China Tourism Group Duty Free Corporation Limited(601888) ( China Tourism Group Duty Free Corporation Limited(601888) . SH) released the annual performance report for 2021 on April 22, 2022. The annual report shows that in 2021, the company achieved a total operating revenue of 67.676 billion yuan, an increase of 28.76% over the same period of the previous year, and a net profit attributable to the parent company of 9.654 billion yuan, an increase of 57.23% over the same period of the previous year. The growth rate has exceeded 30% for three consecutive years, with brilliant performance. China exemption said that in 2021, the company focused on key markets, continuously enhanced the endogenous and epitaxial development power, and realized the rapid growth of business performance.
in the era of post epidemic, the leading leadership of China exemption industry remains
Although the global tourism duty-free industry has been hit hard by the epidemic, the tax-free sales of Hainan free trade port are unique here, which has also greatly increased the China Tourism Group Duty Free Corporation Limited(601888) sales volume of China’s leading tax-free enterprise.
According to the industry benchmark “top 25 global tourism retailers” compiled by Moody davitt report, by the end of 2020, China Tourism Group Duty Free Corporation Limited(601888) has taken the lead in Korea Lotte duty-free group and jumped to the first place, becoming the world’s highest income tourism retail operator.
In 2021, China free will continue to hand over outstanding performance sheets. The annual report shows that in 2021, the operating revenue reached 67.676 billion yuan, a year-on-year increase of 28.67%; The net profit attributable to the shareholders of listed companies was RMB 9.654 billion, with a year-on-year increase of 57.23%. The key indicators continue to lead, and it is expected to remain the “overlord” of global tourism operators.
Although China tax exemption is the “overlord” of the tax-free industry, the sporadic outbreak of the epidemic in China has a short-term disturbance to China Tourism Group Duty Free Corporation Limited(601888) in China. In August last year, the fourth quarter and March this year, the passenger flow in Hainan was temporarily affected by the sporadic outbreak of the epidemic in China. The short-term pressure of the epidemic affected the performance of China free insurance to a certain extent. According to the quarterly report disclosed on the same day, the company achieved an operating revenue of 16.782 billion yuan in the first quarter of 2022, a year-on-year decrease of 7.45%, and a net profit attributable to the parent company of 2.563 billion yuan, a year-on-year decrease of 9.99%.
In fact, the short-term disturbance of the epidemic does not affect the real profitability of the company. A brokerage analyst said that affected by the epidemic, the growth rate of most industries slowed down. As a leading enterprise in the tourism consumption industry, China Tourism Group Duty Free Corporation Limited(601888) will be affected in the short term. With the normalization of epidemic prevention and control, China Tourism Group Duty Free Corporation Limited(601888) ‘s profitability is gradually back on track, and the industry leader’s leadership remains the same.
Regardless of the impact of short-term epidemic disturbance, let’s take a specific look at the operating data from January to February disclosed by the company. From January to February, the company achieved a revenue of about 13.1 billion yuan and a net profit attributable to the parent company of about 2.4 billion yuan, an average year-on-year increase of about 20%. Further calculation shows that the net interest rate increased by about 2.61% compared with Q1 and 12.26% compared with Q4. The above-mentioned securities firm analysts also said that the more important factor for the improvement of net profit is the improvement of management. Since new year’s day this year, China Tourism Group Duty Free Corporation Limited(601888) has scientifically arranged the marketing plan under the command of “seeking benefits from management”, narrowed the discount level, paid attention to the assessment of profit indicators, set the best record in the same period in history, and promoted the significant improvement of gross profit margin.
It is also worth noting that according to the latest quarterly report, among the top ten shareholders of China Tourism Group Duty Free Corporation Limited(601888) in the first quarter of this year, Chen Fashu significantly increased his holdings of 4 million shares, with a total position of more than 13 million shares, ranking the seventh largest shareholder of China Tourism Group Duty Free Corporation Limited(601888) in the first quarter of this year. As a super niusan and the former richest man in Fujian, Chen Fashu entered China Tourism Group Duty Free Corporation Limited(601888) as early as the first quarterly report of 2020. This time, he increased his position sharply again, which may mean that he is still very optimistic about China Tourism Group Duty Free Corporation Limited(601888) development prospects.
China Tourism Group Duty Free Corporation Limited(601888) strategic layout continues to advance and is entering the harvest period
In December 2021, the State Council issued the tourism development plan of the 14th five year plan. Relevant policies are guiding the return of consumption. At the same time, they also provide important support for the recovery of the prosperity of the tourism industry, tax-free and other related sub industries.
With the strong support of the policy, China Tourism Group Duty Free Corporation Limited(601888) , as the industry leader, is also further promoting its strategic layout. According to the annual report, the roof steel structure project of Haikou international duty-free City, a key project, has been completed, and the construction of curtain wall, electromechanical and fine decoration projects is progressing in an orderly manner. It is expected to open in September 22; The commercial part of Sanya international duty free city phase I land 2 project has also achieved the capping of the main steel structure; Hexin Island project also fills the vacancy of business format by introducing many strength and online popular brands; The first phase of Hainan International Logistics Center has been completed and delivered. This means that China Tourism Group Duty Free Corporation Limited(601888) ‘s tax-free share in Hainan outlying islands will be significantly increased after the implementation of key benchmark projects.
