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<Research>HSBC Research: Cutting JP Flights Poses Direct Risk to CN Airline Earnings; TONGCHENGTRAVEL, TRIP.COM-S Benefit from Stable Travel Demand
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While China has recently urged its citizens to avoid traveling to Japan, Chinese airlines have reportedly received instructions to cut Japan flights until the end of March 2026, which, as HSBC Global Research said in its report, will pose a direct risk to their earnings. Since the pandemic, China-Japan routes have been highly profitable for Chinese airlines, but the extension of flight reductions will now cover the lucrative Lunar New Year holiday. That said, travel demand won't disappear even though the number of tourists traveling to Japan will decrease. Travelers will only be prompted to change their destinations. It is expected that TONGCHENGTRAVEL (00780.HK) can capitalize on increased domestic travel demand, while TRIP.COM-S (09961.HK) will benefit from travelers shifting to other international destinations. HSBC Global Research reiterated a Reduce rating for AIR CHINA (00753.HK), CHINA EAST AIR (00670.HK), and CHINA SOUTH AIR (01055.HK), with target prices of HKD4.3, HKD2.6, and HKD3.3, respectively. Optimistic that stable travel demand will serve as a boon for TONGCHENGTRAVEL and TRIP.COM-S, the broker gave TONGCHENGTRAVEL a Buy rating and a target price of HKD26, while rating Trip.com (TCOM.US) as Buy, with a target price of USD90. AAStocks Financial News |
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