\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 888 China Tourism Group Duty Free Corporation Limited(601888) )
China Tourism Group Duty Free Corporation Limited(601888) disclosed the 2021 annual report and the first quarterly report. In 2021, the company’s revenue reached 67.676 billion yuan, a year-on-year increase of 28.67%; The net profit attributable to the parent company was 9.654 billion yuan, a year-on-year increase of 57.23%; The gross profit margin was 33.68%, with a year-on-year increase of -6.96 PCTs; The net interest rate attributable to the parent company was 14.27%, with a year-on-year increase of + 2.6pcts. Split Q4 in 2021, and the revenue of single Q4 reached 18.176 billion yuan, a year-on-year increase of 4.11%; The net profit attributable to the parent company was 1.163 billion yuan, a year-on-year decrease of 60.93%; The gross profit margin was 26.44%, with a year-on-year increase of -13.43pcts; The net interest rate attributable to the parent company was 6.4%, with a year-on-year increase of -10.65pcts. In the third quarter of 2021, the company received a preferential return of 740 million yuan of income tax and a rent concession of 1.14 billion yuan of capital airport. Therefore, the net profit at the end of the statement in this quarter was greater than the net profit formed by operation.
From January to February 2022, the revenue increased steadily, and the epidemic affected the performance in March. According to the company’s disclosure, from January to February 2022, the company achieved a revenue of about 13.1 billion, a year-on-year increase of about 20%; The net profit attributable to the parent company was about 2.4 billion yuan, with a year-on-year increase of 20%. The discount of some brand goods from January to February has been significantly narrowed compared with the second half of 2021. In March 2022, affected by the epidemic, the passenger flow in Hainan decreased significantly, resulting in the decline of revenue in that month. Overall, in the first quarter of 2022, the company’s revenue was 16.782 billion yuan, a year-on-year decrease of 7.45%; The net profit attributable to the parent company was 2.563 billion yuan, a year-on-year decrease of 10.02%; The gross profit margin was 34.00%, year-on-year -5.11pcts; The net interest rate attributable to the parent company was 15.28%, with a year-on-year increase of -0.43pcts, and the performance in the first quarter was in line with expectations.
The development of duty-free business in Hainan outlying islands has accelerated, and the industry is expected to recover in 2022. In 2021, the company’s duty-free business in Hainan outlying islands continued to maintain high growth, of which the duty-free stores in Sanya achieved a revenue of 35.509 billion yuan, a year-on-year increase of 66.58%, and a net profit attributable to the parent company of 4.168 billion yuan, a year-on-year increase of 40.46%; Haimian achieved a revenue of 15.962 billion yuan, a year-on-year increase of 61.05%, and a net profit attributable to the parent company of 793 million yuan, a year-on-year increase of 20.75%. Shanghai RISHANG realized a revenue of 12.49 billion yuan, a year-on-year decrease of – 9.02%, and a net profit attributable to the parent company of 690 million yuan. CDF member purchase and other businesses achieved a revenue of 3.714 billion yuan. Considering the repeated epidemic in many places in China in Q3 in 2021, the tax-free potential of Hainan outlying islands has not been fully stimulated. With the disappearance of the epidemic and the recovery of passenger flow, the tax-free business of outlying islands is expected to further recover.
The proportion of member consumption increased steadily, continued to sign new brands, and actively laid out the “Z era”. The company continues to explore the digital innovation mode and the stable development of online business. At the same time, the company actively makes efforts to build the membership system. By the end of 2021, the number of “free members” of the company’s wechat applet has exceeded 20 million, and the proportion of member sales has increased from 52% to 87%. The company strives to reach 26 million members in 2022. In terms of procurement and investment attraction, in 2021, the company successfully introduced 12 fragrance brands, 30 clothing and footwear brands, 62 special commodities and 26 limited commodities, so as to meet the unique needs of generation Z consumers.
The brand investment promotion of Haikou international duty-free city has been steadily promoted, and important channel resources have been continuously distributed to make full preparations for the “post epidemic era”. In terms of Haikou international duty free city, the company has confirmed cooperation with more than 500 brands in 2021. In 2021, the company won the bid for the tax-free operation rights of Suifenhe railway port, Taiyuan airport and Quanzhou Shijing port; Completed the preparation of duty-free shops such as Chengdu Tianfu International Airport, Qingdao Jiaodong International Airport, Ningbo Lishe International Airport and Yiwu Airport; The company actively establishes strategic cooperative relations with key cities to prepare for the layout of stores in the city in the future; In terms of tax business, the company won the bid for T2 and T3 fragrant chemical store projects of capital airport. We believe that the company’s continuous distribution of channel resources can strengthen its industrial position and lay a good foundation for the “post epidemic era”.
Investment suggestion: at present, China Tourism Group Duty Free Corporation Limited(601888) no matter the competition pattern, supply chain advantage or business model, the competition pattern of the track has not been destroyed. The epidemic has not had a great impact on the profit logic, and the recovery of passenger flow will effectively promote the company’s performance. In 2022, as the impact of the epidemic gradually subsides, the long-term value of the medium exemption will not decrease. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 10.5 billion, 14.1 billion and 18.4 billion respectively, with corresponding growth rates of 9%, 33.5% and 30.9% respectively, maintaining the “recommended” rating.
Risk tip: the epidemic repeatedly affects offline passenger flow
