Summary of China Tourism Group Duty Free Conference Call Company Overview - **Company**: China Tourism Group Duty Free (601888.SS, 601888 CG) - **Industry**: Consumer sector in China/Hong Kong - **Market Capitalization**: Rmb161,767 million - **Current Stock Price**: Rmb78.99 (as of Nov 7, 2025) - **Price Target**: Rmb66.00, indicating a downside of 16% from the current price [6][6][6] Key Takeaways Sales Performance - **Hainan Offline Duty-Free Sales**: Increased by 35% year-over-year (YoY) in early November 2025, reaching Rmb506 million with 73,000 shoppers [9][9][9] - **Growth Drivers**: The growth is attributed to a lower base effect, increased electronics sales, and a new policy allowing local residents to purchase duty-free items [9][9][9] - **Historical Context**: Daily duty-free sales in November are typically 40% higher than in September, suggesting potential for continued growth in November 2025 [9][9][9] Financial Projections - **Earnings Per Share (EPS)**: Projected EPS for 2025 is Rmb2.23, with estimates increasing to Rmb3.09 by 2027 [6][6][6] - **Revenue Forecast**: Expected net revenue for 2025 is Rmb54,387 million, with growth anticipated to Rmb66,525 million by 2027 [6][6][6] - **Valuation Metrics**: - P/E ratio for 2026 is estimated at 24x, which is 1 standard deviation below the average since 2017 [10][11][11] - Dividend yield projected to increase from 1.4% in 2025 to 2.0% by 2027 [6][6][6] Risks and Opportunities - **Upside Risks**: - Favorable policy outcomes for Hainan Free Trade Zone and downtown duty-free shopping [13][14][14] - Improvement in consumer spending, particularly in beauty and luxury products [13][14][14] - **Downside Risks**: - Overall economic slowdown affecting disposable income [13][14][14] - Price competition among various retail channels [13][14][14] - Insufficient supply of luxury products [13][14][14] Market Sentiment - **Analyst Rating**: The stock is rated as Equal-weight, indicating a neutral outlook compared to the market [6][6][6] - **Investor Day**: An upcoming investor day in Sanya, Hainan, is expected to provide further insights into the company's development and management's outlook [9][9][9] Conclusion China Tourism Group Duty Free is experiencing a significant rebound in sales, particularly in Hainan, driven by favorable policies and consumer behavior. However, the company faces challenges from economic uncertainties and competitive pressures. The stock is currently rated as Equal-weight, with a price target suggesting a potential decline from current levels. Investors should monitor upcoming events and market conditions closely.

Market Overview - A-shares showed mixed performance with the Shanghai Composite Index regaining the 4000-point mark, closing up 0.53% at 4018.60 points, while the Shenzhen Component rose 0.18% and the ChiNext Index fell 0.92% [2][3] - The trading volume in the Shanghai and Shenzhen markets reached 21,745 billion, an increase of 1,754 billion from the previous trading day [3] Sector Performance - Traditional sectors such as liquor, tourism, and aviation saw significant gains, with stocks like Shede Liquor and China Duty Free hitting the daily limit, and Kweichow Moutai rising over 2% [2] - In contrast, previously strong sectors like semiconductors and artificial intelligence experienced a collective pullback [2] - Among 31 industry indices, 23 saw gains, with beauty care and food & beverage leading at 3.60% and 3.22% respectively, while the power equipment sector was the only one to decline, falling over 1% [3] Consumer Sector Dynamics - The surge in the consumer sector is attributed to multiple favorable factors, including positive economic signals such as a 0.2% month-on-month and year-on-year increase in the CPI for October, and a 1.2% year-on-year rise in core CPI [4] - The government is expected to continue implementing policies to boost consumption, as indicated in the fiscal policy report for the first half of 2025 [4] - The duty-free sector received a boost from the optimization of Hainan's duty-free shopping policy effective November 1, with a significant event scheduled for December 18 [4] Investment Sentiment - Analysts suggest that A-shares are entering a critical phase of economic verification, with expectations of a volatile upward trend but potentially slower growth rates [5] - There is a growing discussion about style rotation in the market, with high dividend and consumer sectors becoming more attractive to investors [2][5] - The rise of the "old economy" stocks, particularly in the liquor sector, has reignited interest in traditional industries, contrasting with the previously favored "new economy" sectors like technology [6] Market Classification - The terms "old economy," "middle economy," and "new economy" have gained popularity in market discussions, categorizing stocks based on their industry characteristics [6] - Fund managers emphasize the importance of evaluating business models and intrinsic value rather than strictly adhering to these classifications [6] Valuation Concerns - Despite the overall market valuation being reasonable, there are concerns about the high trading density in sectors like artificial intelligence and robotics, which may lead to localized bubbles [7]

