event:
According to the official wechat news of Hainan business, the total sales of 10 duty-free shops on outlying islands in 2021 was 60.173 billion yuan, a year-on-year increase of 84%.
comment:
The epidemic situation continues unabated. In addition to more than 700000 off Island duty-free shopping trips per month from March to may 2021, the number of off Island duty-free shopping tourists has decreased significantly since the outbreak of China’s scattered epidemic in June. The number of off Island duty-free shopping trips in August was as low as 224000, lower than the level before the implementation of the new off Island duty-free policy in 2020. On the whole, the tax exemption of outlying islands in 2021 was affected by covid-19 epidemic, exceeding that in 2020, but the tax exemption of outlying islands increased year-on-year. In 2021, the total sales of 10 outlying island duty-free stores in Hainan reached 60.173 billion yuan, a year-on-year increase of 84%. Among them, the tax-free sales volume was 50.49 billion yuan, a year-on-year increase of 83%; The number of duty-free shoppers was 9.6766 million, a year-on-year increase of 73%; The number of duty-free purchases was 53.4925 million, a year-on-year increase of 71%. According to the data of Haikou customs, the tax exemption of outlying islands from January to September 2021 was about 35.5 billion yuan. Calculated only according to the tax exemption part, the tax exemption of outlying islands in the fourth quarter of 2021 was about 14.9 billion yuan, surpassing the second quarter of 2021, which was less affected by the epidemic, and the tax-free retail recovered rapidly.
Online tax retail has broad prospects. In 2021, the total tax-free sales of Hainan outlying islands reached 60.173 billion yuan, including tax retail of about 9.683 billion yuan, mainly thanks to wechat online retail apps such as member purchase launched by duty-free operators such as China tax free group, which allows tourists to buy tax goods online. The emergence of online retail enables a large number of consumers with entry-exit records within a certain period of time to choose goods at home and mail them home, which greatly expands the source of customers for tax-free retailers on outlying islands and is no longer limited to visitors to the store. Duty free retailers are expected to rely on online retail to expand the scale effect, further improve their profitability and strengthen their competitive advantage.
RCEP helps the development of Hainan free trade port. On January 1, 2022, the regional comprehensive economic partnership agreement (RCEP) came into force. China took the lead in completing the approval of the agreement and submitting the letter of approval, which played a positive role in promoting the agreement to reach the threshold for its entry into force on schedule. According to the ASEAN Secretariat, China, Japan, Australia, New Zealand, Laos, Cambodia, Thailand, Singapore, Vietnam and Brunei have officially submitted the approval letter, and RCEP will enter into force in ten countries that have submitted the approval letter from January 1, 2022. Under the RCEP agreement, China and Japan will carry out free trade for the first time. Japan’s tariff rate on goods of Chinese origin will be reduced to zero as soon as the agreement takes effect, reaching 57% and finally reaching 88%. At present, the policy of Hainan free trade port is not perfect, the construction of free trade port is still in the early stage, and RCEP has a partial suppression effect on Hainan free trade port in the short term. After the customs is closed in 2025, Hainan free trade port will widely implement the tariff free policy and blacklist only a small number of commodities. The preference will exceed 90% of the tax-free range of RCEP, which is limited to 15 Asia Pacific and ASEAN countries. In the long run, it is expected to become the cornerstone of the construction of Hainan free trade port and help Hainan free trade port.
Investment strategy: the number of inbound and outbound flights of Hainan civil aviation has recovered rapidly, the epidemic situation in Zhejiang and Xi’an has little impact on migrant tourists, and the peak tourism season in Hainan comes as scheduled. Under the influence of local Chinese New Year and Winter Olympics, China’s tourism may still recover slowly in the first half of 2022, and inbound and outbound tourism is expected to relax initially in the second half of 2022. In the long run, the tax exemption of outlying islands is subject to multiple benefits such as the construction of Hainan free trade port, the expansion of online platform market and the pneumonia of covid-19 virus, and the market space is broad. It is recommended that the tax-free faucet China Tourism Group Duty Free Corporation Limited(601888) (601888) benefiting from the rapid recovery of tax-free on outlying islands in the short term.
Risk tips: repeated covid-19 sporadic epidemic, global covid-19 epidemic controlled less than expected, intensified competition, policy change, macroeconomic downturn and other risks.
