\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Performance summary:
It is predicted that the net profit in 2021 will be between 9.4 billion and 10.1 billion, an increase of 54% to 66% over the same period of the previous year (the acquisition of the equity of Hong Kong China travel in the reporting period has little impact, which is ignored here), and the net profit after deduction of non-profit will be between 9.3 billion and 10 billion, a year-on-year increase of 55% – 67%. Based on this calculation, 4q recorded a net profit of between 910 million and 1.61 billion, a year-on-year decrease of 69% to 45%. In addition, due to the return of operating expenses and Hainan income tax in the third year of the capital airport this year, the profit is about 1.9 billion, and the net profit of the company’s operating income in 2021 is about 7.5 billion to 8.2 billion. The annual performance was lower than our expectation.
On a year-on-year basis, 4q’s performance is significantly lower than that in the same period of 20 years. It is expected that in 2020, 4q company will write back a large number of accrued airport rents, resulting in a higher base period, the repeated domestic winter epidemic, resulting in the decline of tourism popularity in Hainan, the increase of 4q promotion discount, and the provision of inventory impairment according to practice.
As the global epidemic has not improved yet, it is difficult for overseas tourism to improve in the short term, and Hainan sector will still be the main contribution to the company’s performance in 2022. According to Haikou customs, in 2021, the tax-free shopping amount in Hainan outlying islands was 49.5 billion yuan, the number of shoppers was 6.72 million, and the per capita shopping amount was 7368 yuan, an increase of 80%, 49.8% and 20.2% respectively compared with the previous year, still maintaining a good growth. 4q under the influence of the epidemic, the amount of shopping was 14 billion, the number of shoppers was 1.59 million, and the per capita consumption was 8783 yuan, an increase of 23%, – 7% and 32% respectively over the same period of last year. In the short term, due to the impact of the epidemic in winter, the growth rate of shopping trips in winter has decreased, and the consumption in the spring festival may be affected. The performance of 1q Hainan is expected to be under pressure. However, throughout the year, T2 duty-free store of Meilan Airport will open at the end of 2021, and Haikou international duty-free city is also planned to open in 2022. On the other hand, the product discount may be narrowed, and the performance is expected to improve quarter by quarter.
In December, the company announced the acquisition of 100% equity of Hong Kong China Travel Service. Since then, the company will become the only fully licensed duty-free product sales company in China. The complementary effect of entry-exit business is expected to deepen, adding help to improve the post epidemic market layout and improve the overall profitability.
The company continued to promote long-term strategic layout during the epidemic period. In addition to improving the coverage of duty-free shops in Hainan outlying islands and building supporting businesses, with the expansion of scale, the company’s bargaining power with upstream suppliers has improved, and has successively established cooperative relations with more than 1000 well-known brands. Since the promotion of the new tax-free policy for outlying islands, many luxury brands have settled in. The company also pays attention to digital construction, gathers 20 million free members, and strengthens the flow advantage by gradually improving member services. In addition, the city’s duty-free shops will be arranged in advance. In the future, with the improvement of the epidemic situation, it is expected to improve profits through linkage with airport duty-free shops.
The profit forecast is lowered. It is expected that the company will realize net profits of 9.77 billion, 13.07 billion and 17.35 billion respectively from 2021 to 2023, with a year-on-year increase of 59%, 33.8% and 32.8% respectively. The EPS is 5 yuan, 6.69 yuan and 8.89 yuan respectively. The current share price corresponds to PE 38 times, 28 times and 2321 times respectively. The current valuation is reasonable and the “buy” investment proposal is maintained.
Risk tip: the impact of the epidemic is intensified, and the sales of outlying islands are less than expected
