Group 1 - The tourism retail sector experienced a decline of 0.55% on September 17, with China Duty Free Group leading the drop [1] - The Shanghai Composite Index closed at 3876.34, up 0.37%, while the Shenzhen Component Index closed at 13215.46, up 1.16% [1] - China Duty Free Group's closing price was 71.15, reflecting a decrease of 0.55%, with a trading volume of 283,000 shares and a transaction value of 2.011 billion yuan [1] Group 2 - The tourism retail sector saw a net outflow of 83.0826 million yuan from institutional investors, while retail investors had a net inflow of 29.2964 million yuan [1] - The net inflow from speculative funds was 53.7862 million yuan, indicating varied investor sentiment within the sector [1] - China Duty Free Group had a net outflow of 83.0826 million yuan from institutional investors, representing a 4.13% decrease in net position [1]

Investment Rating - The report maintains a "Buy" rating for several companies in the service consumption sector, including Gu Ming, Mi Xue, Cha Bai Dao, Xiao Cai Yuan, Da Shi, and others [7][8]. Core Insights - The recent policy measures aimed at expanding service consumption are expected to boost the service sector, particularly in areas such as cultural tourism, IP consumption, and elderly care [1][2]. - The report highlights the potential for significant growth in China's service consumption, with the current contribution of service industry value added to GDP at 57%, compared to around 70% in developed countries, indicating room for expansion [1][2]. - The report emphasizes the importance of high-quality service supply and the integration of new technologies and business models to enhance the service sector [1][4]. Summary by Sections Policy Measures - The report outlines five key areas with 19 specific measures to promote service consumption, including the cultivation of service consumption platforms and the enhancement of high-quality service supply [3][4]. - Specific initiatives include optimizing cultural product offerings, extending operating hours for tourist attractions, and promoting long-term care insurance [3]. Market Performance - As of August 2025, retail and catering revenue reached 449.6 billion yuan, showing a year-on-year growth of 2.1%, indicating a recovery from previous lows [4]. - Domestic travel during the first half of 2025 saw 3.285 billion trips, a 20.6% increase year-on-year, with spending reaching 3.15 trillion yuan, up 15.2% [4]. Company Recommendations - The report suggests focusing on leading companies with growth potential and strong market positions, such as Gu Ming, Mi Xue, and others, which are expected to benefit from policy support and industry consolidation [5][8]. - Specific companies highlighted for their growth potential include Gu Ming (1364 HK), Mi Xue Group (2097 HK), and others, with target prices set for each [8][12]. Financial Performance - Gu Ming reported a 34.4% year-on-year increase in GMV to 14.1 billion yuan in the first half of 2025, with a net profit of 1.625 billion yuan, reflecting a 121.5% increase [13]. - Mi Xue Group's revenue for the first half of 2025 was 14.87 billion yuan, a 39.3% increase year-on-year, with a net profit of 2.69 billion yuan, up 42.9% [15]. Growth Outlook - The report anticipates that as the new measures are implemented, the service sector will experience a surge in high-quality supply and innovative business models, driving domestic demand growth [4][5].

Core Viewpoint - The newly opened city duty-free shops are performing well in terms of customer traffic, but the overall duty-free industry is still under pressure [12]. Group 1: City Duty-Free Shops Performance - The city duty-free shops in Guangzhou and Shenzhen opened on August 26 and have seen good customer traffic since their opening, especially on weekends [3][4]. - Popular products include electronic items like headphones and tablets, as well as "Guochao" (national trend) products [3][8]. - The shops cater to travelers who are about to depart within 60 days and require valid entry documents and tickets [6]. Group 2: Industry Challenges - Despite the positive performance of new city duty-free shops, the overall duty-free industry faces challenges, including a decline in sales at other types of duty-free stores [12]. - For instance, from January to June 2025, the duty-free shopping amount in Hainan's offshore duty-free stores was 16.76 billion yuan, down 9.2% year-on-year, with a significant drop in the number of shoppers [12]. - Major companies like China Duty Free Group reported a revenue of approximately 28.2 billion yuan in the first half of 2025, a decrease of 9.96% year-on-year, while Wangfujing's duty-free business saw a revenue drop of 15.93% [12][14]. Group 3: Future Outlook - The industry is transitioning from a "price war" to "value service," aiming for high-quality development [14]. - The opening of the first city duty-free shop in Wuhan has provided valuable operational experience for companies in this sector [14]. - The overall market is expected to benefit from the recovery of cross-border tourism and improved consumer purchasing power [14].

