Market review last week:
Last week (01.17-01.21), the social service sector (Shenwan) fell 1.29%, the Shanghai Composite Index rose 0.04%, the Shenzhen Component Index fell 0.86%, and the Shanghai and Shenzhen 300 fell 0.16%. The social service sector lost 1.32 percentage points to the Shanghai composite index last week, ranking 19th among the weekly rises and falls of Shenwan’s 35 primary sub industries.
Core view:
On January 19, 2022, the Ministry of finance, the Ministry of Commerce, the Ministry of culture and tourism, the General Administration of customs and the State Administration of Taxation issued a notice on adjusting the operation and bidding period of inbound and outbound duty-free stores at ports during the epidemic period. The notice said that in order to alleviate the impact of the epidemic on market subjects, duty-free stores approved to be established in accordance with the management measures and have completed the bidding can extend the business period determined during the bidding of duty-free stores 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; From July 2020 to June 2022, for duty-free shops approved to be established according to the administrative measures but not yet completed the bidding, the time limit for completing the bidding within 6 months from the date of approval of establishment may not be subject to, but the bidding shall be completed before December 31, 2022 at the latest. The extension of business term and bidding time limit will provide tax-free enterprises with sufficient development time and space, and play a strong supporting role in improving the brand power and deepening the business layout of tax-free enterprises. The tax-free industry is closely related to relevant policies. At present, China’s tax-free industry policies are continuously liberalized, helping the tax-free industry enter a period of rapid growth. The adjustment of operation period, bidding period, etc. further reflects the overall trend of policy limitation relaxation. In the long run, the tax-free industry is expected to achieve strong growth under the logic of consumption return + policy support + continuous improvement of its own brand strength and product strength.
On January 20, 2022, the State Council issued the “14th five year plan” for tourism development, It is proposed to “innovate and improve China’s tourism under the condition of normalization of epidemic prevention and control, promote inbound tourism step by step and steadily develop outbound tourism under the premise of effective control of the international epidemic, strive to promote the deep integration of culture and tourism, strive to improve the modern tourism system and speed up the construction of a tourism power”, At the same time, it puts forward the development goal of “vigorous development of China’s tourism, orderly promotion of inbound and outbound tourism, obvious enhancement of the international influence and competitiveness of tourism, and significant progress in the construction of a tourism power” by 2025, and “basically building a world tourism power and making important contributions to building a cultural power” by 2035. The Winter Olympics and the spring festival may be regarded as the starting point for the recovery of tourism retail and other industries. In the future, with the gradual improvement of the epidemic situation, the tourist and travel passenger flow is expected to continue to rise. The attention and support of the national and local governments will help tourism retail and its corresponding sub industries to obtain stronger recovery momentum, such as duty-free, catering and wine stores. The proposal of this plan reflects the country’s attention to the construction of a powerful tourism country and the international development of tourism. The long-term development logic of the industry is good. After the end of the epidemic in the future, the industry is expected to recover and show an accelerated growth trend.
Company announcement and industry information:
China Tourism Group Duty Free Corporation Limited(601888) : in 2021, the company achieved a total operating revenue of 67.669 billion yuan, an increase of 28.65% over the same period of last year, and a net profit attributable to shareholders of listed companies of 9.592 billion yuan, an increase of 56.23% over the same period of last year; Huatian Hotel Group Co.Ltd(000428) : in 2021, the company expects the net profit attributable to the shareholders of the listed company to be 60-90 million yuan, an increase of 111.69% to 117.53% year-on-year. The impact of non recurring profits and losses on the current net profit is about 406.37 million yuan; Huangshan Tourism Development Co.Ltd(600054) : the company will transfer 100% of the equity of Huishang hometown cultural development group to Huangshan Huishang hometown company, a wholly-owned subsidiary of the company. Huangshan Yunding Investment Management Co., Ltd., a wholly-owned subsidiary of the company, plans to acquire 40.85% of the shares of Huangshan 600 mile Houkui tea industry held by Huangshan Saifu tourism and cultural industry development fund.
Investment suggestions:
Duty free industry: we are optimistic about the relatively clear recovery trend of the duty-free industry supported by the recovery of passenger flow. Related targets are China Tourism Group Duty Free Corporation Limited(601888) which is expected to show a recovery in revenue and profit after the recovery of passenger flow.
Hotel Industry: the upgrading of industry structure and chain trend are obvious, the brand, scale and management advantages of leading hotel groups are obvious, and there is good growth space in the future. Related targets include leading enterprises Shanghai Jin Jiang International Hotels Co.Ltd(600754) , Btg Hotels (Group) Co.Ltd(600258) , and Huazhu group.
Catering and Tourism: the recovery of the industry under the epidemic is under short-term pressure, and the trend of industry chain is obvious. Pay attention to the expansion and business performance of leading catering enterprises. The relevant targets include seabed fishing, sipping and sipping.
Risk tips:
Repeated epidemic impact; Macroeconomic fluctuations; Policy supervision risk.
