According to the Zhongtong Finance APP, Sinolink Securities released a research report stating that the stock performance of consumer service demands has been weak since the beginning of 2024, and the scenic spot sector has relatively better performance benefited from continuous release of leisure travel demands and the catalyst of cultural and tourism hot events. Hotel sector is facing the pressure of supply recovery and fluctuation of business travel demands, while catering is facing short-term pressures such as reduced average spending and frequency of customer visits. The current market is gradually shifting from the focus on "recovery elasticity" to "sustainability" for consumer services. The three main sectors that are bullish are leisure travel, cost-effective dining, and silver-economy. Key symbols of focus include Ctrip (09961), YATU (ATAT.US), Yum China (09987), Fu Shou Yuan (01448), and Dassault Systems Co., Ltd. (01405).

Tourism and hotel industry: bullish on continued leisure travel, and recommend OTA platforms.

Sinolink Securities pointed out that short-term residents' tourism willingness remains high. The key focus is on incremental contributions to the lower-tier market, inbound tourists and the elderly group. It is expected that 24E domestic tourism revenue is expected to increase by 11%, and the number of inbound tourists will recover and the unit price will be higher, which is expected to have a faster income growth rate than domestic tourism, thereby driving the overall domestic tourism revenue (domestic tourism + inbound tourism) to increase by 17.5%.

Recommendations: 1) Continuously bullish on OTA platforms that benefit from continued release of leisure demand both domestically and internationally, and an increase in online penetration rate. Pay close attention to Ctrip; 2) Scenic spots should prioritize artificial scenic spots with low base, strong marketing ability, and great potential for group customer recovery. At the same time, pay attention to the elastic natural scenic spots driven by improved transportation and tourism hot events. 3) In the hotel sector, it is recommended to focus on ATOUR Hotels, a brand that balances efficiency and service experience and has potential for increased retail space.

Catering industry: H2 base is expected to improve, and opportunities on the left side of cost-effective varieties should be focused.

Sinolink Securities pointed out that there is a high base effect due to the release of retaliatory demand in the same period of last year in the first half of this year. The latest April revenue in the social and catering industries above quota is 4.4% and flat year-on-year, and the high-base effect in the second half is expected to improve. In the short term, the high-frequency catering consumption emphasizes cost-effectiveness, and it is recommended to focus on the opportunities of the left side of the fast food category. Focus on Dassault Systems and Yum China.

Life services: demand is certain and supply is high-barrier, and industry leaders have outstanding long-term value.

According to data from the National Bureau of Statistics, there were 297 million people over the age of 60 in China in 2023, accounting for 21.1% of the total population, and China has entered an aging society. China has a profound culture of filial piety, and the demand for life services is certain. Urban land is scarce, and operating cemeteries are subject to strict approval processes. Fushouyuan has ample reserves of salable cemetery land and strong service capabilities. From 2010 to 2023, its revenue and net profit attributable to shareholders has a CAGR of 16.8% and 16.9%, respectively, with strong growth continuity, decreasing capital expenditures, abundant cash flow, and expected continuous dividend increases in the future.

Risk warnings: The release of consumer demand may not meet expectations, shortage of labor, significant rise in raw material prices, etc.