the possibility of being flat year-on-year in August. With the end of the college entrance exams, air ticket sales have increased significantly as expected. Considering a significant increase in summer travel bookings for hotels, the industry is optimistic about the demand for family travel, and it is expected that the first wave of peak passenger flow will occur in mid-to-late July, with both quantity and price improving compared to recent periods and year-on-year. Meanwhile, the aviation industry continues to combat overcapacity, with major airlines gradually narrowing the window for data comparison, which is expected to shift the focus of airline revenue management from "peer competition" to "passenger demand," helping to reduce irrational competition. With oil prices falling rapidly, aviation is expected to return to the long-term super cycle logic. Improved supply and demand will ensure a significant improvement in the peak season operations and are expected to catalyze optimistic expectations. Recommended airlines include Air China Limited, China Eastern Airlines Corporation, Juneyao Airlines, Spring Airlines, and China Southern Airlines. Oil transportation: The strait's recovery in oil transportation rates is expected to rebound, and the lifting of sanctions on Iran benefits the compliant market 1) Short-term: U.S.-Iran talks open the strait for 60 days and lift the ban on Iranian oil. Last week, the number of ships passing through the strait increased by nearly three times compared to the previous week, reaching 50% of February levels; among them, VLCC passage nearly doubled. VLCC transportation rates experienced a surge and then fell back, with TCE on the Middle East route reaching over 500,000 USD/day, before dropping to nearly 300,000 USD/day; the rates on the U.S. Gulf and West African routes experienced a slight drop after a surge in mid-June, with rates still exceeding 140,000 USD/day. 2) Medium-term: After the strait is reopened, oil transportation capacity utilization will return to pre-conflict high levels, and the control of Longjin will further enhance the situation, with the follow-up demand for filling reservoirs worth looking forward to. The scale and pace of filling reservoirs will be related to the price and production speed of oil futures. 3) Long-term: If the lifting of Iranian oil sanctions continues, the compliant oil transportation market will achieve super high prosperity and sustainability for several years, providing a dual space for performance and valuation. Short-term speculation provides an opportunity for long-term strategic layout. Recommended companies include COSCO Shipping Energy Transportation, China Merchants Energy Shipping, Nanjing Tanker Corporation, and CSSC SHIPPING. Logistics: European and American mainline freight rates continue to rise, with attention to changes in tariff policies and their effects in July On June 26, the SCFI comprehensive index rose by 4% compared to the previous week, with European and American routes increasing by 6-10% and 7% respectively. European and American freight rates have cumulatively risen by over 90% since May. Shipping companies have been raising prices continuously since May to mitigate the pressure of oil prices and repair rates before the peak season. Shippers are concentrating on shipments early to avoid further price increases and tariff hikes, leading to an early start to the peak season, combined with a slight reduction in the number of shipping lines, supporting a significant increase in rates in May and June. As early shipments decrease and international oil prices fall, it is recommended to pay close attention to changes in tariff policies in July in various countries. 1) The current 10% tariff in the United States will expire in July, so it is important to see if there will be additional tariffs; 2) The EU will introduce small package tariffs in July, and the impact may be similar to the impact of the U.S. tariffs in the second half of 2025. Subsequent demand during the peak season and the impact of tariffs may be key to the sustainability of the price increases. Related targets include COSCO Shipping Holdings, OOIL, SITC, Shanghai Jinjiang Shipping (Group) Co., Ltd., and TS LINES. Risk Disclosure: Economic fluctuations, geopolitical oil prices, tariffs, exchange rates, safety accidents, etc.