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.

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]

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]

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]

Market Overview - The Hong Kong stock market experienced a significant upward trend, with all three major indices rising over 1%. The Hang Seng Index increased by 1.55% or 407.23 points, closing at 26,649.06 points, with a total trading volume of HKD 2,147.88 million [1] - The Hang Seng China Enterprises Index rose by 1.9%, closing at 9,443.24 points, while the Hang Seng Tech Index increased by 1.34%, closing at 5,915.56 points [1] Blue Chip Performance - Pop Mart (09992) led the blue-chip stocks, surging by 8.11% to HKD 221.4, contributing 19.35 points to the Hang Seng Index. The company's sales growth was driven by increased production capacity and consumer demand [2] - Other notable blue-chip performers included CNOOC (00883) up 5.95%, China Resources Mixc Lifestyle (01209) up 4.98%, and Haidilao (06862) up 4.9% [2] Sector Highlights - Major technology stocks showed positive performance, with Tencent rising by 2.44% and Alibaba by 2.06%. The consumer sector was boosted by multiple favorable factors, with China Duty Free (601888) soaring over 15% [3] - The cryptocurrency sector saw significant gains, with Bitcoin returning to USD 106,000, leading to a rise in related stocks [4][5] - Gold stocks continued their upward trend, supported by gold prices nearing USD 4,080 per ounce, with several gold companies reporting substantial gains [5][6] Consumer Sector Dynamics - The consumer sector experienced a strong rally, with China Duty Free (01880) rising 15.34% and other consumer stocks like Huasheng Group (01179) and China National Aviation (00753) also showing significant increases [4][9] - The Ministry of Finance's report on consumption policies and the rise in the Consumer Price Index (CPI) contributed to the positive sentiment in the consumer market [4] Lithium Industry Insights - Lithium stocks were active, with Tianqi Lithium (09696) rising by 3.04%. The price of lithium hexafluorophosphate increased by 13.02% compared to the end of October, indicating a potential price increase cycle [6][7] - Analysts predict strong battery demand growth, with expectations of a 31% increase by 2026, highlighting the positive outlook for companies like Ganfeng Lithium [7] Notable Stock Movements - LeShuShi (02698) debuted with a significant rise of 25.95%, reflecting strong market interest in its health products [8] - Longhua Automobile (02333) saw an increase of 8.19%, driven by a strong new car cycle and ongoing transformation towards new energy vehicles [10] - Cambridge Technology (06166) reported a 21.57% increase in revenue for the first three quarters, indicating robust growth in its core business segments [11]

Core Insights - The appreciation of the Renminbi has led to a significant increase in the related sectors, with a 3.62% rise in the Renminbi appreciation beneficiary sector on the previous trading day [1] - Major stocks benefiting from the Renminbi appreciation include China Duty Free Group, which surged by 10% [1] Market Performance - The Shanghai Composite Index closed at 4018.6, up 0.53%, while the Shenzhen Component Index closed at 13427.61, up 0.18% [1] - Key stocks and their performance include: - China Duty Free Group (601888): Closed at 86.89, up 10.00% with a trading volume of 913,800 shares and a transaction value of 7.687 billion [1] - Pinwa Food (300892): Closed at 36.70, up 8.84% with a trading volume of 109,600 shares and a transaction value of 392 million [1] - China Eastern Airlines (600115): Closed at 5.26, up 7.35% with a trading volume of 3,049,300 shares and a transaction value of 1.572 billion [1] Capital Flow - The Renminbi appreciation beneficiary sector saw a net inflow of 876 million in main funds, while retail investors experienced a net outflow of 392 million [2][3] - Specific stock capital flows include: - China Duty Free Group: Main funds net inflow of 113.8 million, retail net outflow of 45.2 million [3] - Sun Paper (002078): Main funds net inflow of 85.86 million, retail net outflow of 52.24 million [3] - China National Airlines (601111): Main funds net inflow of 28.98 million, retail net outflow of 57.41 million [3]

Market Overview - The Hong Kong stock market experienced a significant upward trend, with all three major indices rising over 1%. The Hang Seng Index increased by 1.55% to close at 26,649.06 points, with a total trading volume of HKD 2,147.88 million [1] - According to Guangfa Securities, the foundation for a bull market in Hong Kong stocks remains intact, suggesting a potential "oscillating upward" trend rather than a rapid increase. The fundamental drivers for November are strong, emphasizing the value of high-growth sectors [1] Blue-Chip Performance - Pop Mart (09992) led the blue-chip stocks, surging 8.11% to HKD 221.4, contributing 19.35 points to the Hang Seng Index. The company has seen increased production capacity and sales growth due to a pre-sale model [2] - Other notable blue-chip performers included CNOOC (00883) up 5.95%, China Resources Mixc Lifestyle (01209) up 4.98%, and Haidilao (06862) up 4.9% [2] Sector Highlights - Major technology stocks showed positive performance, with Tencent rising 2.44% and Alibaba increasing by 2.06%. The consumer sector also saw gains, particularly in travel and new consumption stocks, with China Duty Free Group rising over 15% [3] - The consumer sector's growth was supported by favorable policies and increased consumer spending, as indicated by the CPI data and the success of the new duty-free shopping policy in Hainan [4] Cryptocurrency and Gold Stocks - The cryptocurrency sector saw significant gains, with Bitcoin returning to USD 106,000 and Ethereum surpassing USD 3,600. This surge was attributed to positive market sentiment following news of the U.S. government potentially ending its shutdown [5] - Gold stocks continued their upward trend, with notable increases in shares like Chifeng Jilong Gold Mining (06693) and Zhaojin Mining Industry (01815) [5][6] Lithium Sector - Lithium stocks were active, with Tianqi Lithium (09696) rising 3.04%. The price of lithium hexafluorophosphate has seen a significant increase, indicating a potential price cycle [6] - Citic Securities highlighted the long-term benefits of gold due to global liquidity expansion and geopolitical risks, while also noting the strong demand forecast for batteries in the coming years [7] Notable Stock Movements - LeShuShi (02698) debuted strongly, rising 25.95% on its first day of trading. The company focuses on hygiene products in emerging markets [8] - China Duty Free Group (01880) saw a strong performance, rising 15.34%, driven by the new duty-free shopping policy in Hainan [9] - Great Wall Motors (02333) increased by 8.19%, supported by a strong new car cycle and ongoing transformation towards new energy vehicles [10] - Cambridge Technology (06166) reported a 21.57% increase in revenue and a 70.88% increase in net profit for the first three quarters of 2025, driven by its core businesses [11]