Guotai Haitong Securities Co., Ltd. has released a research report suggesting that the strong expectation of an El Niño event could catalyze related consumption demand through summer travel and household power backup preparedness, driven by anticipated high temperatures.

The report recommends focusing on the following areas: 1) Cool destination assets: Locations with high latitude, high altitude, mountainous lakes, or forest ecosystems offer a tangible temperature difference and may experience stronger elasticity in summer tourist traffic. 2) Consumer-grade energy storage assets: Under extreme weather disturbances, household demand for backup power is expected to increase.

The primary views from Guotai Haitong Securities Co., Ltd. are outlined below:

El Niño Development Likely, High Temperature Outlook May Amplify Summer Demand

According to the latest forecasts from NOAA and WMO, the probability of El Niño forming has increased significantly, with a potential for moderate to strong evolution. El Niño events typically elevate global average temperatures and increase the likelihood of extreme weather. The WMO also predicts that temperatures from June to August will be above average across most regions globally. Domestically, China's National Climate Center anticipates that most parts of the country will experience above-average temperatures during the main flood season, with more high-temperature days. Phased heatwaves could impact residents' travel decisions.

The firm believes that with the叠加 of consumer demand for "cool retreats, family trips, long-distance travel, and natural scenery," destinations endowed with cool resources are poised to see stronger elasticity in summer tourist traffic.

Historical Performance of Cool Destinations During El Niño Years

During El Niño occurrence years such as 2004, 2009, 2015, 2018, and 2023, destinations like Xinjiang, Tibet, Jilin, and Changbai Mountain generally showed positive growth in tourist traffic. Excluding the low-base effect post-2020, the average tourist growth in El Niño years was approximately 21.2% for Xinjiang, 62.2% for Tibet, 15.9% for Jilin, and 14.6% for Changbai Mountain. Specifically, in 2015, tourist numbers in Xinjiang, Tibet, Jilin, and Changbai Mountain increased by about 23.4%, 28.8%, 16.5%, and 11.4% year-on-year, respectively. In 2018, the growth rates were approximately 43.2%, 31.5%, 15.3%, and 12.5%, respectively.

Consumer-Grade Energy Storage: A Potential Beneficiary

Extreme weather may amplify fluctuations in local power supply and demand, potentially benefiting demand for consumer-grade energy storage. El Niño could simultaneously intensify the impact of extreme events such as high temperatures, droughts, and heavy rainfall. Hot weather increases electricity demand for air conditioning and cooling equipment, while extreme weather may also raise the probability of local power supply interruptions. This could enhance household awareness and demand for emergency power sources, portable energy storage, balcony solar storage, and residential storage products.

Key Risk Factors

The report highlights risks including uncertainty in climate predictions, the impact of extreme summer weather, and a potential slower-than-expected recovery in consumer willingness to spend.