EB SECURITIES: Maintains "Overweight" Rating on TRAVELSKY TECH (00696) as Airport Digitalization & Travel Intelligence Revenue Grows Rapidly

EB SECURITIES released a research report stating that the civil aviation industry maintained a stable development trend in 26H1. The Electronic Travel Distribution (ETD) system processed approximately 372 million passengers for domestic and international airlines, a year-on-year increase of 0.3%. The net profit forecast for TRAVELSKY TECH (00696) for the years 2026-2028 is maintained at 2.531/2.715/2.928 billion yuan, considering the companys strong market-leading position in the domestic aviation IT sector and the optimistic long-term development prospects of the civil aviation industry, retaining an Overweight rating. Key points from EB SECURITIES are as follows: Event: On August 24, 2026, the company released its performance report for 26H1 ending June 30, 2026. In 26H1, the companys revenue was 4.112 billion yuan, a year-on-year increase of 5.6%; net profit attributable to shareholders was 1.543 billion yuan, a year-on-year increase of 6.6%. The total operating costs for 26H1 remained essentially flat year-on-year. The total operating costs were 2.418 billion yuan, a year-on-year decrease of 0.4%, of which: 1) employee compensation and the five insurances and one fund increased year-on-year, resulting in labor costs rising by 9.3%; 2) due to the impact of project construction phases, airport digital software and hardware costs decreased by 48.7% year-on-year; 3) technical support and maintenance fees decreased by 8.0% year-on-year; 4) departure and distribution support fees decreased by 8.4% year-on-year; 5) depreciation and amortization increased by 5.2% year-on-year. The revenue from aviation information platform services slightly declined year-on-year; however, revenue from airport digitalization and intelligent travel products and services grew rapidly. By business segment, 1) revenue from aviation information platform services was 2.352 billion yuan, a year-on-year decrease of 1.7%, primarily due to stable system processing volumes year-on-year and revenue from foreign and regional airlines being impacted by currency fluctuations; 2) revenue from settlement and clearing services was 454 million yuan, a year-on-year increase of 11.4%, due to increased settlement clearing business volume; 3) revenue from airport digitalization services was 600 million yuan, a year-on-year increase of 43.5%, due to increased scale of projects meeting completion acceptance criteria; 4) revenue from intelligent travel products and services was 442 million yuan, a year-on-year increase of 14.9%, due to increased IT service demand from clients and product expansion; 5) revenue from information network and digital infrastructure services was 257 million yuan, a year-on-year decrease of 8.9%, due to reduced business volume in distribution information technology services. Domestic passenger demand remained stable overall, with a slight year-on-year increase in system processing volume. The civil aviation industry maintained a steady development trend in 26H1, with the ETD system processing approximately 372 million passengers for domestic and international airlines, a year-on-year increase of 0.3%, of which: 1) the system processing volume for Chinese commercial airlines increased by 0.3% year-on-year; 2) the system processing volume for foreign and regional commercial airlines increased by 0.7% year-on-year. The company is focusing on airport digitalization, low-altitude economy, trusted innovation, and AI. 1) Airport digitalization: The company signed a strategic cooperation framework agreement with Shanghai International Airport and Hainan Airport Infrastructure Group to promote a smart airport platform to 19 airports with over ten million passengers; 2) Low-altitude economy: The company has improved the business layout of one system, one platform, multiple products, and launched the Hainan Province Low Altitude Economic Business Coordination Platform at the expo; 3) Trusted innovation and AI: The core distribution business has fully transitioned to a domestically produced open system, achieving full-stack domestic production of the departure system at international hub airports with over ten million passengers for the first time. Profit forecasts, valuation, and ratings: The net profit forecast for 2026-2028 is maintained at 2.531/2.715/2.928 billion yuan. Considering the companys strong leading position in the domestic aviation IT market and the optimistic long-term prospects for the civil aviation industry, an Overweight rating is maintained. Risk warning: Passenger volume growth in civil aviation may not meet expectations; significant appreciation of the RMB against the USD.