\u3000\u3000 China Tourism Group Duty Free Corporation Limited(601888) (601888)
Event:
The company disclosed the performance express on January 21 and realized a revenue of 67.7 billion yuan / year-on-year + 29% in 2021; Net profit attributable to parent company: 9.59 billion yuan / year-on-year + 56%; Net profit deducted is RMB 9.47 billion / year-on-year +59%.
Comments:
The epidemic had a significant impact on the performance in the second half of the year, but the company's revenue growth in Hainan remained resilient
Referring to the performance express, the company's Q4 achieved a revenue of 18.17 billion yuan / year-on-year + 4%, and a net profit attributable to the parent of 1.1 billion yuan / year-on-year - 64%. Excluding the return of Shanghai International Airport Co.Ltd(600009) rent in the same period of 20 years, it decreased by 50% year-on-year. Among them, we expect Q4 Hainan's Online + offline revenue to reach about 15 billion, with a year-on-year increase of more than 30%. Under the background of the year-on-year decline in the overall number of tourists in Q4 Hainan, we still recorded a good growth, mainly due to the company's active response to the challenge of the epidemic in combination with Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channels and discount promotion strategies. Q4 company achieved a parent net profit rate of 6.1%, a year-on-year decline, mainly due to the reduction of passenger flow in Hainan and the increase of discount + online dutiable commodity sales. The actual value of Q3 decreased by 3.6pct month on month (excluding rent and tax return), which is mainly related to the accrual of a number of expenses in Q4, but it is generally consistent with the fluctuation law of historical quarters (0.3 ~ 4.8pct). In order to cope with the disturbance of the epidemic on the supply chain, the company increased inventory reserves this year, resulting in an increase in impairment provision at the end of the year. In addition, it is expected that the increase of Q4 employee bonus expenses will also have an impact.
The scale is expanding rapidly, and the management emphasizes the transformation of future growth from "quantity" to "quality"
The company has become the world's largest duty-free operator for two consecutive years. Under the scale expansion, the supply chain management ability is significantly stronger than that before the epidemic. Referring to the gross profit margin gap between the company (49%) and dufry (60%) before the epidemic, we believe that in the future, the company will strengthen procurement negotiations with foreign brands, increase the proportion of solely supplied goods and expand the sales of high-quality products; Internally, there is still room for improvement in gross profit margin under the measures of improving operation efficiency, optimizing logistics, store counter construction and so on. At the same time, we have repeatedly stressed that there are external constraints in the industry discount competition. Under the background that the tax-free customer source structure is dominated by Chinese customers, the continuous discount competition strategy is difficult to be accepted by government regulators and brands. At present, the management has begun to change from focusing on the quantity of operation to the quality of operation, and the overall discount range in Hainan market has also been tightened. We expect that the gross profit margin of the company may be improved quarter by quarter in 2022.
Profit forecast and valuation
Considering that the management emphasizes the transformation of growth from quantity to quality, it is expected that factors such as the slowdown of discount competition in 22 years are expected to drive the improvement of earnings month on month. The Growth Logic of the medium and long-term tax-free industry remains unchanged, and the company has significant competitive advantages. The landing of new tax-free properties on outlying islands is expected to improve the reception bottleneck in peak seasons and accelerate the introduction of top luxury brands. It is estimated that the net profit attributable to the parent company in 2021-23 will be 9.6 billion yuan, 12.8 billion yuan and 16.2 billion yuan, with the corresponding PE of 41x, 31x and 24x respectively. The current valuation matches the performance growth rate, and the improvement in the chain of operation in the future may bring catalysis and maintain the "buy" rating.
Risk tips
Repeated risk of 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.
