CTG DUTY-FREE(SH:601888) Ping An Securities·2024-09-02 10:40Investment Rating - The report maintains a "Recommended" investment rating for the company, indicating an expectation of stock performance that is better than the market by 10% to 20% over the next six months [3][12]. Core Views - The company's revenue for the first half of 2024 was 31.265 billion yuan, a decrease of 12.81% year-on-year, with a net profit attributable to shareholders of 3.283 billion yuan, down 15.07% [6]. - The report highlights that the company's business structure and profitability have changed significantly since 2019, influenced by policy changes and the recovery of inbound tourism [6][10]. - The company is expected to benefit from the recent introduction of city duty-free policies, which will allow it to operate additional duty-free stores starting October 1, 2024 [10]. Summary by Sections Financial Performance - The company's gross margin improved to 33.53%, up 2.92 percentage points, while the net profit margin increased to 11.67%, up 0.25 percentage points [6]. - Sales expenses rose by 8.51% to 4.638 billion yuan, with a sales expense ratio of 14.83%, an increase of 2.91 percentage points [6]. - The company reported a significant decline in revenue from its Hainan operations, with sales of duty-free goods contributing 21.670 billion yuan and taxable goods contributing 9.158 billion yuan [6]. Market Dynamics - The report notes a recovery in international passenger traffic at Shanghai Airport, reaching 89% of 2019 levels, while Hainan's airports showed mixed performance [9]. - The number of visitors and their purchasing conversion rates are closely linked to the company's sales performance, with domestic tourism and inbound travel markets showing strong activity [7][9]. Future Outlook - The company is projected to achieve net profits of 6.41 billion yuan, 8.27 billion yuan, and 10.05 billion yuan for the years 2024 to 2026, respectively [10]. - The report emphasizes the company's competitive advantages in the global travel retail market and its ongoing efforts to optimize supply chains and improve operational efficiency [10].