Bank of China International: Summer travel peak season is approaching, pay attention to the performance of the travel industry chain.

Bank of China International released a research report stating that the current social services sector has experienced adjustment with a relatively low valuation level. With the peak season for summer travel approaching, under the catalysis of multiple factors, the demand for cultural and tourism travel industry is expected to continue to grow. The bank maintains an industry rating stronger than the overall market. The bank recommends focusing on the tourism chain and related companies with strong certainty of future performance growth, benefiting from the recovery of business travel flows and the potential increase in market share of chain hotel brands. In addition, the recovery of the cross-border tourism market is expected to promote the recovery of airport duty-free shops and accelerate the introduction of new policies on city duty-free shopping. Bank of China International's main points are as follows: Market review & industry dynamics: In the first two weeks of trading, the Shanghai Composite Index fell by 1.15% to close at 4043.64. The CSI 300 fell by 2.01% to close at 4842.17. The social services sector fell by 2.12%, ranking 22nd out of 31 industries in the first-level Shanwan ranking. The social services sub-sectors and tourism retail sectors all declined, from highest to lowest: professional services (-1.27%), education (-2.28%), tourism and scenic spots (-2.28%), hotels and catering (-3.55%), tourism retail (-4.01%). According to Flight Housekeeper, from June 29 to July 5, the total number of passenger flights operated by civil aviation in China was 112,672, up 6.03% from the previous week and 109.20% of the same period in 2019. Among them, the number of international flights was 13,070, reaching 86.11% of 2019 levels, up 3.11% from the previous week. Focus on the performance of the peak summer travel season: With the start of summer holidays in July, cultural and tourism travel is at its peak for the year. According to TONGCHENGTRAVEL's "2026 Summer Travel Trend Forecast Report," this year's summer travel market is expected to show stable growth. In addition, more people are choosing to explore non-traditional popular tourist destinations and are opting for some third and fourth-tier cities for exploration. Popular tourist destinations that are both cool and well-connected are more popular. According to Feizhu's "2026 Summer Travel Barometer," the popularity of summer travel has grown significantly compared to the previous year, with good reservation growth for destinations with leisure and cooling attributes and a significant increase in hotel reservations in Heilongjiang. Popular international destinations for outbound travel include South Korea, Thailand, Malaysia, Hong Kong, China, and Singapore, with long-haul destinations such as Brazil and Iceland growing rapidly. State Council approves the "Fifteenth Five-Year Plan for Tourism Strong Country Construction": The State Council issued approval, agreeing in principle to the "Fifteenth Five-Year Plan for Tourism Strong Country Construction," for the first time incorporating the "Tourism Strong Country" into the national five-year plan. The plan mentions promoting the deep integration of culture and tourism as the main line, enriching tourism supply, unleashing consumption potential, and enhancing service quality. Four departments continue to implement policies to support enterprise stability and expansion in unemployment insurance: The Ministry of Human Resources and Social Security, the Ministry of Education, the Ministry of Finance, and the State Administration of Taxation jointly issued the "Notice on Supporting Enterprises to Stabilize and Expand Employment through Unemployment Insurance." It mentions implementing three beneficial policies for enterprises: continuing the implementation of the stabilization and return policy, continuing the implementation of the one-time expansion subsidy policy, and optimizing the skills enhancement subsidy policy. Recommendations for investment: The sector has undergone adjustments and valuation levels are at historically low levels. In addition, with the peak season for summer travel approaching, the cultural and tourism travel sector is expected to receive attention. The bank recommends focusing on the tourism chain and related companies with strong certainty of future performance growth: TONGCHENGTRAVEL, Huangshan Tourism Development, LiJiang YuLong Tourism, Songcheng Performance Development, Guangzhou Lingnan Group Holdings, UTour Group, China Cyts Tours Holding, HAICHANG HLDG, Jiangsu Tianmu Lake Tourism, Changbai Mountain Tourism, etc.; benefiting from the recovery of business travel flows and the potential increase in market share are chain hotel brands such as Shanghai Jin Jiang International Hotels, BTG Hotels, SSAW Hotels & Resorts Group, etc.; benefiting from employment promotion policies are Beijing Career International, Shanghai Foreign Service Holdinggroup, FESCO Group Co., Ltd.; the recovery of the cross-border tourism market is expected to promote the recovery of airport duty-free shops and accelerate the introduction of new city duty-free policies. It is recommended to focus on companies such as China Tourism Group Duty Free Corporation, Wangfujing Group; Tongqinglou Catering Corporation which caters to the recovery of catering and banquet demand; Shanghai Yuyuan Tourist Mart, a well-known brand in local life consumption; exhibition brands such as Zhejiang Meorient Commerce & Exhibition Inc. and DLG Exhibitions & Events Corporation that benefit from the revival of business activities; companies in the performing arts industry chain such as Funshine Culture Group and Zhejiang Dafeng Industry. Major risks facing the rating: Insufficient recovery of travel demand, industry recovery falling short of expectations, and policy implementation falling short of expectations.