\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Core view
The company is firmly in the leading position in the tax-free industry and leads the development of the industry. The scale of Asian tourism retail market has grown rapidly, becoming the core consumption area of the world tourism retail market, and the market share of China free tourism ranks first. In the context of consumption upgrading, due to the impact of the epidemic and the narrowing of the price difference of luxury goods outside China, the trend of overseas consumption return is obvious, driving the continuous recovery and substantial expansion of China's duty-free market. China's tax-free licenses are scarce, with high barriers to entry. China's tax-free full license has obvious advantages in operation, and is firmly at the forefront of the industry. The tax-free license will be liberalized to a limited extent and moderate competition will be introduced. China tax exemption will still lead the development of the tax-free industry by virtue of its first mover advantage, scale advantage and supply chain advantage.
The company focuses on offshore tax exemption, airport tax exemption and local tax exemption, while making efforts to carry out overseas business and grasp international development opportunities. The new tax-free policy for outlying islands in Hainan will help the growth of supply and demand in China's tax-free market and benefit the long-term development of the tax-free industry in the future. The company's three outlying island duty-free stores grasp the policy dividend, rely on the first mover advantage, continuously expand the scale, and have a stable leading position. Meilan Airport Phase II project, the landing of Sanya International duty-free City Phase I site 2 and the opening of Meilan Airport T2 duty-free store will continue to promote the growth of the company's offshore duty-free performance. Haikou international duty-free city is expected to land in 2022 and will echo with Haitang Bay in Sanya to further expand the scale of the company. The company's airport duty-free business has the right to operate large airports such as Beijing, Shanghai, Guangzhou, Hong Kong and Macao duty-free, with obvious channel monopoly advantages. With the gradual easing of the epidemic situation, the passenger throughput is expected to recover, and the airport tax-free income will return to the pre epidemic level and continue to increase. The company's tax exemption in the city is booming. If the policy is restricted and liberalized in the future, it will become an important growth opportunity. Seizing the opportunity of international development, the company has arranged 6 overseas duty-free stores in Cambodia, Hong Kong and Macao, operated 2 cruise duty-free stores, and actively explored the overseas market. In the future, the listing of Hong Kong stocks is expected to further enhance the company's international status.
Investment advice
As a leader in the duty-free industry, the company has significant advantages in brand cooperation, supply chain management and market share. The continuous improvement of the epidemic situation in the future will help promote the recovery of tourism retail industry. The duty-free industry is expected to show high prosperity and high space driven by consumption upgrading + policy support. The company is expected to continue to expand its scale with its leading advantages to achieve high-speed and benign growth. It is estimated that the operating revenue of the company from 2021 to 2023 will be 75.255/99.240/125.891 billion yuan respectively, with a year-on-year increase of 43.08% / 31.87% / 26.86%; The net profit attributable to the parent company was 10.355/13.753/18.260 billion yuan respectively, with a year-on-year increase of 68.65% / 32.81% / 32.78%; EPS is 5.30/7.04/9.35 yuan respectively, and the corresponding PE of the current stock price is 37.80/28.46/21.44 times respectively. "Strongly recommended" rating for the first coverage.
Risk tips
Macroeconomic fluctuations; Repeated epidemic impact; Industry policy changes.
