Industry Overview - The beauty retail sector in China experienced a year-on-year growth of 5.1%, with total retail sales reaching 465.3 billion yuan in 2025, significantly outperforming the overall retail market which grew by 3.7% [2] - December 2025 saw a notable increase in cosmetic retail sales, reaching 38 billion yuan, marking an 8.8% year-on-year growth, driven by year-end consumer demand and promotional activities [2] Brand Developments - Maybelline faced backlash after announcing a partnership with the youth group "Times Youth" as brand ambassadors, leading to consumer dissatisfaction and low sales figures [3] - Dakeci responded to an investigation regarding misleading advertising of its children's lip balm, clarifying that it did not promote the product as "food-grade" despite previous claims on e-commerce platforms [4] - The first "youthful needle" for temporal filling was approved in China, marking a significant advancement in aesthetic medicine [5] - The high-end fragrance brand Wenxian opened its first pop-up store in Shanghai, focusing on traditional incense culture [6][7] - Proya launched a new medical skincare series targeting post-surgery and specialized skin care, planning to enter OTC channels [8] - The UK brand Indu exited the color cosmetics market to focus on skincare, citing higher consumer loyalty in that segment [9] - Sephora announced a strategic partnership with Olive Young to create a dedicated K-beauty section, set to launch in North America and Singapore [10] - Valentino Beauty exited the South Korean market due to limited distribution and competition from local brands [11] - Patrick Ta Beauty entered the Middle Eastern market through a partnership with Sephora, launching in several countries [12] - Douglas reported a slight increase in Q1 sales but faced pressure on profit margins due to consumer price sensitivity [13][14] Regulatory and Market Trends - Recent reports highlighted the discovery of banned substances in children's creams, prompting regulatory investigations and product recalls [15] - Unilever Ventures invested in two Indian beauty brands, indicating confidence in the high-end, clean beauty market in India [16] - China Duty Free Group announced a significant acquisition of DFS assets for approximately 3.95 billion USD, enhancing its presence in the Greater Bay Area [17] - Saks Global filed for Chapter 11 bankruptcy, marking a significant event in the luxury retail sector [18] - L'Occitane is exploring a potential IPO in the US market, having previously been privatized in 2024 [20] - Shandong Province initiated a pilot program for electronic labels on cosmetics, aimed at improving product traceability and compliance [21] - New cosmetic testing standards are being proposed in China to enhance safety and regulatory compliance [22]

Core Insights - The article highlights the changes in the Hong Kong Stock Connect holdings, with notable increases and decreases in ownership percentages for various companies [1][2][3] Group 1: Increased Holdings - Haotian International Investment (01341) saw the largest increase in holdings, up by 1.85% to a total of 65.37% [2] - IFBH LIMITED (06603) increased by 1.44%, reaching a holding of 7.29% [2] - Fortior Technology (Shenzhen) Co., Ltd. (01304) increased by 1.07%, with a current holding of 21.10% [2] - Over the last five trading days, Zhongqing Holdings (01855) had the highest increase at 6.13%, bringing its total to 13.79% [3] - Other notable increases include Haotian International Investment (01341) at 3.94% and Junda Co., Ltd. (02865) at 3.69% [3] Group 2: Decreased Holdings - Junda Co., Ltd. (02865) experienced the largest decrease in holdings, down by 2.45% to 47.55% [2] - China Duty Free Group (01880) saw a reduction of 1.54%, with a current holding of 35.20% [2] - Zhaoyan New Drug (06127) decreased by 0.95%, now holding 62.78% [2] - Over the last five trading days, Nanjing Panda Electronics (00553) had the largest decrease at 3.20%, with a holding of 45.04% [3] - Other significant decreases include Goldwind Technology (02208) at 3.02% and China Duty Free Group (01880) at 2.64% [3] Group 3: Long-term Trends - Over the past 20 days, Junda Co., Ltd. (02865) had a substantial increase of 15.33%, reaching a holding of 47.55% [4] - Zhongwei New Materials (02579) also saw a significant increase of 10.95%, with a current holding of 13.87% [4] - The long-term decrease list includes China Metallurgical Group (01618) with a reduction of 6.79%, now at 35.17% [4]

Group 1 - LVMH established a stake in China Duty Free Group (1880.HK) on January 19, with a holding percentage of 6.30% [1]

