According to the research report released by Bank of China Securities, based on data from the National Bureau of Statistics, in 2024, China's total retail sales of consumer goods are expected to be approximately 48.79 trillion yuan, a year-on-year increase of 3.5%. Throughout the year, retail sales are expected to maintain a steady recovery trend. Additionally, consumption promotion policies such as trade-in programs will also contribute to good growth in the consumption market. The Qunar Index mini-program shows that on January 17, the search volume for the Shanghai-Taipei route increased by 16% compared to the previous week, with the Fuzhou-Taipei route seeing the most significant increase, nearly 6 times, and Xiamen increasing by 1.2 times. Furthermore, there was also a noticeable increase in search volume for flights from Shenzhen and Chongqing to Taipei.

Looking back at 2024, retail consumption has steadily increased, and the travel market has maintained a high level of prosperity. We anticipate that resident income and consumer confidence will further grow in 2025. Bank of China Securities recommends paying attention to travel chains and industry-related companies with strong performance growth certainty: Huangshan Tourism (600054.SH) and others; chain hotel brands such as SSAW Hotels & Resorts (301073.SZ), which benefit from the recovery of business travel and increased market share post-pandemic; and Kelly Services (300662.SZ), which benefits from employment promotion policies.

In addition, the recovery of the cross-border travel market is expected to drive the recovery of airport duty-free sales and accelerate the introduction of new urban duty-free policies. It is recommended to pay attention to China Duty Free Group (01880) and others; Tongqinglou (605108.SH), which caters to the recovery of dining and banquet demand; local life consumption brand Yuyuan Co., Ltd. (600655.SH); exhibition brand Mio Exhibition (300795.SZ), which benefits from business recovery; and cultural performance industry chain company Fengshang Culture (300860.SZ), among others.

The main points from Bank of China Securities are as follows:

In the first two trading weeks (2025.1.06-2025.1.17), the social services sector rose by 2.79%, ranking 11th among the 31 industries in the Shenwan first-level classification. The social services sector outperformed the CSI 300 Index by 1.80 percentage points. With the Spring Festival approaching, travel enthusiasm is gradually rising. We maintain an outperform rating for the industry.

Market Review & Industry Dynamics Data

In the first two trading weeks, the Shanghai Composite Index rose by 0.95%, closing at 3241.82. The CSI 300 rose by 0.98%, closing at 3812.34. The social services sector rose by 2.79%, ranking 11th among the 31 industries in the Shenwan first-level classification. The social services sector outperformed the CSI 300 Index by 1.80 percentage points.

Among the sub-sectors of social services and the tourism retail sector, three rose, with the percentage change from high to low as follows: Education (+5.29%), Professional Services (+3.10%), Tourism and Scenic Areas (+2.99%), Hotel and Catering (-1.67%), and Tourism Retail (-2.88%).

According to Flight Manager, from January 6 to January 12, the national civil aviation executed 105,209 passenger flights, an increase of 3.32% compared to the previous week, which is 109.97% of the level in the same period of 2019. Among them, the number of international flights was 13,017, recovering to 91.71% of 2019 levels, with a week-on-week increase of 0.35%.

Biweekly News

In 2024, retail consumption is steadily recovering. According to data from the National Bureau of Statistics, in 2024, China's total retail sales of consumer goods are expected to be approximately 48.79 trillion yuan, a year-on-year increase of 3.5%. By consumption type, the retail sales of goods are approximately 43.22 trillion yuan, a year-on-year increase of 3.2%, while catering revenue is approximately 5.57 trillion yuan, a year-on-year increase of 5.3% Looking at the whole year, retail sales have maintained a steady recovery trend. In addition, consumption promotion policies such as trade-in programs have also contributed to good growth in the consumer market.

With the Spring Festival approaching, the expected passenger flow during the Spring Festival travel rush is projected to reach 9 billion trips. As the Spring Festival holiday is coming, travel enthusiasm is gradually rising. Furthermore, the number of holiday days for the Spring Festival in 2025 will increase by one day, and the demand for long-distance travel and outbound tourism is expected to grow further. In terms of overall scale, according to estimates from transportation and other departments, the cross-regional movement of people during the Spring Festival travel rush will reach 9 billion trips, with railway and civil aviation passenger volumes expected to exceed 510 million and 90 million trips respectively, both setting historical highs.

Group tours to Taiwan are partially resuming. On January 17, the Ministry of Culture and Tourism announced that the mainland will soon resume group tours to Taiwan for residents of Fujian and Shanghai, and related preparations are actively underway. The Qunar Index mini-program shows that on January 17, the search volume for the Shanghai-Taipei route increased by 16% compared to the previous week, with the Fuzhou-Taipei route seeing the most significant increase, nearly 6 times, and Xiamen increasing by 1.2 times. Additionally, there was also a noticeable increase in search volume for flights from Shenzhen and Chongqing to Taipei. Ctrip stated that three hours after the announcement, the search volume related to Taiwan on its platform surged by 48%, with Shanghai and Fujian being the main sources of mainland residents traveling to Taiwan, accounting for 30% in 2019.

Investment Suggestions

Looking back at 2024, retail consumption is steadily rising, and the travel market maintains a high level of prosperity. We expect that in 2025, residents' income and consumer confidence will further increase. We recommend paying attention to travel chains and related companies with strong performance growth certainty: Huangshan Tourism, Lijiang Co., Songcheng Performance, Lingnan Holdings, Zhongxin Tourism, China Youth Travel Service, Haichang Ocean Park, Tianmu Lake, Changbai Mountain, etc.; chain hotel brands such as SSAW Hotels & Resorts, Jinjiang Hotels, and ShouLve Hotels that benefit from the recovery of business travel and increased market share post-pandemic; Kelly International, which benefits from employment promotion policies; the recovery of the cross-border travel market is expected to drive the recovery of airport duty-free and accelerate the introduction of new city duty-free policies, so we recommend paying attention to China Duty Free Group and Wangfujing; Qionglin Tower, which caters to the recovery of dining and banquet demand; local life consumption time-honored brand Yuyuan Co.; exhibition brands like Miao Exhibition and Lansheng Co. that benefit from business recovery; and performance industry chain companies such as Fengshang Culture and Dafeng Industry