\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 888 China Tourism Group Duty Free Corporation Limited(601888) )
Events
China Tourism Group Duty Free Corporation Limited(601888) 4-23 issue 2021 annual report. In 2021, the operating revenue was 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%, and the net profit not attributable to the parent company was 9.534 billion yuan, a year-on-year increase of 59.77%. The weighted average return on net assets was 37.33%, with a year-on-year increase of 7.97pct. The net cash flow from operating activities was 8.329 billion yuan, with a year-on-year increase of 1.56%. The fully diluted EPS was 4.94 yuan and the non diluted EPS was 4.88 yuan. Among them, the operating revenue of 4q21 was 18.177 billion yuan, a year-on-year increase of 4.11%, and the net profit attributable to the parent company was 1.163 billion yuan, a year-on-year decrease of 60.93%.
At the same time, the company released the first quarterly report of 2022. 1q2022’s operating revenue was 16.782 billion yuan, a year-on-year decrease of 7.45%, the net profit attributable to the parent was 2.563 billion yuan, a year-on-year decrease of 9.99%, the net profit deducted from non attributable to the parent was 2.559 billion yuan, a year-on-year decrease of 9.72%, the diluted EPS was 1.31 yuan, and the return on net assets was 8.31%.
Distribution plan for 2021: the company plans to distribute cash dividends of 15 yuan (including tax) to all shareholders for every 10 shares, with a total of 2.929 billion yuan (accounting for 30.34% of the net profit attributable to shareholders of Listed Companies in 2021).
Brief comments and investment suggestions:
1. In 2021, the operating revenue was 67.676 billion yuan, with a year-on-year increase of 28.67%. 4q21 and 1q22 were 18.177 billion yuan and 16.782 billion yuan respectively, with a year-on-year increase of 4.11% and a year-on-year decrease of 7.45%.
in China Tourism Group Duty Free Corporation Limited(601888) 2021, the operating revenue was 67.676 billion yuan, a year-on-year increase of 28.67%, the gross profit margin was 33.68%, a year-on-year decrease of 696pct, and the net profit attributable to the parent company was 9.654 billion yuan, a year-on-year increase of 57.23%. The company’s 4q21 and 1q22 operating revenues were 18.177 billion yuan and 16.782 billion yuan respectively, with a year-on-year increase of 4.11% and a year-on-year decrease of 7.45% respectively; The net profit attributable to the parent company was 1.163 billion yuan and 2.563 billion yuan respectively, with a year-on-year decrease of 1.813 billion yuan and 285 million yuan respectively. In 2021, the company’s operating revenue, total profit and net profit attributable to the parent company increased significantly year-on-year. The main reason is that the company paid close attention to the tax-free market of Hainan outlying islands in 2021, and the business in Hainan continued to maintain high growth. In addition, the rent concession of Capital Airport and the preferential enterprise income tax enjoyed by some subsidiaries in Hainan also had a positive impact on the company’s profits. The gross profit margin of 1q22 was 34.00%, a year-on-year decrease of 5.11pct and a month on month increase of 7.57pct. We judged that 1q22 gross profit margin increased month on month, mainly due to the reduction of discount and cost reduction and efficiency increase of integrated operation in Hainan. By business, in 2021, the gross profit margin of tax-free business was 37.82%, a year-on-year decrease of 7.08pct, and the gross profit margin of taxable business was 24.59%, a year-on-year decrease of 7.96pct.
The tax-free business has increased rapidly and the market advantage is stable. In 2021, the tax-free business income of China tax exemption was 42.936 billion yuan, a year-on-year increase of 32.67%, and the tax-free market in Hainan accounted for about 87%; Among them, the income of Sanya duty-free shop was 35.509 billion yuan, a year-on-year increase of 66.58%, and the income of sea free shop was 15.962 billion yuan, a year-on-year increase of 61.05%. In addition, the daily income of Shanghai was 12.491 billion yuan, a year-on-year decrease of 9.02%, and the daily income of China was 1.907 billion yuan, a year-on-year decrease of 40.45%. The company’s key projects have been promoted successively: ① the roof steel structure project of Haikou international duty-free city has been completed; ② Capping of the main steel structure of the commercial part of Lot 2, phase I, Sanya international duty free city; ③ Hexin Island project has introduced many brands and improved performance and efficiency; ④ The first phase of Hainan International Logistics Center was completed and delivered.
