CICC has released a research report maintaining its earnings forecasts for TRAVELSKY TECH (00696) at RMB 2.327 billion for 2025 and RMB 2.581 billion for 2026. The current stock price corresponds to 13.6x 2025 P/E ratio and 12.1x 2026 P/E ratio. The firm maintains its outperform industry rating and HK$13 target price (corresponding to 15x 2025 P/E ratio and 13x 2026 P/E ratio), representing 10.2% upside potential from the current stock price.

For 1H25, the company reported revenue of RMB 3.895 billion, down 3.6% year-on-year, while net profit attributable to shareholders reached RMB 1.448 billion, up 5.9% year-on-year, meeting market expectations. CICC's main observations are as follows:

**AIT Business Processing Volume Remains Stable; System Integration Business Drags Revenue Growth**

1H25 AIT business revenue increased 2.1% year-on-year, with total reservation volume up 5.3% year-on-year. According to the company's operational data announcement, 1H25 processing volume for Chinese airlines increased 5.5% year-on-year, while foreign and regional airline system processing volume declined 7.8% year-on-year, showing relatively slow recovery.

System integration business revenue declined 38.5% year-on-year, dragging down overall company revenue growth, primarily due to project construction progress impacts. For 1H25, settlement business, data network, and technical support & product revenues grew 12.4%, declined 12.4%, and increased 30.4% respectively year-on-year.

**Operating Costs Decline; Collection Situation Improves**

1H25 operating costs decreased 4.2% year-on-year, mainly benefiting from: 1) Depreciation and amortization costs declined 17.6% year-on-year as some fixed assets and intangible assets completed their depreciation cycles; 2) Integration business sales costs dropped 52.1% year-on-year due to project construction progress impacts.

Additionally, the company recorded a net reversal of credit impairment losses of RMB 177 million in 1H25 (compared to RMB 66 million in 1H24), primarily due to improved customer collections and reduced bad debt provisions for accounts receivable.

**Recommend Monitoring Operations of Joint Venture CAAC Mobile Technology ("Umetrip" Operator)**

According to the company's 2024 annual report, as of end-2024, the company held a 20.66% stake in CAAC Mobile Technology Co., Ltd. According to the Civil Aviation Administration of China website, the Umetrip app officially launched its "Civil Aviation Official Direct Sales Platform" function in July, allowing users to compare and purchase direct airline tickets from multiple carriers on a single interface, with Umetrip as the platform operator not charging ticket agency fees. The firm recommends continued monitoring of recent changes in Umetrip user activity and potential impacts on its commercialization.

**Risk Factors:** Civil aviation demand below expectations; cost growth exceeding expectations; large impairment provisions.