\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Event comments
On January 21, 2022, China Tourism Group Duty Free Corporation Limited(601888) released 2021 performance express. In 2021, the revenue was 67.669 billion yuan, a year-on-year increase of 28.65%; The net profit attributable to the parent company was 9.592 billion yuan, a year-on-year increase of 56.23%, and the non net profit attributable to the parent company was 9.472 billion yuan, a year-on-year increase of 58.73%. Among them, Q4 revenue in 2021 was 18.170 billion yuan, a year-on-year increase of 4.08%; The net profit attributable to the parent company was 1.101 billion yuan, with a year-on-year change of – 63.00%; Net profit deducted from non parent company was 1.083 billion yuan, with a year-on-year change of – 63.59%.
The vigorous development of tax-free business on outlying islands has boosted the strong growth of the company’s performance. During the reporting period, the company focused on the main duty-free business and paid close attention to the duty-free market of Hainan outlying islands. The duty-free business of outlying islands continued to grow at a high speed. According to the statistics of Haikou customs, the tax-free sales of Hainan outlying islands reached 60.173 billion yuan in 2021, with a year-on-year increase of 84%. The tax-free sales of outlying islands showed a rapid development trend. In the context of the outbreak of the epidemic, cross-border travel controls have been tightened, overseas consumption has returned significantly, and the demand for tax exemption on China’s outlying islands has increased. At the same time, the state has gradually relaxed the tax exemption policy for outlying islands, giving strong support to the tax-free industry of Hainan outlying islands and the layout of the company’s tax-free business. On January 19, 2022, the five ministries and commissions issued a notice that, in order to alleviate the impact of the epidemic on market subjects, duty-free shops that have been approved to set up and completed bidding in accordance with the management measures can extend the business period determined during the bidding of duty-free shops on the basis of friendly negotiation, which can only be extended once for up to two years. The business term after extension can exceed 10 years. If the operation period can be extended, it will help the company continuously deepen its business layout and achieve more long-term and rapid growth by virtue of its leading advantages.
The short-term impact of the epidemic does not change the company’s long-term growth logic. The state attaches importance to the development of tourism. In the future, with the continuous improvement of the epidemic situation, the company will obtain broader development space and show bright growth. Q4 of the company in 2021 was repeatedly impacted by the epidemic, and the profit end was under pressure due to the large discount and the increase of online proportion. On January 20, 2020, the State Council issued the tourism development plan of the 14th five year plan, which further reflects the country’s attention to the development of tourism, the construction of a tourism power and a cultural power. We believe that with the gradual improvement of the epidemic situation, the discount strength of the company is expected to decline, and the offline business will continue to recover due to the gradual recovery of passenger flow. The company is expected to show sustained high-speed growth under the trend of consumption return + policy support + continuous improvement of its own quality.
Investment advice
The company is expected to reduce discounts, increase the proportion of offline consumption and gradually improve the pressure on the profit side when the epidemic situation gradually improves in the future. The company’s offshore duty-free business is developing rapidly. In the future, the company as a whole is expected to show sustained high-speed growth under the trend of consumption return + policy support + continuous improvement of its own quality. Maintain a “strongly recommended” rating.
Risk tips
Repeated epidemic impact; Macroeconomic fluctuations; Policy fluctuation risk.
