China Travel (Hong Kong) has swung back to profitability, and the spin-off of its cultural and tourism businesses in Hong Kong and Macao has entered the countdown phase.
This is the first interim performance after the company completed the divestment of its tourism real estate business and fully focused on the core track of scenic spot destinations.
In the first half of the year, the company recorded revenue from continuing operations of HK$2.056 billion, representing a 13% increase over the same period of the previous year (the restated figure for the same period last year was HK$1.827 billion); profit attributable to shareholders was HK$112 million, turning around from a loss of HK$86.85 million in the same period last year; basic earnings per share was 2.02 HK cents, compared with a loss of 1.57 HK cents in the same period last year.
As disclosed in the interim performance announcement, the turnaround to profitability is mainly driven by the superposition of three factors. First, the company completed the in-specie distribution on December 22, 2025, to spin off and clear the loss-making tourism real estate business from the group — in the same period of last year, this discontinued operation recorded a loss of HK$137 million, which directly dragged the group's performance during the period to a loss of HK$74.76 million.
Wu Qiang, Chairman of the Group, Feng Li, General Manager, and Xie Dong, Chief Financial Officer, attended the performance press conference today (September 1). Xie Dong, Chief Financial Officer, stated that the spin-off process is currently advancing in an orderly manner, and the company will accelerate the promotion in accordance with established procedures. After there is substantial progress, it will be announced to the market in due course, and the company will focus on accelerating the business development of the two listed companies in the follow-up. He emphasized that the company will first focus on the spin-off of Hong Kong and Macao businesses, and then the Hong Kong and Macao team will further explore the possibility of developing student dormitory businesses.
Another reason for the turnaround in performance is that the Songhua Lake Company and China Travel Service Ice & Snow Company, whose acquisition was completed in the second half of 2025, brought new revenue growth drivers; in addition, the implementation of strategies has promoted operational improvement. According to the profit statement, operating profit in the first half of the year was HK$142 million, a year-on-year increase of about 60%; the change in fair value of investment properties was negative HK$91.48 million, which narrowed compared with the loss of HK$123 million in the same period of last year, also providing support to the profit side. Profit from continuing operations for the period was HK$102 million, a significant increase from HK$62.63 million in the same period of last year; total comprehensive income was HK$323 million, compared with HK$164 million in the same period of last year.
Data source: 2026 Interim Performance Announcement of China Travel International Investment Hong Kong Limited
However, another aspect of the quality of the turnaround is also noteworthy. Calculated based on the data in the announcement, the cost of sales in the first half of the year was HK$1.468 billion, a year-on-year increase of 16.7%, which was faster than the 13% growth rate of revenue. The gross profit margin dropped from about 31.2% in the same period of last year to 28.6%, a year-on-year decrease of about 2.5 percentage points; net financial costs were HK$19.9 million, a significant expansion from HK$4.5 million in the same period of last year, mainly due to the increase in financial costs to HK$34.21 million; the passenger transport segment turned from a profit of HK$7.8 million in the same period of last year to a loss of HK$8.73 million.
In addition, share of profit of associates amounted to HK$5.28 million (HK$430,000 in the same period of last year), share of profit of joint ventures amounted to HK$47.23 million (a year-on-year increase of 4.4%), and the narrowing of non-recurring fair value changes also amplified the improvement of book profit to a certain extent.
In terms of segment structure, the profit balance is clearly tilted towards the scenic spot segment. According to the announcement, revenue from tourism scenic spots and related businesses was HK$988.5 million, a year-on-year increase of 37%, and the segment performance was HK$108.0 million, a substantial increase from HK$22.4 million in the same period of last year; revenue from travel document and related businesses was HK$127.7 million, a year-on-year decrease of 13%, and the segment performance was HK$47.82 million, a 29% decrease from HK$67.18 million in the same period of last year; revenue from hotel business was HK$426.0 million, a slight year-on-year decrease of 1%, and the segment performance was HK$104.5 million, a 3% decrease from HK$101.5 million in the same period of last year; revenue from passenger transport business was HK$501.2 million, a year-on-year decrease of 2%, and the segment turned from profit to loss.
