Travel Firms Bank On Jump In Getaways

CHINA'S government may give its citizens at least six more vacation days next year, and analysts say the extra leisure time likely will boost China's already flourishing travel-and-tourism sector.

Travel operators are betting on a shift to shorter, more frequent trips by rolling out new vacation packages, a sign that they believe the government will push through the holiday proposals soon.

Analysts say the biggest travel companies are the ones most likely to benefit from the overhaul because they have the scale and network to respond to the heightened demand for road trips and weekend getaways.

They include two companies listed on Nasdaq as American depositary receipts: Ctrip.com International, China's largest hotel and airline-ticket aggregator by revenue, and Home Inns & Hotels Management, the largest Chinese economy-hotel chain by outlets. Another likely beneficiary is Shanghai-listed operator China CYTS Tours Holding, part of a travel group set up by the Communist Party's Youth League.

Some analysts say that because the possible holiday changes haven't been well publicized, these probably aren't reflected in the price of travel stocks.

The government is proposing that three traditional Chinese festivals become public holidays -- and subsequently long weekends. It also wants to introduce paid vacation days. It isn't clear when the changes will be announced, though state media have said revisions in public holidays might be implemented as soon as February.

The upshot of the changes is that for the first time, Chinese workers can decide when they want to travel. Until now, they could only find the time to head out during the country's three weeklong 'Golden Week' holidays, either during the Spring Festival, May's Labor Day or over October's National Day.

During last month's Golden Week, 146 million Chinese hit the road. Such en-masse traveling has created severe transportation and accommodation problems, and travel operators complained about being unable to cope. Now, the government may cancel the Labor Day 'Golden Week' and turn it into a one-day public holiday May 1.

'The country's planners appear to have concluded that more holidays, spread throughout the year, would do more to promote consumption and cause less disruption to the economy,' says Jing Ulrich, chairman of China equities at J.P. Morgan Securities.

The government's aim in increasing holidays is part cultural awakening, part economics. It wants to revive awareness of old customs among the young, a generation that hasn't celebrated festivals as formal occasions because they were abolished during the Cultural Revolution. The designated festival vacations are Tomb-Sweeping Day, a time to pay respects to ancestors and already a holiday in Hong Kong; the Dragon Boat, or 'dumpling,' Festival; and the Mid-Autumn, or 'mooncake,' Festival. In all, China would have 11 national holidays, one more than now.

Another proposal aims to give Chinese workers at least five paid vacation days a year. Many Chinese companies offer paid vacations on a discretionary basis, or not at all, but this change would make giving annual leave compulsory.

Investors have been treating China's tourism companies as proxies for the fast-growing Chinese economy. The World Bank forecasts it will grow 11.3% this year and 10.8% in 2008. The country's tourism sector last year earned $84 billion, up 18% from 2005, according to official figures.

Yet investor enthusiasm for Ctrip, Home Inns and even domestically listed CYTS has dipped recently, as recent mortgage-related troubles in the U.S. and high world oil prices have sparked fears that global economic growth could slow. Nasdaq shares of Home Inns are 24% below their 52-week-high close. Ctrip's stock had its highest close in a year on Nov. 8, following the company's announcement of good results, but has since fallen about 3% on Nasdaq. Meanwhile, shares of CYTS are down 29% from their 52-week high of 32 yuan ($4.31) on Sept. 10. Analysts say the price dents present a window for investors to position themselves for next year's changes.

With holidays spaced out more through the year, Home Inns anticipates earnings should fluctuate less next year. 'We expect to see more stability in the business in the future,' says May Wu, its chief financial officer. Tomorrow, Home Inns will announce third-quarter earnings.

Home Inns recently acquired Shanghai Top Star Hotel Management, giving it a presence in secondary cities and adding about 4,200 rooms to its total. Ms. Wu has said her company plans to have 1,000 hotels in three to five years, up from 201 now.

Friday, Home Inns closed at $37.07 on Nasdaq. Credit Suisse has a 12-month target of $61.20.

At Shanghai-based Ctrip.com, third-quarter net income beat analysts' expectations by rising 78% to $14.6 million. The company, customers of which are mostly business travelers, has been pushing more packaged tours aimed at high-income leisure travelers.

The proposed vacation changes could mean a drop in business travelers but a demand increase for leisure travel, says Jane Sun, Ctrip's chief financial officer. 'We would expect total volume of travel to be fairly consistent,' she says.

'I have a 'strong buy' on this stock because it already has very strong revenue drivers even without the proposed changes,' says Catherine Leung, an analyst with Citigroup in Hong Kong. For Ctrip shares, she has a 12-month price target of $75 -- 23% above Friday's close of $60.73.

CYTS, the first travel agency to list shares on the mainland, has moved into managing low-priced hotels and resorts. Its net income for the first nine months of the year rose 83% to 126 million yuan.

Zeng Guang, an analyst with China Jianyin Investment Securities, says that while the loss of a weeklong break may mean less overseas travel by Chinese tourists, domestic tours probably will heat up. This would help operators like CYTS that focus mainly on travel within China.

'Holiday changes will boost short trips,' says Mr. Zeng, who has a six-to-12-month target of 32 yuan on the stock. CYTS closed at 22.59 yuan Friday in Shanghai.