Core Viewpoint - The tourism retail sector experienced a 2.29% increase on September 16, led by China Duty Free Group, while the overall market indices showed modest gains [1] Group 1: Market Performance - On September 16, the Shanghai Composite Index closed at 3861.87, up 0.04% [1] - The Shenzhen Component Index closed at 13063.97, up 0.45% [1] Group 2: Sector Performance - The tourism retail sector saw a net inflow of 171 million yuan from main funds, while retail investors experienced a net outflow of 118 million yuan [1] - The stock of China Duty Free Group (601888) closed at 71.54 yuan, reflecting a 2.29% increase with a trading volume of 348,700 shares and a transaction value of 24.79 million yuan [1]

Group 1 - The stock price of China Duty Free Group (中国中免) increased by 2.02% on September 16, reaching 71.35 CNY per share, with a trading volume of 344 million CNY and a market capitalization of 147.613 billion CNY [1] - Year-to-date, the stock price has risen by 8.17%, with a 0.46% increase over the last five trading days, an 8.55% increase over the last 20 days, and a 17.20% increase over the last 60 days [1] - The company has appeared on the "龙虎榜" (a stock market leaderboard) once this year, with the most recent appearance on April 10 [1] Group 2 - China Duty Free Group, established on March 28, 2008, and listed on October 15, 2009, primarily engages in the retail of tourism products and related services [2] - The company's main business segments include tourism retail, which accounts for 72.26% of revenue from duty-free and taxable goods, and tourism retail complex investment and development [2] - As of June 30, 2025, the company reported a revenue of 28.151 billion CNY, a year-on-year decrease of 9.96%, and a net profit attributable to shareholders of 2.600 billion CNY, down 20.81% year-on-year [2] Group 3 - Since its A-share listing, China Duty Free Group has distributed a total of 18.405 billion CNY in dividends, with 7.241 billion CNY distributed over the last three years [3] - As of June 30, 2025, the top ten circulating shareholders include Hong Kong Central Clearing Limited, which holds 82.66 million shares, an increase of 15.7285 million shares from the previous period [3] - Other significant shareholders include Invesco Great Wall New Growth Mixed Fund and various ETFs, with increases in their holdings compared to the previous period [3]

Summary of China Tourism Group Duty Free Conference Call Company Overview - **Company**: China Tourism Group Duty Free (CTG Duty Free) - **Ticker**: 1880.HK - **Market Cap**: HK$127 billion (US$16.4 billion) [5] Key Industry Insights - **Hainan Duty-Free Market**: Hainan is the key revenue source for CTG Duty Free, accounting for 55% of total revenue. The duty-free sales in Hainan are expected to improve, with a forecasted decline of only 1% in H225E, turning positive in Q425E [2][9]. - **Sales Performance**: Hainan duty-free sales decreased by 9% YoY in H125 but narrowed to a decline of 5% in June 2025, indicating a recovery trend [2][9]. Financial Performance - **Net Profit Forecast**: The net profit for Q425E is expected to increase YoY, with a projected NPM of 5.7% in H225E, up 1.8 percentage points YoY [3][9]. - **Earnings Per Share (EPS)**: EPS estimates for 2025-2027 have been cut by 14-12% due to lower-than-expected revenue and deteriorating margins. The revised EPS for 2025E is Rmb1.96, down from Rmb2.28 [6][12]. - **Revenue Projections**: Total revenue is expected to decline to Rmb53.647 billion in 2025E, with a gradual recovery to Rmb63.325 billion by 2027E [12][19]. Strategic Outlook - **Pricing Strategy**: The company plans to adjust its pricing strategy by reducing discounts and promotions, which is expected to stabilize margins and improve profitability [3][9]. - **Market Competition**: Cooling competition in Hainan's duty-free market is anticipated to support NPM expansion, alongside improved inventory management [9]. Valuation and Investment Rating - **Price Target**: The price target has been raised to HK$71.20 from HK$58.40, reflecting a 17% discount to the new price target for CTG-A [4][5]. - **Investment Rating**: The company maintains a "Buy" rating, with expectations of positive sales growth and margin improvement in the coming years [4][9]. Risks and Challenges - **Major Risks**: - A sharp decline in CDF International's net profit - Higher concession rates at airports post re-tendering - Lower Hainan NPM due to increased discounts and a higher sales contribution from lower-margin consumer electronics [9]. Additional Financial Metrics - **Gross Profit Margin (GPM)**: Expected to improve slightly, with GPM projected at 31.8% for 2025E [12]. - **Debt Metrics**: The net debt to EBITDA ratio is not meaningful (NM) for 2025E, indicating a strong balance sheet position [5]. Conclusion - The outlook for China Tourism Group Duty Free is cautiously optimistic, with expected improvements in sales and profitability driven by strategic pricing adjustments and a recovering Hainan market. However, potential risks related to competition and operational costs remain significant considerations for investors.

