\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Event:
The company announced on January 14 that it is expected to realize a net profit attributable to the parent company of 9.4-10.1 billion yuan in 2021, with a year-on-year increase of 3.3-4 billion yuan, an increase of 54% – 66%; It is expected to realize net profit deduction of RMB 9.3-10 billion; Among them, Q4 realized a net profit attributable to the parent company of RMB 900-1.6 billion, excluding the impact of Shanghai International Airport Co.Ltd(600009) rent reversal in the same period of 20 years, a year-on-year decrease of 27% – 60%.
Comments:
Q4 net interest rate is expected to decrease month on month compared with Q3, or it is mainly affected by expense provision
Referring to the performance forecast, we estimate that the net profit margin attributable to the parent company of Q4 is in the range of 4% – 8%, and the apparent net profit margin of Q3 decreased significantly by 22.4% month on month. However, from the perspective of actual net interest rate, the difference between Q4 and Q3 does not deviate from the historical range:
(1) the two non operating factors of Q3 net profit attributable to the parent company are thickened, and the comparison of Q3 and Q4 net interest rates after excluding is close to the historical average: after excluding the impact of capital airport rent return (thickened by 1.14 billion) + Hainan tax preference return (thickened by 740 million), Q3’s actual net interest rate is about 9.7%. Except that in 2017 and 2020, affected by the consolidation of daily wholesale income and the return of on-line rent, the net interest rate attributable to the parent company of Q4 was about 2.5pct lower than Q3 on average from 2015 to 2020, because Q4 is usually the time point for the centralized accrual of various expenses of the company. However, the difference between Q4 and Q3 is about 1.7-5.4pct, which is within the historical fluctuation range. Considering that the company completed the acquisition of Hong Kong China Travel Service assets in Q4 and the opening of incremental projects from 2022 to 2023, Q4 may save unexpected expenses.
(2) in Q4, the passenger flow in Hainan picked up in the peak season, and the gross profit margin is expected to remain stable and rise slightly. Affected by the epidemic in the second half of the year, Q3 of the company increased discounts in response to the decline of passenger flow, and the proportion of online sales increased, resulting in a sharp decline in gross profit margin over the previous 20 years. However, after entering the Q4 peak season, the passenger flow in Hainan picked up, the company discount has narrowed, the proportion of superimposed offline sales has picked up, and the overall gross profit margin should pick up compared with Q3 epidemic + off-season. Therefore, it is less likely that the gross profit margin will continue to decline.
Profit forecast and valuation
Considering that the company further narrows the discount in the peak season of 22q1, the operation is expected to improve month on month. In the medium and long term, the Growth Logic of the tax-free industry remains unchanged, the company has significant competitive advantages, and there is still a large growth space for the airport + outlying islands + urban tax-free channels. It is estimated that the net profit attributable to the parent company in 2021-23 will be RMB 9.9 billion, RMB 14.1 billion and RMB 17.4 billion, corresponding to PE of 40x, 28x and 23x respectively. The current valuation matches the performance growth rate, and the improvement of operating chain in the future may bring catalysis and maintain the “buy” rating.
Risk tips
Risk of repeated epidemic in China; The improvement of the company’s gross profit margin is less than expected; The climbing progress of the new project is lower than expected.