明年中国公民的假期有望至少增加六天，分析师表示，休假时间的增多可能会令中国繁荣的旅游业进一步升温。

旅游业人士认为，政府很快将制定新的休假方案，为此他们正在推出一系列新的度假计划，以适应休假天数增多、假期跨度缩小的新局面。

分析师称，实力雄厚的大型旅游公司可能会从休假方案调整中受益最多，原因是它们具有规模和网络分布上的优势，可以满足不同旅行人群的需求。

这其中包括两家在纳斯达克上市的公司：中国收入最高的酒店和机票预订服务商携程旅行网(Ctrip.com International)，中国门店数量最大的经济型酒店连锁企业如家快捷酒店管理公司(Home Inns & Hotels Management)。另一个可能的受益者是在上海证交所上市的中青旅控股股份有限公司(China CYTS Tours Holding, 简称：中青旅)，该公司隶属于中国共产主义青年团成立的一个旅游集团。

一些分析师表示，由于具体的休假调整方案尚未公布，因此这一因素可能还没有反映在旅游类股的股价中。

政府准备将三个中国传统节日定为公共假日，从而形成三个连休三天的长周末。同时还准备推出带薪休假。尚不清楚何时会宣布假日调整方案，但国家媒体表示，公共假日的新方案最早可能会从2月份开始实行。

这些调整的意义在于，中国的劳动者首次可以自行决定他们何时休假。直到目前为止，他们还只能在三个国家法定的黄金周假期──春节、五月份的劳动节和十月份的国庆节──期间休假。

在上个月的黄金周期间，共有1.46亿中国人外出。这种一窝蜂式的出行带来了严重的交通和食宿问题，旅游经营机构抱怨对此难以应付。如今，政府可能会取消五月份的黄金周，而将其变为五月一日休假一天的公共假日。

摩根大通(J.P. Morgan Securities)中国证券市场部总监李晶(Jing Ulrich)说，中国的政策制定者看来已得出结论：在增加假日天数的同时实现假日在一年中的均匀分布，将更有利于促进消费和减少对经济的负面影响。

政府增加假日既有复兴传统文化的目的，也有经济方面的考量。政府希望重新唤起年轻人对传统风俗的认识。准备列为公共假日的是清明节（香港已将其作为假日）、端午节和中秋节。这样，中国将有11天全国性假日，比目前多一天。

另一个提议是让中国的劳动者每年能获得至少5天的带薪年假。许多中国公司都未对带薪年假做出正式规定，甚至根本没有，这种改变将从法律角度保证年假的执行。

投资者一直将中国的旅游公司视为中国经济高速增长的代表。世界银行(World Bank)预测，中国经济今年的增长率为11.3%，2008年将增长10.8%。官方数据显示，中国旅游业去年创收840亿美元，比2005年增长了18%。

不过，由于不久前的美国次级抵押贷款危机和全球油价高企使人们担心世界经济增长可能放缓，投资者对携程旅行网、如家快捷酒店和中青旅的热情近期也开始降温。如家快捷酒店美国存托凭证的价格已较52周高点回落了24%。携程旅行网的美国存托凭证在该公司11月8日宣布良好业绩后创出年内新高，但此后已下跌了约3%。与此同时，中青旅的股价已较9月10日创出的人民币32元（合4.31美元）的52周高点下跌了29%。分析师表示，股价的下跌为投资者针对明年的情况调整头寸提供了机会。

由于假日变得更为分散，如家快捷酒店预计明年业绩的波动性将会降低。该公司首席财务长吴亦泓(May Wu)表示，预计未来的业绩将更为稳定。如家快捷酒店将于周二公布第三季度业绩。

如家快捷酒店最近收购了七斗星商旅酒店(Shanghai Top Star Hotel Management)，借此进入了二线城市，并因此新增客房4,200间。吴亦泓曾表示，如家快捷酒店计划在三至五年内拥有1,000家酒店。目前该公司共有201家酒店。

上周五，如家快捷酒店收于37.07美元。瑞士信贷(Credit Suisse)为其设定的12个月目标价为61.20美元。

总部位于上海的携程旅行网第三季度净利润增长78%，至1,460万美元，超出了分析师预期。该公司一直在向高收入的休闲游客户推出更多旅行方案。迄今为止，携程旅行网的客户多为商旅人士。

携程旅行网首席财务长孙洁(Jane Sun)表示，假期的修改可能会带来商务旅行人数的下降，但休闲游的需求可能上升。她说，预计旅行总人数会基本稳定。

花旗集团(Citigroup)驻香港分析师Catherine Leung说，她对携程旅行网的评级为强烈建议买进，因为即使在休假方案不调整的情况下，该公司的收入增长势头也非常强劲。她为携程旅行网设定的12个月目标价为75美元，比上周五60.73美元的收盘价高出了23%。

作为首家在中国内地上市的旅行社，中青旅已经涉足低价酒店和度假村经营业务。该公司今年前9个月的净利润增长了83%，为人民币1.26亿元。

中国建银投资证券有限责任公司(China Jianyin Investment Securities, 简称：中投证券)分析师曾光说，尽管为期一周的长假期取消了一个可能会导致中国公民海外游的减少，但国内游却可能升温。这将有助于中青旅等以国内游为重点的运营商。

曾光表示，假期的调整将会推动短途旅游。他为中青旅设定的6至12个月目标价为人民币32元。上周五中青旅收于22.59元。

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