Core Viewpoint - Morgan Stanley has revised its earnings per share forecasts for China Duty Free Group down by 13%, 7%, and 2% for the years 2025 to 2027, respectively, while also lowering revenue projections by 6% to 8% [1] Group 1: Earnings and Revenue Forecasts - The earnings per share estimates for China Duty Free Group have been adjusted downward for the years 2025, 2026, and 2027 by 13%, 7%, and 2% respectively [1] - Revenue forecasts have been reduced by 6% to 8% [1] Group 2: Target Price and Rating - The target price for China Duty Free Group has been increased from 55 HKD to 60 HKD [1] - The rating has been maintained at "in line with the market" [1] Group 3: Market Conditions - Demand for duty-free products has been weaker than expected, particularly on e-commerce platforms [1] - The gross profit margin for China Duty Free Group remains weak [1] - An improvement in offline sales and profit margins is anticipated following the launch of the Hainan Free Trade Port in mid-December this year [1]

Core Insights - Hainan's duty-free sales during the summer vacation reached 3.67 billion yuan, with 3.796 million items sold and 667,000 consumers participating [1] Sales Performance - The total sales amount for Hainan's 12 duty-free operators from July 1 to August 31, 2025, was 3.67 billion yuan [1] - The number of items sold during this period was 3.796 million [1] - The total number of consumers who participated in the duty-free shopping was 667,000 [1] Marketing and Promotions - The Fourth Hainan International Duty-Free Shopping Festival and the Seventh China Duty-Free Shopping Festival were held, introducing over 30 brands and showcasing numerous new products [1] - Various promotional activities were launched to stimulate new consumption momentum [1] Consumer Experience - The focus was on family and child-friendly offerings, including the opening of the first CareBears pop-up store and the first CareBears-themed café in mainland China [1] - The company emphasized a warm and enjoyable shopping experience with a diverse range of duty-free products to meet consumer demands [1] Operational Efficiency - Hainan Customs implemented a "centralized + automated" order review model to ensure smooth operation of the duty-free policy during the summer [1] - Increased efforts were made to audit new duty-free products and improve logistics efficiency for popular items [1] - Enhanced store inspections were conducted during peak tourist periods to create a healthy shopping environment for travelers [1]

Core Viewpoint - CDF Sanya International Duty-Free City celebrates its 11th anniversary with a series of innovative activities aimed at enhancing consumer experience and solidifying its position as a leading destination for duty-free shopping and tourism in Hainan [1][16]. Group 1: Expansion and Innovation - Since its opening in 2014, CDF Sanya International Duty-Free City has expanded from 120,000 square meters to 398,100 square meters, becoming a national AAAA-level tourist attraction [3][16]. - The duty-free city has introduced various new projects, including the "Hearts Island" phase and the standalone beauty plaza in Area C, showcasing its commitment to high-quality cultural tourism consumption [3][16]. - The venue now features a diverse range of nearly 1,000 domestic and international brands across multiple sectors, including jewelry, cosmetics, fashion, electronics, and dining [6][8]. Group 2: Consumer Engagement and Marketing Strategies - The anniversary celebration includes promotional activities such as 10x points for purchases, weekend prize draws, and scratch-off games, aimed at enhancing customer engagement [10][12]. - CDF Sanya is focusing on high-end membership services, offering customized experiences and exclusive events to attract affluent consumers back to the duty-free shopping environment [12][16]. - The introduction of flagship stores for brands like Coach, Estée Lauder, and Lancôme highlights the city's strategy to attract younger consumers through experiential shopping [8][10]. Group 3: Integration of Culture and Commerce - The duty-free city is transforming traditional commercial spaces into multi-value platforms, integrating outdoor sports and entertainment events to create immersive shopping experiences [14][16]. - Collaborations with various brands and events, such as Jay Chou's concert, are utilized to convert entertainment traffic into shopping opportunities, enhancing the overall consumer experience [14][16]. - CDF Sanya aims to build a comprehensive platform that integrates travel elements such as dining, accommodation, and entertainment, contributing to Hainan's development as an international tourism consumption center [16].

