Key investment points
On November 10, the general office of Hainan Provincial People’s government announced the plan for building an international tourism consumption center in Hainan Province during the 14th five year plan, which clearly accelerated the development of the duty-free market for daily consumer goods, promoted the implementation of the tax-free policy for daily consumer goods of the island’s residents, issued the measures for the administration of “zero tariff” imported goods consumed by the island’s residents, and accelerated the coverage of all cities and counties on the island, The expected tax exemption on Hainan Island is one step closer.
When will the island tax exemption policy be introduced?
Under the impact of the epidemic, Hainan’s tourism industry was hit hard and its economy was weak. The tax exemption policy on the island is not only a booster for Hainan’s economic recovery, but also an important part of the policy of national free trade port demonstration base. With the gradual promotion of the tax-free policy on the island from 2020 to 2021, it is expected that the first batch of tax-free lists and the list of duty-free stores on the island will be launched one after another. The first batch of pilot projects will be carried out first, and the follow-up scope will be gradually expanded.
How big is the tax-free market space on the island?
The policy shows that the tax-free space planning on the island will cover the whole island. Then we preliminarily estimate that 19 cities and counties in the province are expected to achieve full coverage, 19 cities and counties are expected to achieve at least one duty-free store configuration, and many duty-free stores may be settled in core tourist cities such as Haikou and Sanya. In terms of tax exemption quota, with reference to the quota level before the adjustment of tax exemption on outlying islands in 2020, combined with the permanent population of Hainan of 10.08 million, if one tenth of the volume can be released, it is preliminarily estimated that the volume of tax exemption on the island is about 30 billion yuan, and the overall volume is close to the total tax exemption sales of Hainan outlying islands of 27.5 billion yuan in 2020.
What are the basic requirements for participants?
Through the list of “one negative and three positive” and the speeches of the official media, we can see the basic requirements of the investors settled in duty-free: first, they should have certain financial strength, national enterprises with good reputation and regional leaders deep in Hainan; Second, it can provide stable overseas supply channels and high-quality goods, focusing on FMCG necessary for daily life; Third, it is equipped with a bonded warehouse of a certain scale that can be used to store imported goods.
Involving industrial chain and related objects:
First, companies with tax exemption licenses. There are 10 licenses in China, of which China Tourism Group Duty Free Corporation Limited(601888) is the largest, with complete industry leading licenses, and many stores in Hainan; Four regional leading companies with tax-free licenses earlier (Zhuhai tax-free, Shenzhen tax-free, China export service tax-free and overseas Chinese tax-free (cancelled)); three new tax-free companies will obtain tax-free licenses in 2020, aiming at Hainan ( Wangfujing Group Co.Ltd(600859) , Hainan Development Holdings Nanhai Co.Ltd(002163) , Hainan Haiqi Transportation Group Co.Ltd(603069) ).
Second, actively distribute Hainan local enterprises that are duty-free on the island. Based on the direction of daily FMCG mainly for the convenience of the people, we screened 29 local listed companies in Hainan with high correlation with daily consumption, such as food and beverage, agriculture, forestry, animal husbandry and fishery, medicine and biology, leisure services, etc.
The third category is listed companies that are announcing their applications for licenses. In view of the high quality of the duty-free track, many listed companies scramble to apply for duty-free licenses, most of which are department stores. At present, there are 11 companies applying for tax exemption licenses: Shanghai Bailian Group Co.Ltd(600827) , Wuhan Department Store Group Co.Ltd(000501) , Guangzhou Lingnan Group Holdings Company Limited(000524) , Dashang Co.Ltd(600694) , Chang Chun Eurasia Group Co.Ltd(600697) , Nanning Department Store Co.Ltd(600712) , Hunan Friendship&Apollo Commercial Co.Ltd(002277) , Better Life Commercial Chain Share Co.Ltd(002251) , Zhongbai Holdings Group Co.Ltd(000759) , Fujian Dongbai (Group) Co.Ltd(600693) , Guangdong Highsun Group Co.Ltd(000861) . The progress of application still needs further attention.
Fourth, other listed companies that plan to layout tax exemption. The tax-free market is huge, and many enterprises have layout plans. At present, in the public information, Utour Group Co.Ltd(002707) , Shandong Hiking International Co.Ltd(600735) , Caissa Tosun Development Co.Ltd(000796) and Greenland Holdings Corporation Limited(600606) four listed companies plan to carry out tax-free business.
The essence of tax exemption is to benefit the people. As an important part of the two wheel drive of Hainan’s tax exemption system, it is the general trend to promote “zero tariff” on daily consumer goods of residents on the island. Although the tax exemption on the island is a new track, the volume is similar to that on the outlying islands, and the prospect is broad. Tax exemption on the island is expected to effectively boost domestic demand and activate consumption potential with rich consumption scenarios and convenient purchase process. With the further expansion of tax-free consumer groups, relevant business entities will usher in new performance growth points, and the incremental space is worth looking forward to. The 10 billion market nuggets are at the right time.
Risk statement
The impact of covid-19 epidemic, the policy was less than expected, and the economy accelerated downward.
