China Travel Int’l spinoff spotlights its natural scenery and cultural tourism aspirations

After divesting its real estate business last year, the company continues to restructure with plans to spin off its HKM Culture Tourism unit for a separate Hong Kong listing

Key Takeaways:

• China Travel International will spin off its HKM Culture Tourism business via an in specie stock distribution to its shareholders
• The state-owned tourism company is reorganizing to focus on its theme parks and natural scenery business

By Lau Chi Hang

After going nowhere in recent months, shares of China Travel International Investment Hong Kong Ltd. (0308.HK), or CTI, suddenly came to life on May 15, rising over 7% in a single day. That marked the start of a brief rally that saw the shares skyrocket as much as 41% the next day, before giving most of that back to close up 5%. The sudden interest in an otherwise stodgy state-owned company became apparent days later when CTI announced last week it would spin off its CTG Hongkong and Macao Culture and Tourism Holding Ltd. (HKM Culture Tourism) unit for a separate listing in Hong Kong.

A Hong Kong Stock Exchange stalwart since its listing in 1992, CTI has four major businesses: tourist attraction and hotel operation, passenger transportation and travel document and related services. It later added real estate to develop property-based tourism spots.

Its HKM Culture Tourism spinoff will leave CTI with only its tourist attraction business, making it a pure-play tourism enterprise with heavy focus on theme parks and natural scenic spots.

The move is just the latest step in an ongoing restructuring for CTI. Last October, the company announced the divestment of its tourist property projects, transferring them to a private company. Shares in the private company were distributed to existing CTI shareholders, with an option to receive HK$0.336 per share in cash as an alternative.

Outside its tourism real estate spinoff, CTI has also been acquiring new tourism projects. It spent 300 million yuan ($44 million) and assumed 755 million yuan in bank loans to acquire the Songhua Lake Ski Resort in Northeast China’s Jilin province from embattled property developer Vanke, along with the resort’s management company. It also acquired China Travel (Beijing) Bingxue Sports Development Co. Ltd.

In its theme park segment, the company is in the process of upgrading its older Window of the World and Splendid China theme parks, both in the Southern boomtown of Shenzhen, through introduction of new intellectual properties (IPs). The former will position itself around classic global cultural experiences, introducing IPs and leveraging technology to construct immersive scenes. The latter will focus on Chinese cultural IPs, collaborating with the Shenzhen municipal government and other stakeholders to create a more unique and contemporary experience.

Well-played strategic move

Spinning off HKM Culture Tourism in the latest step of its reorganization will allow CTI to focus more fully on its business of operating tourist attractions, a move expected to benefit all parties involved.

For CTI, the spinoff will produce two separately listed companies, each focused on its respective strengths and operations, improving their strategic clarity and operational efficiency. Each of the two entities will also have its own fundraising platform, enabling it to raise capital independently and directly through the public market.

For investors, the two listed companies will be clearly delineated in terms of what they do following the spinoff. CTI will focus on natural and cultural scenic spots as well as theme parks in Mainland China, while HKM Culture Tourism will operate businesses in ancillary tourism industries, enabling investors to assess both companies more precisely.

An uncertain future for HKM Culture Tourism

While the restructuring will undoubtedly benefit CTI, prospects look less optimistic for the newly spun-off HKM Culture Tourism, which operates in passenger transportation, hotel operations and travel document services.

The company’s passenger transport business operates the TurboJET service, which boasts a fleet of 22 high-speed ferries traveling between Hong Kong and Macao; and CTS Bus, which operates 221 tourist coaches and 44 commercial vehicles covering cities across the Greater Bay Area in South China’s Guangdong province.

Its hotel operations feature three brands: Metropark, Kew Green, and Green Residence. It operates a total of seven hotels and one serviced apartment spread across Hong Kong, Macao and Beijing, with 2,563 rooms at the end of last year.

In terms of its travel document business, the company is the exclusive agent for CTS Holdings’ travel document administration services in Hong Kong. It is best known for processing Mainland Travel Permits for Hong Kong and Macao Residents, commonly known as “Home Return Permits,” according to the company’s prospectus for its Hong Kong listing.

According to the listing document, HKM Culture Tourism’s revenue has been relatively flat over the last three years, rising slightly from HK$2.19 billion ($280 million) in 2023 to HK$2.24 billion the next year, only to fall back to HK$2.2 billion in 2025. But its profit has been falling steadily over that time, more than halving from HK$479 million in 2023 to HK$194 million in 2024, and falling further still to HK$117 million last year.

The shriveling profits owe partly to relatively large losses on the company’s investment properties. That impact is expected to diminish going forward with the spinoff of its tourist property business last October. But even the company’s gross profit, which doesn’t include investment losses, has been on a continuous downward trajectory over the past three years, falling from HK$806 million in 2023 to HK$624 million last year.

Among HKM Culture’s three core businesses, only hotel revenue has been growing, rising 8% year-on-year last year to HK$890 million. On the other hand, its passenger transportation revenue dropped 4.4% to HK$1 billion, and document-related services fell by an even sharper 18.7%.

The reality is the TurboJET service operating between Hong Kong and Macao is unlikely to return to its past glory, as travelers no longer rely on maritime transport following the completion of a bridge connecting Hong Kong and Macao in 2018. The travel document service has also been subsiding to more normal levels following a period of “revenge” travel post-pandemic. And the hotel business, despite logging some growth, is hardly a huge operation with fewer than 3,000 rooms. Constrained by its limited scale, it’s hard to imagine any big breakthroughs for the company to excite investors in the near term.

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