\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 888 China Tourism Group Duty Free Corporation Limited(601888) )
Event: the company released its annual report for 2021. During the reporting period, the company achieved a total operating revenue of 67.676 billion yuan / + 28.67%, a net profit attributable to the parent company of 9.654 billion yuan / + 57.23%, and a non net profit attributable to the parent company of 9.534 billion yuan / + 59.77%.
The parent company realized net profit of RMB 167.9 billion / – 2.59 billion / – 2.57 billion / – 2.59 billion / – 2.59 billion, and the net profit attributable to the parent company was RMB 16.79 billion / – 2.59 billion / – 2.57 billion.
Hainan’s tourism market has recovered steadily, and the tax exemption of outlying islands has increased rapidly in 21 years. Since the covid-19 epidemic, the recovery rate of tourism in Hainan Province has far exceeded the national average. In 21 years, the total number of tourists received on the island was 81.043 million person times / + 25.5%, recovering to 97.5% in 2019. After the epidemic, especially after the new tax-free policy in July 20, the tax-free outlying islands have undertaken some overseas consumption return, and their competitiveness in terms of brand, price and service has been continuously enhanced. In 2021, 10 outlying island duty-free stores in Hainan Province achieved sales of 60.173 billion yuan / + 84%, including 50.49 billion yuan / + 83% of duty-free sales, 9.6766 million person times / + 73% of duty-free shopping, 534925 million pieces / + 71% of duty-free purchases, 5218 yuan / + 5.8% of customer unit price and 944 yuan / + 7% of average price of single commodity.
The company’s 21-year revenue was 67.676 billion yuan / + 28.67%, and Hainan contributed to the company’s main income. In the 21st year, the company’s revenue in Hainan Province was 47.096 billion yuan / + 57.2%, accounting for 70%,. Sanya Haitang Bay duty-free store has a revenue of 35.51 billion yuan / + 66.6%, accounting for 52.5% of the revenue, and Haimian company has a revenue of 15.96 billion yuan / + 61.1%, accounting for 23.6% of the revenue. The daily revenue of Shanghai was 12.49 billion yuan / – 9%, accounting for 18.5%. On the day, China’s revenue was 1.907 billion yuan / – 40.4%, accounting for 2.8%.
The increase in discounts in the second half of the year led to a decline in gross profit margin. In the 21st year, the company’s comprehensive gross profit margin was 33.68% / -6.96pct, a large decline compared with that in the 20th year, mainly because the epidemic situation in China repeatedly affected the passenger flow on outlying islands in the second half of the year, and the company increased discount promotion to digest inventory. The gross profit margin of tax-free business is 37.8% / – 7.1pct, and that of taxable business is 24.6% / – 8pct. In terms of regions, the gross profit margin in Hainan is 23.6% / – 4.8pct, and that in Shanghai is 31.1% / – 8.4pct.
The new rental agreement of Beishang airport significantly reduces the sales expense rate. The company’s current sales expense is 3.861 billion yuan. Affected by the sharp decline of airport rent, the sales expense rate is 5.71% / – 11.11pct. The rate of administrative expenses remained stable at 3.32% / + 0.21pct, and the rate of financial expenses was – 0.06% / + 0.98pct, mainly due to the decrease of 254 million yuan in exchange earnings and an increase of 204 million yuan in interest expenses in the current period.
The annual net profit attributable to the parent company was 9.654 billion yuan, with a net interest rate of 14.26%. In 21q3, the company received a return of 1.14 billion yuan from the capital airport rent and 740 million yuan from the preferential income tax. After deducting the impact of the two, the company realized an operating profit of 7.774 billion yuan. Among them, Sanya Haitangwan duty-free store realized a net profit of 4.168 billion yuan / + 40.4%, Haimian realized a net profit of 793 million yuan / + 20.7%, Shanghai realized a net profit of 690 million yuan / – 44.6%, and China realized a net profit of 705 million yuan, with a loss of 790 million yuan in the same period of last year. The profit mainly came from the return of airport rent, but it still lost money after deducting the return.
Optimize brand supply and shopping experience, and consolidate the core position of Hainan market. In the past 21 years, the company has completed the opening of T2 duty-free shop of Meilan Airport in Haikou and the civil construction of French garden project of Sanya Phoenix Airport. The projects of Haikou international duty free city and Sanya phase I land No. 2 have been steadily promoted, and the phase I of Hainan International Logistics Center has been completed and delivered. The company continues to expand its stores, introduce more high-quality brands, improve the efficiency of commodity distribution and customer experience, and consolidate its core competitiveness in the duty-free market on Hainan outlying islands.
22q1 affected by the epidemic, the income and profit decreased and the gross profit margin improved month on month. According to the company’s announcement, from January to February, the company realized an operating revenue of about 13.1 billion yuan / + 20%, and the net profit attributable to the parent company was about 2.4 billion yuan / + 20%. It is estimated that the income in March is about 3.68 billion yuan and the net profit attributable to the parent company is about 160 million yuan. China’s epidemic rebounded sharply. In March, the overnight tourist flow in Hainan Province fell sharply by 67.5% year-on-year. In early March, Haitang Bay temporarily closed its stores for nearly five days, which dragged down the company’s performance. The overall gross profit margin of 22q1 company was 34%, significantly increased by 7.56pct compared with 26.44% of 21q4, and decreased by 5.11pct year-on-year in 2021q1. The net interest rate attributable to the parent company in 22q1 was 15.27%, a significant increase of 8.87pct compared with 6.4% in 21q4, and a slight decrease of 0.44pct compared with 15.71% in 2021q1. Compared with 2021h2, the discount intensity of 22q1 company has narrowed, driving the increase of gross profit margin month on month.
Investment suggestion: continue to be optimistic about the development space of China’s tax-free industry and the company’s core advantages in the tax-free field. The short-term epidemic fluctuation will not affect the company’s medium and long-term development. Give a “buy” rating. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 10.1 billion / 14.2 billion / 18.3 billion yuan, corresponding to 35 / 25 / 19 times of PE respectively.
Risk tips: systemic risk, epidemic risk, policy promotion, lower than expected business conditions and other risks.
