Ge Long Hui·2025-07-31 03:41Core Viewpoint - The company forecasts a decline in revenue and net profit for the first half of 2025, with total revenue expected to be 28.15 billion, down 10% year-on-year, and net profit of 2.6 billion, down 26% year-on-year, indicating underperformance in Q2 2025 [1][2]. Group 1: Performance Overview - The company anticipates Q2 2025 revenue of 11.4 billion, a decrease of 8.5% year-on-year, and a net profit of 660 million, down 32.2% year-on-year, which is below expectations [1]. - Revenue decline in Q2 is slightly less severe compared to Q1, which saw a year-on-year decline of 11% [1]. - The recovery of airport duty-free store revenue is ongoing, supported by the resurgence of inbound and outbound tourism [2]. Group 2: Market Trends and Future Outlook - From late June, cross-border flight frequencies have recovered to over 80% of the levels seen in the same period in 2019, suggesting continued improvement in airport duty-free business for H2 [2]. - The company has strengthened its market position in Hainan, with a nearly 1 percentage point increase in market share year-on-year, and expects a positive trend to continue in the second half of the year [2]. - The opening of new duty-free stores and the introduction of tax refund services in Sanya International Duty-Free City are expected to enhance the company's operational layout [2]. Group 3: Long-term Prospects - The Hainan Free Trade Port is set to officially close on December 18, 2025, which is expected to boost local economic vitality and enhance the positioning of Hainan as an international tourism island, benefiting the company's operations in Hainan [2]. - The company has revised its profit forecasts downward for 2025-2027, expecting net profits of 4.52 billion, 5.14 billion, and 5.67 billion, representing year-on-year growth of 6%, 13.7%, and 10.4% respectively [2]. - The current stock price corresponds to H-share P/E ratios of 24x, 21x, and 19x for the years 2025, 2026, and 2027, respectively, indicating potential for expansion as the Hainan Free Trade Port develops [2].