Group 1 - The tourism retail sector experienced a decline of 0.75% on September 2, with China Duty Free Group leading the drop [1] - The Shanghai Composite Index closed at 3858.13, down 0.45%, while the Shenzhen Component Index closed at 12553.84, down 2.14% [1] - China Duty Free Group's closing price was 68.79, reflecting a decrease of 0.75%, with a trading volume of 317,700 shares and a transaction value of 2.195 billion yuan [1] Group 2 - The tourism retail sector saw a net outflow of 22.2 million yuan from institutional investors, while retail investors contributed a net inflow of 159 million yuan [1] - The table indicates that the net inflow from retail investors accounted for 7.24% of the total, while the net inflow from speculative funds was 62.8939 million yuan, representing 2.87% [1]

Group 1 - The company reported a revenue of 28.151 billion yuan for H1 2025, a year-on-year decrease of 10%, and a net profit attributable to shareholders of 2.6 billion yuan, down 21% year-on-year [1] - In Q2 2025, the company achieved a revenue of 11.405 billion yuan, a year-on-year decrease of 9%, while the net profit attributable to shareholders was 662 million yuan, an increase of 32% year-on-year [1] - The sales of duty-free goods in Hainan decreased by 4.2% year-on-year in Q2 2025, showing signs of stabilization compared to a 11.39% decline in Q1 2025, with the company increasing its market share by nearly 1 percentage point [1] Group 2 - For H1 2025, the Sanya duty-free store generated a revenue of 10.343 billion yuan, a year-on-year decrease of 13.7%, with a net profit of 605 million yuan, up 12.75% year-on-year, resulting in a net profit margin of 5.85%, an increase of 1.3 percentage points year-on-year [1] - The Haikou International Duty-Free City reported a revenue of 3.056 billion yuan, a slight increase of 0.4% year-on-year, but incurred a net loss of 424 million yuan, compared to a loss of 431 million yuan in the same period last year [1] - The company is expected to achieve revenues of 59.9 billion yuan, 64.1 billion yuan, and 68.5 billion yuan for 2025, 2026, and 2027 respectively, with year-on-year growth rates of 6%, 7%, and 7% [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Views - The company reported a revenue of 28.15 billion yuan for the first half of 2025, a year-on-year decline of 10.0%, with a net profit attributable to shareholders of 2.60 billion yuan, down 20.8% year-on-year [5][13] - The revenue decline has narrowed quarter by quarter, with Q2 2025 revenue at 11.40 billion yuan, a decrease of 8.5% year-on-year [5][13] - The company has implemented various measures to enhance operations, including the introduction of nearly 200 new brands and deepening membership operations, resulting in improved user conversion and repurchase rates [14][15] Financial Performance - For H1 2025, the company's gross profit margin was 32.5%, down 1.4 percentage points year-on-year [14] - The company expects revenue growth for 2025-2027 to be 569.7 billion yuan, 626.2 billion yuan, and 689.0 billion yuan, with year-on-year growth rates of 0.9%, 9.9%, and 10.0% respectively [15][16] - The net profit attributable to shareholders is projected to be 4.24 billion yuan, 4.94 billion yuan, and 5.58 billion yuan for the same period, with growth rates of -0.7%, +16.7%, and +12.9% respectively [15][16] Market Position - The company's market share in Hainan has increased by nearly 1 percentage point year-on-year, despite the overall pressure on the duty-free sales market [13] - The company has shown resilience in its operations, with some subsidiaries reporting positive operating profit growth, while others are still in a loss-making phase [13][14]

Core Viewpoint - The report from Ping An Securities indicates that China Duty Free Group's net profit attributable to shareholders decreased by 20.81% year-on-year to 2.6 billion yuan in the first half of the year, with a significant decline of 32.21% in the second quarter to 662 million yuan, aligning with preliminary reports [1] Group 1: Financial Performance - The company's net profit for the first half of the year was 2.6 billion yuan, reflecting a year-on-year decline of 20.81% [1] - In the second quarter, the net profit dropped to 662 million yuan, a decrease of 32.21% compared to the same period last year [1] - The adjusted earnings forecasts for 2025-2027 are set at 4.7 billion, 5.6 billion, and 6.1 billion yuan respectively, down from previous estimates of 5 billion, 5.9 billion, and 6.6 billion yuan [1] Group 2: Business Operations - The company operates approximately 200 duty-free stores across over 100 cities, making it the largest duty-free operator in terms of retail outlets in a single country [1] - Recently, two city stores opened, with the Shenzhen store starting trial operations on August 23 and the Guangzhou store officially opening on August 26 [1] - The company has established long-term stable partnerships with around 1,600 well-known global brands, and its membership has surpassed 45 million [1] Group 3: Strategic Initiatives - The company is focusing on strengthening its supply chain and enhancing marketing efforts to improve brand value [1] - The current market valuation corresponds to price-to-earnings ratios of 30.5, 25.6, and 23.6 for the years 2025, 2026, and 2027 respectively, based on the closing price on August 29, 2025 [1] - The report maintains a "recommended" rating for the company [1]

