CMSC: Summer travel demand remains resilient; focus on opportunities in the travel chain and tea beverage sector.

CMSC released a research report stating that since Q3 2026, demand for services consumption has continued to recover, summer leisure travel demand has been unleashed, and combined with the government's continued efforts to expand domestic demand & boost services consumption, the prosperity of the social services sector has remained resilient overall. As outbound travel demand recovers, hotel operations improve, and the competitive landscape of the catering and tea beverage industry optimizes, consumer sectors represented by OTA, hotels, catering, and tea beverages are expected to continue benefiting. In addition, we recommend focusing on layout opportunities in high-growth tea beverage and low-valuation catering growth stocks. CMSC's main views are as follows: Since 2026, demand for services consumption has continued to recover, summer leisure travel demand has been unleashed, and combined with policy efforts to continuously expand domestic demand & boost services consumption, the prosperity of the social services sector has remained resilient overall. Offline consumption in the catering industry is gradually recovering. National catering revenue achieved positive year-on-year growth in July-August. Leading catering companies continued to improve on the strength of brand momentum and supply chain advantages. Competition in the tea beverage industry is gradually shifting from subsidy-driven to scale-and-efficiency competition, with leading brands accelerating store expansion; focus on layout opportunities in high-growth brands. In OTA, domestic leisure travel demand continues to be unleashed, and the outbound travel recovery trend continues. In hotels, demand came under short-term pressure in July due to extreme weather; as improved summer and holiday travel demand drives RevPAR to gradually stabilize, combined with leading companies' continued cost reduction and efficiency enhancement, profitability is expected to recover further. As services consumption policies continue to be implemented, we recommend focusing on investment opportunities in the OTA, hotel, and catering consumption chain, with top picks Ctrip Group, TONGCHENGTRAVEL, Shanghai Jin Jiang International Hotels, and BTG Hotels. In addition, we recommend focusing on layout opportunities in high-growth tea beverage and low-valuation catering growth stocks: Luckin Coffee, GUMING, YUM CHINA, and GREEN TEA GROUP. Catering: Offline consumption recovering moderately, leading companies' operations continuing to improve Since 2026, catering consumption demand has overall maintained a recovery trend. National catering revenue reached RMB 456.7/454.4 billion in July/August, up 1.4%/1.1% year on year. As residents' consumption scenarios gradually recover and services consumption policies continue to advance, industry demand is expected to continue improving. Leading catering companies, leveraging brand advantages, supply chain capabilities, and improved operational efficiency, outperformed the industry; we recommend focusing on GREEN TEA GROUP and HAIDILAO. Tea beverages: Industry competition gradually returning to efficiency, leading brands continuing to expand Since 2026, competition in the tea beverage industry has gradually shifted from subsidy-driven to competition on brands, supply chains, and operational efficiency. Leading brands, leveraging scale advantages, continued to advance store expansion and improved operating quality through product mix optimization. With expansion into delivery channels, coffee, and breakfast categories, leading brands still have strong growth potential; we recommend focusing on GUMING and Mixue Bingcheng. OTA: Outbound travel demand continuing to recover, broad growth space in international business Since 2026, domestic leisure travel demand has continued to be unleashed, summer travel demand has remained resilient, and combined with hotel supply growth and continuously rising online penetration, the OTA industry's operating performance has been stable and improving. In outbound travel, with the recovery of international flights and the unleashing of residents' cross-border travel demand, destination recovery has been somewhat divergent; international business remains an important DRIVE for leading OTAs' long-term growth. Top picks: Ctrip Group and TONGCHENGTRAVEL. Hotels: RevPAR gradually stabilizing, cost reduction and efficiency enhancement driving profit recovery In Q3 2026, hotel industry demand remained resilient overall. Summer and holiday traffic growth drove sequential improvement in industry RevPAR. Hotel supply continued to expand, and leading companies continued to enhance profitability through asset-light development and cost optimization. As subsequent stimulus measures such as consumption vouchers and cultural tourism consumption policies are gradually implemented, hotel industry operations are expected to recover further. Top picks: Shanghai Jin Jiang International Hotels and BTG Hotels. Risk warnings: Macro consumption decline, store opening progress below expectations, exchange rate risk, intensifying industry competition.