1、 Core view
Tax exemption remains the core focus, and taxed businesses bring new increment. The tax-free income supports the profits of mature international hub airports. Once the international passenger flow recovers, the bargaining power of airport aviation airports will recover rapidly. The elasticity of tax-free income before 2025 is expected to improve the pessimistic expectation of the current market; After the epidemic, luxury brands pay unprecedented attention to airport tax channels. LV has officially signed a contract with Guangzhou Baiyun International Airport Company Limited(600004) in October, and the value of airport tax channels is expected to be revalued in the future.
2、 2022 outlook
The entry-exit policy is expected to be relaxed, the negotiation results of airport tax-free agreement are expected to be implemented, the elasticity of tax-free income is expected to improve the current pessimistic expectation, and the tax commercial area of hub airport may show the herding effect of luxury brands. Based on the improved vaccination rate of covid-19 and the excellent phase III data of covid-19 oral specific drugs, with the gradual opening of overseas doors, Hong Kong people are expected to try out isolation free customs clearance in the mainland in December 2021. China's entry-exit restrictions will be relaxed and expected to continue to strengthen in 2022. There is a high probability of turning points in international passenger flow. Based on the fact that the aviation charges of international passengers are 2.5 times that of Chinese passengers and the elasticity of tax-free income, We expect the overall performance and valuation of the airport to be repaired, and the airport sector is expected to outperform the market in 2022.
3、 Future highlights of key stocks
Guangzhou Baiyun International Airport Company Limited(600004) : 1) the tax exemption elasticity will not change in the short term. After the recovery of international passenger flow, the elasticity is relatively maximum, and there is huge room for long-term tax exemption growth. 2) LV official announced to settle in Baiyun T2, luxury herding is expected to appear, the value of airport tax channels is expected to be revalued, and the business prospect is expected to be significantly improved.
Shanghai International Airport Co.Ltd(600009) : 1) the company is still at the bottom. When the international passenger flow begins to recover, the bargaining power of Shanghai International Airport Co.Ltd(600009) in the tax-free business will recover rapidly, and the performance and valuation are expected to be repaired simultaneously; 2) The income elasticity of this round of tax-free contracts is expected to improve the current pessimistic expectations; 3) Hongqiao is expected to gradually restore its international function, the growth of tax-free scale is expected to speed up, and tax businesses are also developing at a high speed. In the long run, the two developments will show synergistic effects.
Meilan Airport H: the only outlying island duty-free airport. Phase II was put into operation to expand production capacity and increase duty-free area. The company ushered in new opportunities for development.
Shenzhen Airport Co.Ltd(000089) : the satellite hall is put into operation, the tax-free contract is about to be tendered, the luxury is settled, the tax-free business is improved, and gradually changes to the dominant position of non aviation business, with high-speed growth expected.
4、 Catalyst
1) The epidemic repair exceeded expectations; 2) The recovery of international passenger flow exceeded expectations; 3) The growth rate of tax-free sales scale exceeded expectations; 4) The bidding results of the next round of tax-free contract exceeded expectations.
Risk statement
1. The recovery of the epidemic situation was less than expected;
2. The entry-exit policy is not as expected;
3. Demand recovery is less than expected;
4. The growth rate of tax exemption scale is lower than expected;
5. The situation of tax-free bidding was less than expected.