In addition, although China Tourism Group Duty Free Corporation Limited(601888) accounts for more than 70% of the international passenger flow at airports and ports in China, it continues to layout tax-free channels, and improves the passenger volume and performance of tax-free business by increasing distribution points in China and “continuously developing overseas channels”.
The annual report shows that in terms of port channels, the company won the bid for three duty-free operation rights of Suifenhe railway port, Taiyuan airport and Quanzhou Shijing port, and completed the preparation of duty-free stores such as Chengdu Tianfu International Airport, Qingdao Jiaodong International Airport, Ningbo Lishe International Airport and Yiwu Airport; In terms of store channels in the city, the company pays close attention to the policy trends of stores in the city, actively establishes strategic cooperation relations with key cities, and prepares for the layout of stores in the city in the future; In terms of overseas channels, the company actively explored and steadily promoted the overseas project expansion and tax-free operation right bidding of Southeast Asian countries, made efforts to overcome the adverse factors such as continuous and repeated epidemic, customs closures and restrictions on entry and exit, and vigorously developed online business.
In order to better gather and make use of online traffic, China tax exemption took the lead in testing “duty-free e-commerce”. It is reported that the wechat applet “China free members” has more than 20 million members, which makes China free online business continue to maintain a good development momentum, and the huge number of members also gives China free more advantages in the customer base and price competition of “duty-free e-commerce”.
100 billion tax-free market, and the core competitiveness of China tax exemption will build its moat
According to the 2022 China Tourism white paper released by Ernst & Young consulting, China’s epidemic has been brought under control first. Except for the occasional urban blockade, China’s tourism continues to operate as usual. At the same time, under the background of digital transformation, tourism retailers have increased marketing efforts. Coupled with the rapid expansion of the duty-free market, it is expected that the scale of the duty-free market will reach 150 billion yuan by 2025.
At present, China’s epidemic prevention and control is entering the normalization stage, and the “dynamic clearing” policy is being carried out in an orderly manner. With the gradual liberalization of epidemic prevention and control, tourism and aviation industry may usher in a rapid recovery. The tax-free industry, as a sub industry closely related to tourism and aviation, will further accelerate the expansion of industry market scale.
In order to cope with the impact of the epidemic and other factors on the industry, China Tourism Group Duty Free Corporation Limited(601888) has actively adjusted its strategic layout and business strategy, found a unique “playing method” of China exemption to deal with the dilemma, and actively led the market direction.
It is understood that China tax exemption has occupied the core location in terms of port tax exemption, outlying island tax exemption and urban tax exemption, and further the layout of all channels. In the two years since the outbreak, Hainan has become a tourist attraction for Chinese people. The advantages of duty-free goods in Hainan in terms of price, goods type and shopping experience have led to the rise of duty-free goods sales during the golden holiday. Experts believe that the epidemic environment has played a role in promoting the cultivation of consumption habits, and this consumption habit will continue after the outbreak.
The size of the 100 billion market means more fierce industry competition. It requires tourism retail enterprises to have “hard strength” in terms of traffic, volume and operation.
According to the data, China tax exemption has accounted for 90% of the overall sales of Hainan tourism duty-free retail market. Despite the emergence of a number of new competitors at the end of December last year and early January last year, China Tourism Group Duty Free Corporation Limited(601888) in Hainan’s revenue still increased significantly and remained the leader of the duty-free industry.
At the same time, overseas market expansion has always been the focus of China free. Industry analysts admitted that in the future, if the epidemic prevention and control is stabilized, international routes will be gradually liberalized, and the tourism industry may usher in the peak of “outbound tourism”. It is reported that one belt, one road, and the other countries along the route, has been focused on the layout. The annual report shows that in 2021, in terms of overseas channels, the company actively explored and steadily promoted the overseas project expansion and tax-free operation right bidding of Southeast Asian countries. In the future, on the premise of effective control of the epidemic, the company will continue to expand the retail network in Hong Kong and Macao by taking advantage of the window period before the recovery of international tourism, make a forward-looking layout of overseas markets, and continuously improve the international industry status and voice.
In addition, China Tourism Group Duty Free Corporation Limited(601888) as a representative enterprise in China’s duty-free industry, has a high reputation among duty-free commodity suppliers and has accumulated strong upstream supplier resources. CDF brand has a high reputation in the Chinese tourism shopping market. After the acquisition of nishang China, nishang Shanghai, Haimian company and Hong Kong China Travel asset company, the brand advantage in the duty-free industry has been further improved. In June, 2021, according to the “2021 (18th) China’s 500 most valuable brands” list released by the world brand laboratory, the company’s ” China Tourism Group Duty Free Corporation Limited(601888) ” brand value was 96.291 billion yuan, ranking first in the tourism service industry.
Huatai Securities Co.Ltd(601688) research report said that after honed by the epidemic situation, the terminal market share of China exemption will be more stable, the upstream channel cooperation will be deepened, the competitive environment will be improved, the policy support such as the “14th five year plan” tourism development plan will improve the company’s own operation level, and the continuous operation of member flow assets will show a better industry leading style in 2022, and the strong will always be strong.
