China Travel （0308.HK） attended our dbAccess Asia Conference today.
　　Management guidance is unchanged; and the following are the key takeawaysfrom the conference:
　　Natural and cultural sites continue to be the focusManagement identifies natural and cultural sports as the key focus of thecompany’s future development, and guides the replication of the success ofthe Shapotou project at other scenic spots, including Songshan Mountain.
　　New project development is on track
　　China Travel is in discussion with the Sichuan, Shandong, and Daligovernments on tourism projects in those areas. Management aims tointroduce a new project in 2H16. The company will continue to look into otherinvestment opportunities, including government projects, projects by privateparties, listed companies’ projects, and overseas projects. In evaluatingpotential acquisition targets, management guides an IRR threshold of c. 12%.
　　Leisure resort – to turn around Zhuhai OSR in the near termManagement guides a turnaround of Zhuhai OSR phase one in three years.
　　In addition, China Travel has entered a cooperation agreement withEvergrande （3333.HK, Sell, TP HKD1.97） on the real estate development ofZhuhai OSR phase two, which aims for pre-sale in 2H16. Profitcontribution from the phase two real estate project is expected in 2018.
　　The company’s Anji phase one, which has an area of 30,000 sqm and 188apartments, started its pre-sale in 2H15 at an average price of HKD13,000.
　　Management aims to record profit from the Anji pre-sale later in 2016 or in2017. China Travel plans to work with a third-party developer for the futuredevelopment of Anji real estate.
　　Share buyback
　　YTD, China Travel has spent HKD188m on share buybacks, and repurchased74m shares at an average price of HKD2.53 per share. Management guides acontinuation of its buyback program.
　　Group level consolidation
　　CITS Group, the parent company of CITS （600188.SS, Buy, TP RMB65）， isdiscussing to merge with China National Travel Service Group, the parentcompany of China Travel. After such a merger, China National Travel ServiceGroup would become the only tourism-related SOE.