The share prices of Hong Kong/China travel & leisure companies under our coverage have risen by an average 8% YTD versus 4%/-3% for the HSI/CSI300 indices, and we think there is further room for re-rating. Combining findings from three UBS Evidence Lab datasets (> Access Datasets) and our proprietary research, we think there is upside to current market expectations—our forecasts for domestic tourist numbers/tourism revenue are 9%/20% above CTA estimates, mainly as we think: 1) the mid-to-highincome travellers' consumption rebound is underestimated, and 2) the effect of China's 'internal circulation' policy (see page 8) is yet to play out. We prefer duty-free operators, hotels, theme parks, toll roads, airlines and travel agencies.