What’s new？ China Travel signs strategic agreements for Heibei and JianchuanChina Travel announced yesterday that as of April 6, it entered into a strategicframework agreement with Heibei Tourism Investment Group to jointly developtourism resources in the Beijing-Tianjin-Heibei region:
　　The joint venture will be owned 60% by the company and 40% by HebeiTourism Investment.
　　The joint venture will be given priority for development of quality tourismresources owned by both parties, and it will focus on promoting the jointdevelopment of tourism resources in Jinshanling.
　　In addition, China Travel entered into a strategic framework agreement withthe Dali Bai Autonomous Prefecture People’s Government of Jianchuan Countyto jointly develop tourism resources in Jianchuan County （in Yunnan province）：
　　The joint venture will focus on quality tourism resources, including ShibaoMountain, Shaxi Ancient Town, Jianchuan Ancient City, and QianshiMountain.
　　Deutsche Bank view: aagreements confirm expansion pipeline for touristvenues
　　The strategic agreements confirm our view about China Travel’s assetrestructuring plan. Although China Travel HK has several dominant naturaltourism resources, it has been operating some unprofitable segments （such asJigongshan Mountain and Zhuhai Ocean Spring Resort） for a long time. On theone hand, the new stock option scheme will likely incentivize the company toeither dispose of or turn around the loss-making assets; on the other hand, thecompany is focusing on increasing its number of tourist sites.
　　To recap, China Travel entered three areas in its business framework – with theLeshan Sichuan, Shandong and Dali Yunnan governments – in 2016.
　　A more concrete plan has been confirmed now, and we believe Yunnan will bethe company’s main focus for the next two-three years:
　　Yunnan province drew 431m tourists in 2016, with 31% yoy growth.
　　Hebei province drew 467m tourists in 2016, with 25.5% yoy growth.