\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Event: China Tourism Group Duty Free Corporation Limited(601888) released the announcement of performance pre increase in 2021. It is estimated that the net profit attributable to the parent company in 2021 will be about 9.4-10.1 billion yuan, an increase of about 3.3-4 billion yuan over the same period of last year (after retroactive adjustment), a year-on-year increase of about 54% – 66%.
The company’s overall performance grew rapidly, but slightly lower than expected, mainly affected by the short-term epidemic and intensified industry competition. The company expects to realize a net profit attributable to the parent company of RMB 9.4-10.1 billion in 2021, with a year-on-year increase of 54% – 66% (after retroactive adjustment), and the annual performance is slightly lower than previously expected. It is estimated that the net profit attributable to the parent company of Q4 is 909-1609 million yuan, compared with 2.976 billion yuan in the same period last year, with a year-on-year decrease of about 69.5% – 45.9%. The company’s Q4 profitability has not been significantly improved. On the one hand, Hainan was greatly affected by the epidemic in the short term. In 2021, Hainan achieved a total tax-free sales of 60.173 billion yuan, including 50.49 billion yuan of tax-free sales, a year-on-year increase of + 83%, but the sales of Q3 and Q4 were only + 2.01% and + 31.28% year-on-year respectively. Under the background of the high base in the same period last year, the growth rate slowed down due to the impact of the scattered epidemic in many places across the country. On the other hand, the introduction of new participants partially diverted the company’s sales. DFE data show that in the past year or so since the opening of phase I of Haikong global boutique duty-free City, the tax-free sales of outlying islands have exceeded 1.6 billion yuan; Sanya sea travel duty-free city 21 received more than 2.4 million customers throughout the year. Tax exemption competition in outlying islands intensified and diverted the company’s sales, while there was only one participant in tax exemption in outlying islands in the same period last year, which affected the company’s year-on-year sales performance to a certain extent. Under the background of the epidemic situation and intensified industry competition, the company has maintained large promotion efforts for a long time, and the increase in the proportion of online supplementary purchase has affected the improvement of profit level.
The short-term disturbance of the epidemic is still ongoing, and the high prosperity of the duty-free track and the continuous growth of the company continue to be optimistic for a long time. In the short term, the recent epidemic situation in many parts of the country has rebounded, and the tightening of relevant policies has affected the release of tax-free consumption demand on outlying islands. In the three days of new year’s day in 22, a total of 600 million yuan of tax-free shopping on outlying islands was detected, with a year-on-year increase of + 9.7%. The growth rate slowed down, but the per capita consumption was 9740 yuan, showing a rising trend. During the Spring Festival transportation, it is expected that Hainan airports will transport more than 5 million passengers, an increase of 17% and 34% respectively compared with 21 and 20 years. Considering the recent new confirmed cases in many places, or affecting the actual data performance. In the long run, the expansion of the proportion of middle-income groups under the goal of common prosperity will increase the demand for optional consumption. Tax exemption, as a medium and high-end consumption, has long-term growth support, and is expected to achieve long-term development under the background of consumption return and driven by policies. The competition for tax exemption on outlying islands intensifies and diverts the company’s sales, but it is expected to enhance the competitiveness of tax exemption on outlying islands in the international market and help expand the whole cake. The company has been deeply cultivating tax exemption on outlying islands for a long time and has been laying multi-channel, which is expected to still benefit from the growth of the industry. The recovery of sales scale brings the control of discount strength, and the gross profit margin is expected to stabilize and recover. With the superposition of the impact of tax incentives, the profitability is expected to improve.
Profit forecast: in the long run, under the background of internal and external double circulation and consumption return, the tax exemption on outlying islands will continue to increase, the epidemic situation will improve, and the tax exemption channels at the airport are expected to gradually recover. The company will make efforts to consolidate its leading position in many aspects and will fully enjoy the growth dividend of the industry. However, in the short term, it is greatly affected by the epidemic situation, and its profitability has decreased. The net profit from 2021 to 2023 is reduced to RMB 9.71/13/16.2 billion, the corresponding EPS is RMB 4.97/6.64/8.31, and the corresponding PE is 40 / 30 / 24 times. Maintain a “strongly recommended” rating.
Risk tip: the policy exceeds expectations, the epidemic situation in China is repeated, and the tax-free competition on outlying islands is intensified.