2. The cost rate in 2021 decreased by 9.93pct year-on-year, and that in 1q22 decreased by 1.36pct year-on-year.
During 2021, the expense rate was 8.97%, a year-on-year decrease of 9.93 PCT, mainly due to the year-on-year decrease of 11.12 PCT in the sales expense rate. ① The operating cost was 44.882 billion yuan, with a year-on-year increase of 43.76%, accounting for 66.32% of the operating revenue, with a year-on-year increase of 6.96 PCT, mainly due to the obvious synchronous increase of sales revenue during the reporting period, which led to the rise of sales costs. ② The sales expense was 3.861 billion yuan, a year-on-year decrease of 56.36%, and the sales expense rate was 5.71%, a year-on-year decrease of 11.12 PCT, mainly due to the sharp decline in airport rent payable. ③ The management expense was 2.25 billion yuan, with a year-on-year increase of 37.37%, and the management expense rate was 3.32%, with a year-on-year increase of 0.21 PCT, mainly due to the increase of employee compensation. ④ Financial expenses were – 43 million yuan, with a year-on-year increase of 503 million yuan, mainly due to the higher net exchange income in the previous period.
The expense rate during 1q22 was 10.80%, a year-on-year decrease of 1.36pct, which was basically the same as that in the same period last year. ① The operating cost was 11.076 billion yuan, a year-on-year increase of 0.31%, basically the same as that of the same period last year. ② The sales expense was 1.461 billion yuan, a year-on-year decrease of 17.55%, and the sales expense rate was 8.71%, a year-on-year decrease of 1.07pct. ③ The management expense was 431 million yuan, with a year-on-year decrease of 0.10%, and the management expense rate was 2.57%, with a year-on-year increase of 0.19 PCT. ④ Financial expenses were -796085 million yuan, a year-on-year decrease of 815347 million yuan.
The net interest rates of q21 and q22 are respectively -1.2% and -1.2% after retroactive adjustment, respectively. Due to the closure of Sanya duty-free city and the impact of passenger flow, the revenue in March fell sharply by 49% year-on-year, and the net interest rate fell due to the rigidity of cost.
\u3000\u30003. Comprehensive channel layout and online integrated operation.
Comprehensively distribute important channel resources and expand new business growth points. ① Ports: the company won the bid for three duty-free operation rights in Suifenhe, Taiyuan and Quanzhou Shijing, and completed the preparation for the construction of four airport stores in Chengdu, Qingdao, Ningbo and Yiwu; ② City stores: the company actively cooperates with key cities in strategy; ③ Overseas: the company has steadily promoted overseas projects in Southeast Asia. The Hong Kong airport store / City store, Macao airport store and Cambodia China free store will remain profitable without the recovery of international passenger flow. The Macao City store will be put into trial operation at the end of 2021; ④ Tax: the company won the bid for T2 and T3 fragrant chemical stores in the capital. This is the tax business of the company stationed in the capital airport again after the franchise retail project of the 2008 Olympic Games.
Strive to develop new retail business and solidly promote the integrated operation of online business. The repurchase rate of the company increased significantly, and the proportion of member sales increased from 52% to 87%. ① The account subject of CDF members’ purchase of Hainan official account was changed from Haimian Co., Ltd. to a wholly-owned subsidiary of China exemption group, and the shareholding ratio of China exemption group was increased from 51% to 100%. As the main platform, CDF member purchase has played a great role in online business; ② Pilot and orderly promote the construction of online integration platform, integrate large member systems, build a traffic aggregation platform with more than 20 million members, and establish o2o marketing mode; ③ The large member platform has significantly improved the consumption and repurchase rate, and the proportion of member sales has increased from 52% to 87%.
Maintain judgment on the company. We believe that due to the impact of the epidemic in Shanghai and other places, 2q22’s performance may be under pressure in the short term, but the company’s medium and long-term competitiveness is still: ① supply chain integration further optimizes efficiency and reduces logistics costs; ② Haikou international duty-free city has landed, and the top luxury brand has settled in; ③ Digital upgrading, procurement and replenishment, commodity management and freight information, smart stores cater to the new trend of consumption experience, and the membership stickiness and repurchase rate are improved; ④ In 2021, the company solved the problem of horizontal competition with the controlling shareholder China Tourism Group, and acquired 100% equity of Hong Kong China Travel assets company in cash by means of non-public agreement transfer, with a transaction price of RMB 126 million.
Update profit forecast. Combined with the impact of the epidemic in Shanghai on the market since March 2022, we predict that the company’s net profit attributable to the parent company in 202224 will be 10.379 billion yuan (+ 7.5%, down 21%), 15.114 billion yuan (+ 45.6%, down 13.6%) and 18.255 billion yuan (+ 20.8%), respectively, corresponding to EPS of 5.32 yuan, 7.74 yuan and 9.35 yuan in 20212023. We selected A-share leading consumer goods and overseas luxury enterprises as benchmarking companies. EV / EBITDA valuation method: 35 times EV / EBITDA in 2022 (originally 40 times EV / EBITDA), corresponding to the target price of 244.04 yuan (originally 273.34 yuan, down 10.7%). Give “better than the big market” rating.
Risk warning: the liberalization of tax exemption policy in the city is not as expected; The demand of duty-free market is less than expected; The risk of excessive rent.