Investment Rating - The investment rating for the company is "Buy" with a market price of RMB 69.29 and a sector rating of "Outperform" compared to the market [2][4]. Core Views - The report indicates that the company's revenue decline is narrowing quarter-on-quarter, with a focus on the potential benefits from the Hainan duty-free policy and the growth of city channel sales [9][6]. - The company achieved a revenue of RMB 281.51 billion in the first half of 2025, a year-on-year decrease of 9.96%, and a net profit of RMB 26.00 billion, down 20.81% year-on-year [9][4]. - The report maintains a positive outlook on the company's long-term performance due to its leading position in various channels and the gradual opening of city stores contributing to revenue growth [6][9]. Summary by Sections Financial Performance - In Q2 2025, the company reported revenue of RMB 114.05 billion, a year-on-year decline of 8.45%, and a net profit of RMB 6.62 billion, down 32.21% year-on-year [9][4]. - The company’s market share in Hainan's duty-free shopping has increased, with Hainan expected to open its borders in December 2025, which may boost tourist numbers [9][6]. Revenue Projections - The adjusted earnings per share (EPS) forecasts for 2025-2027 are RMB 2.09, RMB 2.60, and RMB 2.87, respectively, with the current price corresponding to price-to-earnings ratios of 33.1, 26.6, and 24.1 times [6][8]. - The report anticipates a gradual recovery in revenue growth, with projections of 2.7% growth in 2025, followed by 8.3% and 6.4% in 2026 and 2027, respectively [8][9]. Market Position - The company is expanding its city duty-free stores, with new openings in cities like Guangzhou and Shenzhen, which are expected to contribute positively to future revenue [9][6]. - The report highlights the company's competitive advantage in the Hainan duty-free market, supported by favorable government policies and an expanding product range [9][6].

Group 1 - The tourism retail sector increased by 0.03% on September 1, with China Duty Free Group leading the gains [1] - The Shanghai Composite Index closed at 3875.53, up 0.46%, while the Shenzhen Component Index closed at 12828.95, up 1.05% [1] - China Duty Free Group's closing price was 69.31, with a slight increase of 0.03% [1] Group 2 - The tourism retail sector experienced a net outflow of 85.82 million yuan from major funds, while retail investors saw a net inflow of 86.81 million yuan [1] - The trading volume for China Duty Free Group was 359,800 shares, with a transaction value of 250.5 million yuan [1]

Investment Rating - The report maintains a "Recommended" investment rating for the company, indicating an expectation of stock performance exceeding market performance by 10% to 20% over the next six months [9]. Core Views - The company is expected to see a recovery in operations as the decline in revenue narrows, with a focus on improving consumer demand and enhancing service quality [6][7]. - The company reported a revenue of 281.51 billion RMB for the first half of 2025, reflecting a year-over-year decline of 9.96%, with a net profit of 26.00 billion RMB, down 20.81% [3][6]. - The company is actively expanding its market presence, with plans to open new stores and enhance its brand portfolio, particularly in the Hainan region [7]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved a revenue of 281.51 billion RMB, with a net profit of 26.00 billion RMB, and a basic EPS of 1.26 RMB [3][6]. - The second quarter revenue decreased by 8.45% to 114.05 billion RMB, with a net profit decline of 32.21% to 6.62 billion RMB [3][6]. Market Dynamics - The Hainan duty-free market is showing signs of stabilization, with a reduction in the decline of sales and an increase in per capita shopping amounts [6][7]. - The company has strengthened its market position in Hainan, with a market share increase of nearly 1 percentage point year-over-year [7]. Strategic Initiatives - The company is focusing on integrating cultural and tourism experiences with its retail offerings, introducing new brands and enhancing customer engagement through various marketing initiatives [7]. - The company has successfully expanded its operations to international markets, including new stores in Hong Kong and Vietnam, and is promoting domestic brands abroad [7]. Future Projections - The revenue forecasts for 2025 to 2027 have been adjusted to 47 billion RMB, 56 billion RMB, and 61 billion RMB respectively, reflecting a cautious outlook based on current market conditions [7].