Shenwan Hongyuan Group Co., Ltd. has reiterated its "Buy" rating on TRAVELSKY TECH (00696), citing the recovery of the civil aviation industry, expanded marketing investments, and improved operational efficiency through effective management. As China's dominant aviation IT solutions provider, the company leverages its affiliation with TravelSky and strategic partnership with shareholder Meituan to evolve into a top-tier OTA platform.

Short-term strategy follows the operational model of flight management platforms, launching OTA services starting with air tickets, with breakeven expected soon. Long-term plans involve complementary collaboration with Meituan's ecosystem to establish itself as a pillar OTA platform rivaling Ctrip and Tongcheng.

Key insights: 1. Market Leadership: TRAVELSKY TECH is China's primary aviation IT provider, deeply integrated with the industry's digital transformation since 1984. It completed foundational IT systems by 2008 and expanded services through 2024, launching an official aviation direct sales platform in July 2025.

2. GDS Dominance: As the world's third-largest and China's top GDS provider (95% domestic market share), its TravelSky system handles 28% of global transactions.

3. Industry Recovery Drivers: - Flight bookings reached 732 million in 2024, surpassing 2019 peaks - Projected 6% CAGR growth in Chinese air travel frequency over the next decade - Airport expansion to 400 facilities (4% CAGR) and industry CAPEX exceeding ¥200 billion in 2024

4. Pricing Recovery: - Airlines approaching breakeven in 2024, supporting ASP improvement - Visa-free policies boosting international travel, enhancing ASP structure

5. OTA Expansion: The July 2025 launch of its official direct sales platform enters the trillion-yuan OTA market, addressing airlines' overreliance on traditional OTAs.

Risks include slower-than-expected aviation recovery, international travel rebound delays, and challenges in foreign airline business expansion.