China Outbound Tourism Analysis – Winners and Losers

8 June 2017, Global – The China outbound tourism boom is showing no signs of abating with growth of 8% y/y in 1Q17, an improvement from the 4% growth achieved in full year 2016. We take a closer look at some of the countries and equities that are benefitting the most as well as the others that have missed out on this growth.

Chart: China outbound tourists (2015 to 2017)

Chart: China outbound tourists (2015 to 2017)

WINNERS

Japan: The growth in the number of Chinese outbound tourists to Japan has moderated to 12% y/y in 1Q17 which is still fairly impressive, considering the high base last year where 2016 full year growth was 28% y/y and 2015 full year growth was 107%.

  • Who benefits most – Japan Airport Terminal (9706:JP) with China flights taking up around 26% of its total international departure slots at Haneda Airport alone. Among the Chinese carriers, Spring Airlines (601021:CH) has the largest exposure to China-Japan routes which account for 6% of its total passenger capacity.

United States: The number of Chinese outbound tourists to the United States surged 20% y/y in 1Q17, moderating from 2016 full year growth of 26% y/y.

  • Who benefits most – Air China (753:HK) which derives 9% of its total revenue from North American routes. 

Singapore: The number of Chinese outbound tourists to Singapore rose 15% y/y in 1Q17, moderating from 2016 full year growth of 36% y/y.

  • Who benefits most – SATS (SATS:SP)  – China flights account for 10% of the total aircraft movements to/from Singapore Changi International Airport.

Malaysia: The number of Chinese outbound tourists to Malaysia rose 19% y/y in 1Q17, moderating from 2016 full year growth of 50% y/y.

  • Who benefits most –  AirAsia (AIRA:MK)’s China routes account for 11% of its total capacity.

Germany: The number of Chinese outbound tourists to Germany rebounded 8% y/y in 1Q17. This is a marked improvement from the 4% decline in full year 2016.

  • Who benefits most – Air China (753:HK) flights to Germany account for 4% of total capacity.

Thailand: The number of Chinese outbound tourists to Thailand was steady y/y in 1Q17. This is a marked improvement from the 21% decline in 4Q16 but still weaker than the 11% growth in full year 2016.

  • Who benefits most – Airports of Thailand (AOT:TB), China flights account for 11% of the total aircraft movements to/from Thailand.

Vietnam: The number of Chinese outbound tourists to Vietnam rose 55% y/y in Jan-May 2017, even higher than the 2016 full year growth of 51% y/y.

  • Who benefits most – Airports Corporation of Vietnam (ACV:VN), China routes account for 5% of Vietnam’s total aircraft movements.

Chart: Top 10 destinations for China outbound tourists (travel agencies) in 2015

Chart: Top 10 destinations for China outbound tourists (travel agencies) in 2015

LOSERS

South Korea: The number of Chinese outbound tourists to South Korea has fallen 9% y/y and 12% q/q in 1Q17, a marked contrast from its 35% growth in full year 2016. This was mainly driven by the 22% y/y drop in Chinese visitors on package tours despite a 7% rise in Chinese visitors on non-package tours in 1Q17.

  • Most affected – Asiana Airlines (020560:KS) has the largest exposure to China-South Korea routes which contribute 22% of its passenger revenue. This is followed by Korean Air (003490:KS) whose Korea-China routes account for 15% of its passenger revenue. Among the Chinese carriers, Spring Airlines (601021:CH) has the largest exposure with China-Korea routes accounting for 3% of its total passenger capacity.

Hong Kong: The number of mainland Chinese outbound tourists to Hong Kong fell 2% y/y in 1Q17 but this is an improvement from the 7% decline in full year 2016.

  • Most affected – Cathay Pacific (293:HK), mainland China routes contribute 7% of its total passenger traffic.

Taiwan: The number of Chinese outbound tourists to Taiwan continues to be weak, down 42% y/y in 1Q17, versus its 16% decline in full year 2016.

  • Most affected – China Airlines (2610:TT), China flights contribute around 13% of its passenger revenue.

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