Zhi Tong Cai Jing·2025-11-12 03:40Core Viewpoint - The target price for China Duty Free Group (601888)(01880) has been raised by 50% from HKD 60 to HKD 90, reflecting stronger profit growth momentum supported by favorable policies and better growth prospects. The rating remains "Outperform" [1] Group 1: Financial Performance - For Q3 2025, the net profit of China Duty Free Group decreased by 29% year-on-year to RMB 4.52 billion, which was below both the firm's and market expectations [1] - Sales decline has narrowed compared to the previous quarter, with gross margin stabilizing around 32%-33% [1] - The company is expected to gradually improve operations in the future, with gross margins likely to remain stable due to optimized product and merchandise mix [1] Group 2: Cost and Profitability - Due to business expansion, there is an anticipated increase in sales and marketing, rental, and personnel costs, leading to a slower improvement in operating profit margins [1] Group 3: Policy Impact - China has implemented several new duty-free policies aimed at boosting domestic consumption, enhancing tourism in Hainan Province, and expanding shopping channels for domestic and international consumers [1] - Preliminary data from Hainan Province indicates a positive response to these policies, suggesting that the company, as a leading duty-free retailer in the region, will be one of the main beneficiaries [1]