Group 1 - The tourism retail sector experienced a decline of 0.65% on September 15, with China Duty Free Group leading the drop [1] - The Shanghai Composite Index closed at 3860.5, down 0.26%, while the Shenzhen Component Index closed at 13005.77, up 0.63% [1] - China Duty Free Group's stock price was reported at 69.94, reflecting a decrease of 0.65% with a trading volume of 246,300 shares and a transaction value of 1.728 billion yuan [1] Group 2 - The tourism retail sector saw a net outflow of 211 million yuan from major funds, while retail investors contributed a net inflow of 191 million yuan [1] - The net inflow from speculative funds was recorded at 20.1027 million yuan, accounting for 1.16% of the total [1] - The net proportion of retail investors in the sector was noted at 11.06% [1]

Core Viewpoint - UBS reports that China Duty Free Group (601888)(01880) has seen a narrowing decline in revenue for the second quarter year-on-year, but the extent is below market expectations, leading to a downgrade in earnings per share forecasts for 2025 to 2027 by 14% to 12% [1] Group 1: Financial Performance - The company's gross margin and net profit margin have deteriorated due to the impact of sales costs and expenses [1] - UBS maintains a "Buy" rating while raising the target price from HKD 58.4 to HKD 71.2 [1] Group 2: Sales Outlook - It is anticipated that sales at the Hainan duty-free stores will decline by 1% in the second half of the year due to a lower base, with a potential recovery in the fourth quarter [1] - If average customer spending stabilizes, sales in Hainan are expected to grow by 5% and 10% year-on-year in 2026 and 2027, respectively [1]

Core Viewpoint - UBS reports that China Duty Free Group (01880) has seen a narrowing decline in Q2 revenue year-on-year, but the decline is below market expectations, and gross margin and net profit margin have worsened due to sales costs and expenses [1] Financial Performance - UBS has lowered the earnings per share estimates for China Duty Free Group for 2025 to 2027 by 14% to 12% [1] - The target price for the company has been raised from HKD 58.4 to HKD 71.2 while maintaining a "Buy" rating [1] Sales Outlook - Due to a lower base, sales at China Duty Free's Hainan duty-free stores are expected to decline by 1% in the second half of the year, with a potential recovery in Q4 [1] - If average customer spending stabilizes, sales in Hainan are projected to grow by 5% and 10% year-on-year in 2026 and 2027, respectively [1]

Core Viewpoint - UBS reported that China Duty Free Group's revenue decline in the second quarter has narrowed year-on-year, but the extent was below market expectations, leading to a downgrade in earnings per share forecasts for 2025 to 2027 by 14% to 12% [1] Group 1: Financial Performance - The company's gross margin and net profit margin have deteriorated due to the impact of sales costs and selling expenses [1] - UBS maintains a "Buy" rating on the company, raising the target price from HKD 58.4 to HKD 71.2 [1] Group 2: Sales Forecast - It is anticipated that sales at China Duty Free's Hainan duty-free stores will decline by 1% in the second half of the year due to a lower base, with a potential recovery in the fourth quarter [1] - If average customer spending stabilizes, the company's Hainan sales are expected to grow by 5% and 10% year-on-year in 2026 and 2027, respectively [1]