CNY – weak tourism but strong catering data
? During the seven-day Chinese New Year (CNY) holidays, 251m domestic trips were made nationwide, down 2% yoy and recovering to 73.9% of the 2019 level. Tourism income during the holiday was Rmb289.2bn, down 3.9% yoy and recovering to 56.3% of the 2019 level.
? Overall box office receipts during the CNY reached Rmb6bn, making it the second-highest CNY box office receipts in history, but still lower than last year’s.
? The catering industry recovered during the CNY, with pre-cooked food being accepted by more and more families.
? Duty-free sales in Hainan grew strongly by 153% yoy from 30 Jan to 5 Feb, which should benefit the leading duty-free players, like China Duty Free (601888 CH, Add).
? We expect the sportswear and dairy sectors to benefit from the tailwinds of the Winter Olympics; Anta (2020 HK, Add) and Yili (600887 CH, Add) should benefit from the event, as they are partners for the Winter Olympics, which should further strengthen their brand image.
More flexible travel policy expected in 2H22F
According to the Ministry of Culture and Tourism, during the seven-day CNY holiday, 251m domestic trips were made nationwide, down 2% yoy and recovering to 73.9% of the 2019 level; 78.3% of the trips were local and 21.7% were inter-provincial. Tourism income during the holiday was Rmb289.2bn, down 3.9% yoy and recovering to 56.3% of the 2019 level. The weak travel market was attributed primarily to pandemic rebounds in several major cities and the strict pandemic control measures amid the Omicron variant outbreak and the Winter Olympics. Trips to winter sports and snow scenery destinations were popular, growing 68% yoy. We expect the Winter Olympics effect to continue stimulate people’s enthusiasm for winter sports throughout the year. We also expect travel restrictions to be gradually loosened in 2H22F after the Winter Olympics and the Two Sessions in March.
Box office receipts supported by higher ticket prices
Overall box office receipts during the CNY were Rmb6bn, making it the second-highest CNY box office receipts in history, but still lower than last year’s. The sequel to the 2021 war blockbuster The Battle at Lake Changjin led box office receipts with Rmb2.14bn as at 5pm on Feb 5. The average movie ticket price of Rmb50 from Feb 1 to 5 was 8% higher than last year’s. But the traffic volume of 98m people was lower than the 140m in 2020 and 110m in 2019.
Signs of recovery in the catering market
During the CNY holiday, Shanghai offline catering sales reached Rmb3.92bn, up 8.7% yoy and up 9.7% compared to that in 2019. The average daily transaction sales of some restaurant chains grew by 12.65% yoy. Pre-cooked food was popular on dinner tables during the holiday. Alibaba (9988 HK, Add)’s Freshippo recorded over 345% yoy sales growth for pre-cooked food and Taobao recorded over 100% yoy growth. We expect the catering industry to continue to recover in FY22F, along with the likely more flexible travel policy, which should also benefit the brewery sector, since the catering channel accounts
for about 50% of beer sales in China.
Sales of winter sports gear stimulated by the Winter Olympics
Stimulated by the Winter Olympics, sales of ski gear grew by over 180% yoy, and sales of ice-sports gear grew by over 300% yoy in the first four days of the holiday, according to Alibaba. Winter Olympics souvenirs sold out immediately during the opening ceremony of the event. Anta (2020 HK, Add), one of the official partners of the Beijing Winter Olympics, saw its online sales grow rapidly wow. Yili (600887 CH, Add), which we cover, is also one of the official partners of the Winter Olympics, and Tsingtao Brewery (0168 HK, Add) is one of the official sponsors. We expect the sportswear sector to benefit from the tailwinds of the Winter Olympics and other upcoming major international sports events, as long as the favorable government policies towards sports sector continue. The dairy sector will also benefit from the healthy lifestyle promoted by the sports events and public awareness of the importance of nutrition.
Strong growth in duty-free sales on Hainan Island
According to the statistical data provided by the Department of Commerce of Hainan Province, the sales of 10 duty-free shops on Hainan Island from 30 Jan to 5 Feb reached Rmb1.98bn, up by c.30% yoy compared to sales in the CNY period last year. Duty-free sales reached Rmb1.82bn, and the number of duty-free shoppers rose by c.40% yoy to 277.8k. The number of duty-free products purchased reached 1.65m. The average ticket size per shopper during the seven-day period was Rmb7,138. We expect the strong dutyfree sales data to benefit the leading duty-free players, like China Duty Free (601888 CH, Add).