Report summary:
In 2021, Hainan’s tourism consumption market recovered as a whole, which was significantly disturbed by the epidemic in the short term, and the number of people in the whole year recovered close to the level in the same period in 2019. In 2021, Hainan received a total of 81.041 million tourists / + 26%, which has recovered to 97% of the level in 2019. It was hit by the epidemic in China in August and November. In January 2022, Hainan Province received 6.65 million tourists / + 13%, exceeding the same period in 2019. During the Spring Festival, Hainan Province received a total of 5.4113 million tourists / + 18%, realizing a total tourism revenue of 7.53 billion yuan / + 29%, respectively returning to 93% and 52% of the level of the Spring Festival in 2019. However, the recent Sanya epidemic is expected to limit the passenger flow in Hainan in March.
During the Spring Festival in 2022, tourism in Hainan is booming, and the popularity of duty-free shopping increases instead of decreasing after the festival. The epidemic in Sanya in March may lead to pressure on duty-free sales. In 2021, the tax exemption of Hainan outlying islands achieved a total sales of 49.47 billion yuan / + 80%, 6.715 million shopping trips / + 50%, and the customer unit price in December reached a new high of 9348 yuan / person. During the Spring Festival in 2022, the total sales of 10 duty-free stores in Hainan reached 2.131 billion yuan / + 42%. As of February 13, the total sales in February had increased to 4.132 billion yuan / + 127% (affected by the dislocation of the Spring Festival), with an average daily sales of 318 million yuan. On February 28, there was an epidemic in Haitang District of Sanya, which led to the temporary closure of Sanya International duty-free city from March 3 to 7. At the same time, the epidemic prevention and control of Phoenix Airport has become stricter, superimposing the rebound situation of the national epidemic. It is expected that the tax-free sales of Hainan tourism and outlying islands will be under pressure in March.
In 2021, Hanmian’s annual sales recovered 70%, and the sales fell at the beginning of 2022; The share of European and American duty-free businesses in the Asia Pacific region fluctuates upward, and it is a trend to seek China cooperation. In 2021, the total sales volume of Korean exemption was 98.5 billion yuan / + 18%, which has recovered to 73% of the level in 2019. Only 10% of foreign consumers contributed 95% of the performance. In January 2022, the number of foreign customers decreased by 26% year-on-year, resulting in the decline of sales in the current month. The global tax-free groups have been seriously affected by the epidemic. European tax-free giants led by dufry and lagdale have arranged the Asia Pacific market one after another and sought cooperation with Chinese tax-free merchants in recent years.
The recovery of international passenger flow in 2021 is poor, and the recovery of airport tax exemption needs to be fully liberalized. The introduction of the 14th five year plan is conducive to the recovery of entry-exit, but the recovery expectation in 2022 is limited. Affected by the epidemic, the international passenger flow of major airports in 2021 recovered only 2% – 5% compared with 2019, the number of single flight transportation decreased compared with that before the epidemic, and the airport tax exemption is still under pressure.
Investment suggestion: the duty-free industry will maintain high prosperity and growth in the process of consumption return, Chinese luxury penetration and customer unit price improvement. China Tourism Group Duty Free Corporation Limited(601888) as a leader, it has the first mover advantages in channel, scale and operation management, and will continue to lead in the future. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 9.6 billion / 12.7 billion / 18.7 billion respectively, and the corresponding PE will be 35 times / 26 times / 18 times respectively, maintaining the “buy” rating.
Risk tips: the risk of repeated epidemic, the risk of tax exemption policy and the risk of intensified market competition.