Calculated based on the data in the announcement, among the total performance of HK$251.5 million from the four reportable segments, the scenic spot segment contributed about 43%, while the revenue of the three Hong Kong-based businesses of travel documents, hotels and passenger transport all declined, forming another picture parallel to the high growth of the scenic spot segment.
The internal performance of the scenic spot business also shows differentiation. According to the announcement, revenue from theme parks was HK$253 million, a year-on-year decrease of 7%, and attributable profit was HK$18 million, a year-on-year decrease of 20%, mainly affected by intensified market competition and rainy weather; revenue from natural and cultural scenic spot destinations was HK$517 million, a year-on-year increase of 14%, and attributable profit was HK$46 million, a year-on-year increase of 2,472% — of which revenue from Shapotou Scenic Area was HK$164 million, a year-on-year increase of 18%; revenue from Yunnan Company was HK$87 million, a year-on-year increase of 22%; revenue from Detian Scenic Area was HK$171 million, a year-on-year increase of 47%, receiving 1.5 million tourists, a year-on-year increase of 41%, hitting an all-time high; the Qinghai Heidushan Scenic Area, newly established in March 2026, recorded revenue of about HK$21 million and achieved profitability within 3 months of opening. Revenue from leisure resort scenic spot destinations was HK$219 million, and attributable profit was HK$44 million, of which Songhua Lake Company and China Travel Service Ice & Snow Company contributed revenue of HK$163 million and HK$45 million respectively, indicating that the two ice and snow asset acquisitions completed in the second half of 2025 have become real growth drivers.
Feng Gang stated that during the summer vacation, the number of tourist receptions, operating revenue and profits of mainland tourist scenic spots all showed a good growth trend, but the operation of theme parks fell short of expectations due to factors such as aging products and peer competition, and renovation and upgrading will be carried out in the future.
Data source: 2026 Interim Performance Announcement of China Travel International Investment Hong Kong Limited
In terms of financial position, the announcement shows that as of the end of June, the group's total assets amounted to HK$184.70 billion (HK$183.25 billion at the end of 2025), and total equity amounted to HK$135.37 billion (HK$132.68 billion at the end of 2025); cash and bank balances plus pledged restricted deposits totaled HK$288.7 million, bank and other borrowings, borrowings from fellow subsidiaries and borrowings from the holding company totaled HK$221.4 million, and the debt-to-capital ratio was 32%.
The Board of Directors has declared an interim dividend of 1 HK cent per share, totaling about HK$55.366 million, which was not available in the same period of last year. The dividend is expected to be paid on October 20, with the ex-dividend date being September 17, and the share transfer registration will be suspended from September 21 to 23. Calculated based on the data in the announcement, based on the profit attributable to shareholders of HK$112 million, the dividend payout ratio is about 49%, which is consistent with the caliber disclosed in the announcement.
Capital operation is another main line of this announcement.
The announcement discloses that the company proposes to spin off its wholly-owned subsidiary China Travel Hong Kong-Macao Cultural Tourism Holdings by way of in-specie distribution, covering the three Hong Kong-based businesses of travel documents and related businesses, hotels and passenger transport, and to independently list on the Main Board of the Stock Exchange of Hong Kong by way of introduction. The listing application was submitted on May 20, 2026, and the Stock Exchange has confirmed that the company may proceed with the spin-off. After the completion of the spin-off, the group will retain the tourism scenic spot and related businesses.
It should be noted that as of the end of June, the relevant businesses did not meet the "highly probable" criteria of Hong Kong Financial Reporting Standard No. 5 and were not classified as discontinued operations. This means that if the spin-off is finally implemented, the statement structure of China Travel International Investment Hong Kong will change again. The three businesses of travel documents, hotels and passenger transport that contribute stable cash flow but lack growth momentum will leave the listed entity, leaving the scenic spot destination assets with greater revenue elasticity and more obvious profit fluctuations.
Xie Dong pointed out that the spin-off work is advancing in an orderly manner, and in the future, China Travel International Investment Hong Kong and Hong Kong-Macao Cultural Tourism will focus on their respective main businesses to accelerate development.
This article is from the WeChat official account "View", author: View New Media, published with authorization from 36Kr.