On The Platter

TravelSky (696 HK, TP HK$8.06, BUY):  Probably the best 2010 Shanghai World Expo play

TravelSky (TS) produced strong operational data for FY09 with a 17.9% YoY growth in flight bookings compared to our previous forecast of 15.2%.  This was mainly due to a resilient Chinese air travel market which grew 21.7% over the same period.  Going forward, we expect higher passenger air traffic in China as both domestic and global economic recovery spurs higher spending, and we forecast the 2010 World Expo in Shanghai to further complement this growth.  After incorporating higher air travel numbers, we increase our earnings forecast for FY09F, FY10F, and FY11F by 8.9%, 9.4%, and 1.8% respectively.  We believe TS is a unique play, and one of the cheapest ways to invest in the global economic recovery and the domestic Chinese consumption growth theme.  We reiterate our BUY rating with a target price of HK$8.06 based on our sum-of-the-parts valuation (SOTP), implying a c.30% upside from its last traded price. 

(Published on February 24)