Core Viewpoint - China Duty Free Group (CDFG) has reached an agreement to acquire DFS's travel retail business in Hong Kong and Macau, along with its intangible assets in Greater China, from LVMH Group, indicating a strategic expansion in the luxury retail sector [1] Group 1: Acquisition Details - The acquisition includes DFS's operations in Hong Kong, which has 2 stores, and Macau, which has 8 stores, covering both duty-free and taxable luxury goods [1] - LVMH Group will subscribe to newly issued H-shares of China Duty Free Group as part of the transaction [1] Group 2: Strategic Collaboration - A strategic cooperation memorandum has been signed between CDFG and LVMH, focusing on product sales, store openings, and brand promotion [1] - This partnership aims to enhance the operational synergy between the two companies in the luxury retail market [1]

Group 1 - The tourism retail sector experienced a decline of 1.56% on January 22, with China Duty Free Group leading the drop [1] - The Shanghai Composite Index closed at 4122.58, up 0.14%, while the Shenzhen Component Index closed at 14327.05, up 0.5% [1] - China Duty Free Group's stock price closed at 93.61, reflecting a decrease of 1.56% with a trading volume of 439,200 shares and a transaction value of 4.147 billion yuan [1] Group 2 - The tourism retail sector saw a net outflow of 320 million yuan from institutional investors, while retail investors contributed a net inflow of 57.6375 million yuan [1] - The net inflow from speculative funds was 262 million yuan, accounting for 6.32% of the total [1] - The net outflow from China Duty Free Group was 320 million yuan, representing a net institutional share of -17% to -19% [1]

Core Viewpoint - China Duty Free Group Co., Ltd. (China Duty Free) has experienced a decline in stock price and revenue, indicating potential challenges in the tourism retail sector amid changing market conditions [1][2]. Financial Performance - As of January 22, China Duty Free's stock price decreased by 2.03% to 93.16 CNY per share, with a market capitalization of 192.735 billion CNY [1]. - For the period from January to September 2025, the company reported a revenue of 39.862 billion CNY, a year-on-year decrease of 7.34%, and a net profit attributable to shareholders of 3.052 billion CNY, down 22.13% year-on-year [2]. Stock and Shareholder Information - The number of shareholders increased to 309,300 as of September 30, 2025, reflecting a rise of 6.75% [2]. - The company has distributed a total of 18.922 billion CNY in dividends since its A-share listing, with 7.758 billion CNY distributed in the last three years [3]. Market Activity - On January 22, the net outflow of main funds was 214 million CNY, with large orders showing a mixed trend in buying and selling [1]. - The stock has seen a year-to-date decline of 1.48%, but has increased by 34.60% over the past 60 days [1]. Business Overview - China Duty Free primarily engages in the retail of duty-free and taxable goods, with 72.26% of revenue from duty-free sales and 25.54% from taxable goods [1]. - The company operates in both domestic and international markets, focusing on tourism retail and property leasing [1].

Core Viewpoint - China Duty Free Group (CDFG) is making a significant move by acquiring DFS Group's travel retail business in Greater China for up to $395 million, aiming to enhance its international competitiveness and facilitate the export of domestic products [1][3][11]. Group 1: Acquisition Details - CDFG plans to acquire equity and assets related to DFS's travel retail business in Greater China, including 100% equity of DFS Cotai Limitada and two retail stores in Hong Kong [1][3]. - The acquisition includes not only physical assets but also intangible assets such as brand rights and membership systems, which are crucial for enhancing CDFG's market position [3][4]. - The transaction is expected to be funded through a stock issuance to LVMH, raising approximately HKD 924 million for capital supplementation and business development [4][11]. Group 2: Financial Performance - CDFG's financial performance has been under pressure, with a decline in both revenue and net profit for six consecutive quarters leading up to 2025 [9][10]. - The company's revenue and net profit for the first three quarters of 2025 were reported at CNY 398.62 billion and CNY 30.52 billion, reflecting year-on-year decreases of 7.34% and 22.13% respectively [9][10]. - In 2021, CDFG experienced significant growth, with revenues reaching CNY 676.76 billion, but has since faced volatility, with revenues of CNY 544.33 billion in 2022 and CNY 564.74 billion in 2024 [8][9]. Group 3: Strategic Initiatives - CDFG is actively seeking to expand its market presence and adapt to increasing competition in the duty-free sector, particularly in Hainan, where it has opened new retail locations [10][11]. - The collaboration with LVMH is seen as a strategic move to leverage both companies' strengths in product sales, store openings, and brand promotion, aiming to enhance CDFG's competitive edge in the Greater China market [11][12]. - The focus on exporting domestic products is expected to be a key strategy for CDFG to overcome current performance challenges and establish a platform for local brands to enter international markets [11][12].