Core Insights - China Duty Free Group (中国中免) made its first appearance on the Hong Kong Stock Connect active trading list in nearly a month, with a trading volume of 1.698 billion HKD and a net sell of 29 million HKD on November 10 [1] - The total trading volume of active stocks on the Hong Kong Stock Connect reached 30.933 billion HKD, accounting for 29.76% of the day's total trading amount, with a net buying amount of 688 million HKD [1] - Alibaba (阿里巴巴-W) led the trading volume with 5.302 billion HKD, followed by SMIC (中芯国际) and Tencent (腾讯控股) with 4.304 billion HKD and 4.019 billion HKD respectively [1] Trading Activity Summary - The active stocks on November 10 included: - Tencent Holdings (00700): 4.019 billion HKD, net sell of 128 million HKD, 20 appearances in the last month, closing price 649.5 HKD, daily increase of 2.44% [1] - SMIC (00981): 4.304 billion HKD, net sell of 217 million HKD, 20 appearances in the last month, closing price 74.7 HKD, daily decrease of 0.99% [1] - Huahong Semiconductor (01347): 1.306 billion HKD, net sell of 198 million HKD, 20 appearances in the last month, closing price 78.1 HKD, daily decrease of 1.70% [1] - Xiaomi Group (01810): 3.256 billion HKD, net buy of 173 million HKD, 20 appearances in the last month, closing price 42.36 HKD, daily increase of 0.28% [1] - Alibaba (09988): 5.302 billion HKD, net sell of 653 million HKD, 20 appearances in the last month, closing price 163.4 HKD, daily increase of 2.06% [1] - Pop Mart (09992): 3.164 billion HKD, net buy of 519 million HKD, 17 appearances in the last month, closing price 221.4 HKD, daily increase of 8.11% [1] - Meituan (03690): 570 million HKD, net sell of 31 million HKD, 13 appearances in the last month, closing price 103.3 HKD, daily increase of 1.27% [1] - CNOOC (00883): 3.742 billion HKD, net buy of 1.313 billion HKD, 13 appearances in the last month, closing price 22.44 HKD, daily increase of 5.95% [1] - China Mobile (00941): 758 million HKD, net sell of 79 million HKD, 7 appearances in the last month, closing price 87.8 HKD, daily increase of 0.75% [1] - Ganfeng Lithium (01772): 1.142 billion HKD, net sell of 74 million HKD, 4 appearances in the last month, closing price 54.0 HKD, daily increase of 2.47% [1] - Sangfor Technologies (01530): 605 million HKD, net sell of 12 million HKD, 3 appearances in the last month, closing price 29.0 HKD, daily increase of 0.62% [1] - Xpeng Motors (09868): 1.067 billion HKD, net buy of 103 million HKD, 3 appearances in the last month, closing price 92.0 HKD, daily increase of 1.21% [1] - China Duty Free Group (01880): 1.698 billion HKD, net sell of 29 million HKD, 1 appearance in the last month, closing price 81.6 HKD, daily increase of 15.34% [1]

Group 1 - The core point of the news is the significant trading activity of China Duty Free Group Co., Ltd. (中国中免) on November 10, with a notable block trade involving 36,000 shares at a price of 86.89 yuan, totaling 3.128 million yuan [1][2] - The stock closed at 86.89 yuan, reflecting a 10.00% increase, with a trading volume of 7.687 billion yuan and a net inflow of 1.164 billion yuan in main funds for the day [1][2] - Over the past five days, the stock has risen by 13.33%, with a total net inflow of 1.158 billion yuan [1] Group 2 - The latest margin financing balance for the stock is 5.188 billion yuan, which has increased by 125 million yuan, representing a growth of 2.47% over the past five days [2] - Two institutions have rated the stock in the last five days, with Huachuang Securities providing the highest target price estimate of 84.54 yuan [2] - China Duty Free Group was established on March 28, 2008, with a registered capital of 20.68859044 billion yuan [2]

