Of course, there are arguments as to why China should or should not bow to U.S. demands, and the inv...
Travel surges on China's National Day holiday and so do ADRs of Home Inns and Hotels
10/11/2013 7:20 pm EST
Part of the reason is a October 10 recommendation from Goldman Sachs that added the ADRs to its top pick list. And part of the reason is a huge surge in domestic travel during China’s recently concluded National Day holiday week. (Home Inns and Hotels Management is a member of my Jubak’s Picks portfolio http://jubakpicks.com/ )
Goldman’s call is based on a belief that China’s economy is picking up speed again. As the economy recovers tourism and business travel pick up and budget chains, of which Home Inns and Hotels is the largest in China, see occupancy rates climb. That in turn pushes up the all-important RevPAR (revenue per available room) numbers.
But huge growth in travel and tourism during the National Day holiday also demonstrates the potential in China’s domestic travel and hospitality sector. Tourism revenue climbed 21% to 223 billion yuan ($36.4 billion) during this year’s National Day holiday from the same holiday in 2012, according to the China National Tourism Administration.
You didn’t need a market researcher to see the trend during the October 1 to 7 holiday. Just counting heads would do. For example, almost 1 million people visited Beijing’s top tourist sights on October 3 alone with 175,000 crowding into the Forbidden City.
As of October 11, I’m raising my target price on Home Inns and Hotels to $43 an ADR by March 2014 from my recent target of $37.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares of Home Inns and Hotels Management as of the end of June. For a complete list of the fund’s holdings as of the end of June see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/
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