\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Core view
The company issued an announcement on January 14, 2022. In 2021, the company expects to realize a net profit attributable to the parent company of about 9.4-10.1 billion yuan, an increase of about 3.3-4 billion yuan over the same period of last year, a year-on-year increase of about 54% – 66%; It is estimated that the net profit deducted from non parent company is about 9.3-10 billion yuan, an increase of about 3.3-4 billion yuan over the same period of last year, a year-on-year increase of about 55% – 67%. After calculation, the company’s 2021q4 is expected to realize a net profit attributable to the parent company of about 900-16 billion yuan, a year-on-year decrease of about 46% – 69%. Under the impact of the epidemic, the increase of discounts and the increase of online proportion put pressure on the profit side of Q4. It is expected that the profit side is expected to continue to improve as the epidemic situation is gradually controlled.
Hainan outlying islands have broad prospects for tax exemption, with a bright growth rate. The company focuses on the main business of tax exemption, pays close attention to the duty-free market of Hainan outlying islands, and can continue to increase in the future. According to the information from Haikou customs, in 2021, Haikou customs supervised duty-free shopping on Hainan outlying islands with a total amount of 49.5 billion yuan, 6.72 million people, 70.45 million pieces of shopping and a per capita shopping amount of 7368 yuan, an increase of 80%, 49.8%, 107% and 20.2% respectively compared with the previous year. On the whole, China’s offshore duty-free industry has entered a stage of rapid development. On the one hand, under the impact of the epidemic, international cross-border travel is limited, and China’s epidemic prevention and control is relatively good, which makes the return of luxury consumption, duty-free consumption and other consumption significant. On the other hand, the continuous liberalization of the tax-free policy of outlying islands has also brought good opportunities for the development of the tax-free industry of Hainan outlying islands. China tax exemption continued to focus on the main business of tax exemption, made continuous efforts in brand introduction and supply chain management, and the tax exemption business on outlying islands increased significantly year-on-year. Haikou international duty-free city is expected to land in 2022. It will echo with Haitang Bay in Sanya, further expand the scale of the company and deepen the layout of the company’s tax exemption on outlying islands. The short-term impact brought by the current epidemic situation does not change the company’s long-term growth logic. With the epidemic situation gradually controlled, the tourism retail industry will continue to recover and inject power into the company’s performance growth. In the future, the listing of Hong Kong stocks is expected to further improve the company’s international status and deepen the international strategic layout.
Investment advice
China’s offshore duty-free industry has entered a stage of rapid development. We are optimistic about the company’s deep layout in offshore duty-free. In the future, as the epidemic situation is gradually controlled, the company’s discount is expected to continue to decrease and the profit side will continue to improve. The company will present a more eye-catching performance with its solid leading position and the profound layout of tax exemption on Hainan outlying islands. Maintain a “strongly recommended” rating.
Risk tips
Tip 1: macroeconomic fluctuations;
Tip 2: repeated epidemic impact;
Tip 3: industry policy changes.