Market Overview - On November 10, the Hang Seng Index rose by 1.55%, closing at 26,649.06 points, with a total net inflow of HKD 6.654 billion through the southbound trading channel [1] - The total trading volume for the southbound trading was HKD 103.941 billion, with a net buying amount of HKD 6.654 billion [1] Southbound Trading Details - The Shanghai Stock Exchange's southbound trading had a total transaction amount of HKD 63.035 billion, with a net buying of HKD 1.152 billion [1] - The Shenzhen Stock Exchange's southbound trading recorded a transaction amount of HKD 40.906 billion, with a net buying of HKD 5.502 billion [1] Active Stocks - In the Shanghai Stock Exchange's southbound trading, Alibaba-W had the highest transaction amount of HKD 30.14 billion, followed by SMIC and Tencent Holdings with transaction amounts of HKD 25.38 billion and HKD 23.94 billion, respectively [1] - In terms of net buying, China National Offshore Oil Corporation (CNOOC) led with a net buying amount of HKD 564 million, with its stock price increasing by 5.95% [1] - Alibaba-W recorded the highest net selling amount of HKD 748 million, while its stock price rose by 2.06% [1] Shenzhen Stock Exchange Active Stocks - In the Shenzhen Stock Exchange's southbound trading, Alibaba-W also topped the transaction amount with HKD 22.88 billion, followed by SMIC and CNOOC with transaction amounts of HKD 17.66 billion and HKD 16.28 billion, respectively [2] - CNOOC had the highest net buying amount of HKD 750 million, with its stock price increasing by 5.95% [2] - SMIC recorded the highest net selling amount of HKD 12.6 million, with its stock price declining by 0.99% [2]

Group 1: Market Performance - The "big consumption" sector in the A-share market has seen a significant rise, with the CSI Consumer Index increasing by 3.38%, marking the largest single-day gain since the second half of the year [1] - The liquor sector led the gains, with the CSI Liquor Index rising by 5.05% [1] - Several consumer stocks, including Shede Spirits and Kweichow Moutai, reached their daily limit up [1] Group 2: Economic Indicators - The National Bureau of Statistics reported a 0.2% month-on-month and year-on-year increase in the Consumer Price Index (CPI) for October 2025 [1] - Analysts suggest that the October CPI data reflects a steady enhancement of economic vitality and the release of domestic demand potential, predicting a moderate increase in CPI for the fourth quarter [1][2] Group 3: Policy Implications - The Ministry of Finance plans to implement more proactive fiscal policies, including special actions to boost consumption and provide financial subsidies for personal consumption loans [2] - The upcoming traditional consumption peaks, such as "Double 11" and the Spring Festival, are expected to significantly enhance consumer sentiment and corporate performance [2] Group 4: Industry Outlook - The food and beverage sector has underperformed the market since early 2025, but expectations for recovery are rising as the macroeconomic environment improves [3] - The liquor industry is currently in a deep adjustment phase, with demand declining and companies focusing on inventory reduction for long-term health [3] - Analysts recommend gradually increasing positions in the liquor sector, particularly in companies showing signs of performance recovery [3]