Investment Rating - The report maintains a "Buy" rating for China Duty Free Group (601888.SH) [2] Core Views - The acquisition of DFS's Greater China business marks a new chapter for China Duty Free Group, enhancing its position in the tourism retail market [8] - The transaction involves a cash purchase of up to $395 million for DFS's assets and equity in the Greater China region, which is expected to strengthen the company's service network in Hong Kong and Macau [8] - The partnership with LVMH is anticipated to optimize product structure and service levels, further enhancing the company's competitive edge [8] Financial Forecasts - Projected revenue for 2024 is 56.47 billion yuan, with a decline of 16.4%, followed by a slight decrease to 54.52 billion yuan in 2025, and growth to 62.18 billion yuan in 2026 and 69.63 billion yuan in 2027 [2][9] - Net profit attributable to shareholders is expected to be 4.27 billion yuan in 2024, decreasing by 36.4%, then recovering to 3.88 billion yuan in 2025, and increasing to 5.18 billion yuan in 2026 and 5.82 billion yuan in 2027 [2][9] - Earnings per share (EPS) are forecasted to be 2.06 yuan in 2024, 1.88 yuan in 2025, 2.50 yuan in 2026, and 2.81 yuan in 2027 [2][9] Valuation Metrics - The price-to-earnings (P/E) ratio is projected to be 46 in 2024, increasing to 51 in 2025, and then decreasing to 38 in 2026 and 34 in 2027 [2][9] - The price-to-book (P/B) ratio is expected to be 3.6 in 2024, slightly decreasing to 3.5 in 2025, and further to 3.3 in 2026 and 3.1 in 2027 [2][9]

Group 1 - The core point of the news is that China Duty Free Group (CDFG) announced the acquisition of DFS Group's travel retail business in Greater China for up to $395 million in cash, which includes various assets and equity related to DFS's operations in Hong Kong and Macau [2][5] - The acquisition will allow CDFG to hold 100% of DFS Cotai Limitada and acquire assets from two DFS stores in Hong Kong, as well as nine travel retail stores in Hong Kong and Macau [5][6] - CDFG has also signed a subscription agreement with LVMH Group and other entities, planning to issue up to 1.2 million H-shares at a price of HKD 77.21 per share, raising approximately HKD 924 million [6] Group 2 - CDFG's recent financial performance shows a decline in revenue and net profit, with a 7.34% decrease in revenue to CNY 39.86 billion and a 22.13% drop in net profit to CNY 3.05 billion for the first three quarters of 2025 [8] - The Hainan offshore duty-free market is under pressure, with a 9.2% decrease in shopping amount to CNY 16.76 billion in the first half of 2025, although the average spending per person increased by 23% [8][9] - Despite short-term demand weakness, there are still policy benefits and trends in consumption upgrades, with expectations of growth in the Hainan market following the full closure of the island in late 2025 [9]

Group 1 - The tourism retail sector experienced a decline of 1.04% on January 21, with China Duty Free Group leading the drop [1] - The Shanghai Composite Index closed at 4116.94, up 0.08%, while the Shenzhen Component Index closed at 14255.12, up 0.7% [1] - China Duty Free Group's closing price was 60.56, reflecting a decrease of 1.04%, with a trading volume of 446,800 shares and a transaction value of 4.258 billion yuan [1] Group 2 - The tourism retail sector saw a net outflow of 41.464 million yuan from institutional investors, while retail investors experienced a net outflow of 32.2948 million yuan [1] - Conversely, speculative funds recorded a net inflow of 73.7594 million yuan into the tourism retail sector [1] - The net inflow and outflow percentages for China Duty Free Group were -0.97% for institutional investors and -0.76% for retail investors, with a net inflow of 1.73% from speculative funds [1]