Market review last week:
Last week (03.07-03.11), the social service sector (Shenwan) fell by 7.91%, the Shanghai Composite Index fell by 4.00%, the Shenzhen Component Index fell by 4.40%, and the Shanghai and Shenzhen 300 fell by 4.22%. The social service sector lost 3.91 percentage points to the Shanghai composite index last week, ranking 34th among the weekly rises and falls of Shenwan’s 34 primary sub industries.
Core view:
On March 10, 2022, China Tourism Group Duty Free Corporation Limited(601888) released the announcement of main business data from January to February 2022. 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 the parent company was about 2.4 billion yuan, a year-on-year increase of about 20%. The performance was in line with expectations and the profit side performed well. Since March 3, Sanya International duty-free city has suspended its business in cooperation with epidemic prevention work, and issued a notice in the evening of March 7. From March 8, phase I and phase II of CDF Sanya International duty-free city have resumed business, indicating that the factors affecting the epidemic situation in Sanya have been gradually eliminated. We believe that the short-term impact of the Sanya epidemic is not expected to cause a downturn in performance in the first quarter. The increase in online sales is expected to accelerate the company’s sales repair and gradually eliminate the adverse impact of the epidemic.
At present, there are repeated epidemics in some areas. This round of epidemics is facing the severe test of the superposition of overseas input and local cases. The road to recovery of the prosperity of tax-free, tourism and other industries in Hainan is not smooth. However, the national tourism plan for the 14th five year plan reflects the importance attached to tax exemption and tourism development. At the same time, relief policies such as tax relief have been successively issued to support tourism, tax exemption, catering, hotel and other industries significantly affected by the epidemic. We believe that the prosperity of the industry is expected to continue to rise. In 2022, the company will increase the profit side assessment, pay attention to the upgrading of product structure, and increase the proportion of high gross profit categories such as fali jewelry and watches. With the further deepening of the relationship between the company and suppliers, the negotiation ability and influence with upstream suppliers are expected to gradually improve. In September this year, China free new harbor duty-free city is expected to land. Haikou duty-free industry will echo Sanya International duty-free city and deepen the company’s tax-free layout on outlying islands. At the same time, xinhaigang duty-free city is actively promoting the sense of customer consumption experience. It is expected to achieve double upgrading in category introduction and service quality, and help achieve the tax-free sales target of 100 billion on Hainan outlying islands. The company is expected to show sustained growth of performance and continuous improvement of profitability under the support of deepening the relationship with suppliers + upgrading of product structure and services + national policy support.
Company announcement and industry information:
Tibet Tourism Co.Ltd(600749) : Guofeng Group Co., Ltd. holds 12666299 tradable shares with Tibet Tourism Co.Ltd(600749) unlimited sales conditions, accounting for 5.58% of the total share capital of the company Btg Hotels (Group) Co.Ltd(600258) : Directors and senior managers reduced their shares. Director yuan Shouyuan reduced his shares by no more than 25200 shares, and deputy general manager and chief financial officer Li Xiangrong reduced his shares by no more than 70000 shares.
Investment suggestions:
Supported by the recovery trend of tax-free industry, we are optimistic about the recovery of tax-free industry. The 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) , Huazhu group. Catering and Tourism: the trend of industry chain is obvious, and attention is paid 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.