Core Insights - On November 10, 2025, Alibaba-W (09988), SMIC (00981), and Tencent Holdings (00700) were the top three companies by trading volume in the Southbound Stock Connect, with trading amounts of 30.14 billion, 25.38 billion, and 23.94 billion respectively [1][2] - In the Shenzhen-Hong Kong Stock Connect, Alibaba-W (09988), SMIC (00981), and China National Offshore Oil Corporation (00883) also ranked as the top three, with trading amounts of 22.88 billion, 17.66 billion, and 16.28 billion respectively [1][2] Southbound Stock Connect - Top Active Companies - Alibaba-W (09988) had a trading amount of 30.14 billion with a net buy of -7.48 billion [2] - SMIC (00981) recorded a trading amount of 25.38 billion with a net buy of -91.6453 million [2] - Tencent Holdings (00700) had a trading amount of 23.94 billion with a net buy of -4.19 billion [2] - China National Offshore Oil Corporation (00883) achieved a trading amount of 21.14 billion with a net buy of +5.64 billion [2] - Xiaomi Group-W (01810) had a trading amount of 20.62 billion with a net buy of +2.62 billion [2] - Pop Mart (09992) recorded a trading amount of 18.74 billion with a net buy of +834.075 million [2] - Hua Hong Semiconductor (01347) had a trading amount of 13.06 billion with a net buy of -1.98 billion [2] - Ganfeng Lithium (01772) recorded a trading amount of 11.42 billion with a net buy of -743.079 million [2] - China Duty Free Group (01880) had a trading amount of 10.92 billion with a net buy of -1.47 billion [2] - Xpeng Motors-W (09868) achieved a trading amount of 10.67 billion with a net buy of +1.03 billion [2] Shenzhen-Hong Kong Stock Connect - Top Active Companies - Alibaba-W (09988) had a trading amount of 22.88 billion with a net buy of +952.690 million [2] - SMIC (00981) recorded a trading amount of 17.66 billion with a net buy of -1.26 billion [2] - China National Offshore Oil Corporation (00883) achieved a trading amount of 16.28 billion with a net buy of +7.50 billion [2] - Tencent Holdings (00700) had a trading amount of 16.25 billion with a net buy of +2.91 billion [2] - Pop Mart (09992) recorded a trading amount of 12.90 billion with a net buy of +4.35 billion [2] - Xiaomi Group-W (01810) had a trading amount of 11.95 billion with a net buy of -883.856 million [2] - China Mobile (00941) achieved a trading amount of 7.58 billion with a net buy of -789.845 million [2] - China Duty Free Group (01880) recorded a trading amount of 6.07 billion with a net buy of +1.18 billion [2] - 3SBio (01530) had a trading amount of 6.05 billion with a net buy of -11.6094 million [2] - Meituan-W (03690) achieved a trading amount of 5.70 billion with a net buy of -306.287 million [2]

Group 1 - On November 10, China National Pharmaceutical Group (China National Medicine) executed a block trade of 36,000 shares, with a transaction value of 3.128 million yuan, accounting for 0.04% of the total trading volume for the day [1] - The transaction price was 86.89 yuan, which remained stable compared to the market closing price of 86.89 yuan [1][2] - The buying brokerage was Guosen Securities Co., Ltd., while the selling brokerage was Huashan Securities Co., Ltd. Guangdong Branch [2]

Core Viewpoint - UBS reports that Hainan's offshore duty-free sales reached 506 million RMB from November 1 to 7, marking a 35% year-on-year increase, with 73,000 shoppers, a 3.4% increase year-on-year, driven by new duty-free shopping policies [1] Industry Summary - The Chinese duty-free industry outlook is optimistic, primarily due to new policies in Hainan and a low base effect, with expectations for a positive sales trend in Q4 and accelerated growth from 2026 to 2027 [1] - China Duty Free Group (601888) (01880) is expected to be the biggest beneficiary of the positive trends in Hainan's duty-free sales [1] - Airport duty-free sales are anticipated to recover steadily due to the expansion of duty-free areas and a double-digit growth in international passenger traffic [1] - Policy relaxation, along with increased retail space and product variety, will act as catalysts for growth in China's duty-free sales [1]

Core Viewpoint - UBS reports that Hainan's duty-free sales reached 5.06 billion RMB from November 1 to 7, representing a 35% year-on-year increase, significantly exceeding market expectations, driven by new duty-free shopping policies [1] Industry Summary - The optimistic outlook for China's duty-free industry is primarily due to new policies in Hainan and a low base effect, with expectations for a positive sales trend in Q4 and accelerated growth from 2026 to 2027 [1] - China Duty Free Group (01880) is anticipated to be the biggest beneficiary of the favorable conditions in the duty-free market [1] - The expansion of airport duty-free areas and a double-digit growth in international passenger traffic are expected to contribute to a steady recovery in airport duty-free sales [1] - Policy relaxation, along with increased retail space and product variety, will act as catalysts for growth in China's duty-free sales [1]