DBS: <News Alert> China/HK equity strategy: CNY holiday data – booming tourism, cautious spending, sluggish property sales

alanyeo

3 months ago

Data from the 8-day Chinese New Year holiday indicate strong travel demand, cautious consumer spending, and a sluggish recovery in the property market
Holiday data reaffirm our preference for consumer services segments over consumer goods
Preferred stocks incl. Trip.com (9961.HK), Tongcheng (780.HK), Yum China (9987.HK)

What’s new

We summarize data for the 8-day Chinese New Year holiday below. Charts are in the bottom.

Robust travel demand: Chinese tourists made 474 mn domestic trips during CNY holiday, a record high and a 19% increase from 2019 level. Tourism revenue hit Rmb632.7 bn, up 7.7% from 2019 level. The total cross-region trips hit 5.4 bn in the first 23 days of the CNY travel rush starting from Jan 26, 14.4% above 2019 level and 15.8% above 2023 level, respectively. The avg daily cross-border trips was at 1.69 mn, close to 90% of pre-pandemic level (vs 100% of 2019 level in New Year holiday).

…but spending remains cautious: Based on data from Ministry of Culture and Tourism, spending per trip during CNY was at RMB1335, about 90.5% of pre-pandemic level. This is an obvious slowdown from the 97.5% and 96.5% of recovery rate during 2023 National Day holiday and 2024 New Year, respectively. Separately, despite the CNY duty free sales in Hainan island jumped 60% to RMB2.5 bn vs 2023 CNY, sales per buyer dropped 16%.

Record movie box office revenue: Box office set a record for CNY with RMB8 bn total revenue. The strong number is achieved by selling cheaper tickets, as the avg. ticket price dropped 6.2% yoy to RMB49, according to data from Maoyan.

Sluggish new property sales: Avg. daily new home sales fell 27% vs 2023 CNY in 25 key cities monitored by CREIS. Daily sales in Tier-1 cities increased from the last CNY after recent relaxation in home purchase restrictions. But lower tier cities, where usually demonstrate stronger sales during CNY when workers go back to their hometown, saw >20% decline in sales despite the low base in 2023. That said, sales in existing home market were relatively better, with KE data indicating -3%/98%/65% transaction volume change vs 2023 CNY in Tier-1/2/3 cities, respectively.

Our take

Our takeaways on holiday data are:

Poor performance in property and stock markets further dampened consumer sentiment towards spending, particularly on consumer goods. It is evidenced by the slow recovery in spending per trip, weaker purchase per buyers in Hainan duty free sales.
That said, strong data in segments like travel and movie indicate that the demand for services remains robust, as Chinese consumers are shifting spending habits to focus on essential goods and experience rather than owning discretionary products.
Stabilization in property market requires more policy supports.

We reaffirm our preference on OTAs like Trip.com (9961.HK), Tongcheng (780.HK) as they benefit from the robust travel demand. Our sector analyst favor Yum China (9987.HK) under restaurants sector.

Fig: Holiday data as % of 2019 level