\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 888 China Tourism Group Duty Free Corporation Limited(601888) )
Event:
China Tourism Group Duty Free Corporation Limited(601888) announced that from January to February 2022, the company achieved an operating revenue of about 13.1 billion yuan, a year-on-year increase of about 20%; The net profit attributable to shareholders of listed companies was about 2.4 billion yuan, a year-on-year increase of about 20%.
Key investment points:
Revenue growth, diluted expenses and discounts decreased, and profitability returned to normal. From January to February, the company realized the net profit attributable to the parent company of 18.32%, compared with Q1 + 2.61pct in 2021 and Q3 + 9.36pct in 2021 (Q3 is the operating profit margin after excluding income tax and rent return profit). The profitability of the company is back on track, which verifies our previous judgment that the short-term decline is due to the decline of passenger flow caused by the epidemic.
1) the recovery of passenger flow will increase the scale of income and dilute expenses. With the gradual accuracy of epidemic prevention and control and the accumulation of prevention and control experience, tourism has been desensitized to the epidemic. When there are still multi-point epidemics in early 2022, the passenger flow in Hainan has increased significantly. From January to February, the passenger throughput of Sanya Phoenix Airport was 3551900 person times, with a year-on-year increase of 24.83%, returning to 84.24% of the level in the same period in 2019; Haikou Meilan Airport handled 3.4786 million passengers, a year-on-year increase of + 30.34%. The recovery of passenger flow boosted the revenue by 20% year-on-year. At the same time, the expenses were relatively rigid during the period, and the expense rate decreased significantly due to the increase of revenue scale.
2) the decline of discount and the proportion of supplementary purchase jointly boosted the gross profit margin. From January to February, the company’s discount was significantly lower than Q3 in 2021. After the competition in 2021, all duty-free merchants in Hainan have fully realized the disadvantages of price war. The probability of vicious price competition in 2022 is small, and the gross profit margin is supported. At the same time, the recovery of offline passenger flow supported the growth of offline revenue, and the proportion of online business with low profitability decreased, which also significantly boosted the gross profit level.
3) from Q4 in 2021, the preferential income tax rate of 15% is applicable to Hainan business.
The opening of new stores in Haikou + the expectation of stores in the city + the recovery of the epidemic brought multiple highlights. In 2022, the new store of Haikou international duty-free city will open soon, and its investment and construction scale is much larger than that of Sanya International duty-free City, which is expected to contribute to the deterministic increment; The expectation of local stores is getting stronger and stronger. In the “14th five year plan” initiated by 22 departments such as the Ministry of Commerce, it is once again clearly proposed to plan to build a number of duty-free local stores. As an industry leader, China tax exemption is expected to establish a leading supply chain advantage and multi-point layout in advance, which is expected to benefit the most; with the gradual normalization of the epidemic, offline passenger flow continues to recover, the revenue growth momentum is expected to continue and the profitability is expected to be maintained.
Investment and construction of new stores have a strong recovery momentum in January and February, and the company’s investment and construction can contribute to the recovery of passenger flow. It is suggested that the growth of new stores will be strong in January and February. We expect that from 2021 to 2023, the company will realize an operating revenue of RMB 67.669/94.121120.240 billion and a net profit attributable to the parent of RMB 9.592120.53/15.127 billion, corresponding to 38.02/30.25/24.11xpe, maintaining the “buy” rating.
Risk tip: the epidemic situation in China repeatedly affects travel; China’s industry competition intensifies; Foreign duty-free merchants have the risk of price war; The opening time of the new store was postponed; Macro economy affects consumption enthusiasm.
