Haitong Securities International·2025-11-04 11:14Investment Rating - Investment advice: Following the new offshore duty-free policy in Hainan Island, further policy support optimizes in-city duty-free pickup, opening growth potential [5][6][7]. Core Views - The recent notice issued by multiple Chinese ministries aims to enhance the role of duty-free policies in boosting consumption, guiding overseas consumption back, attracting foreign consumers, and promoting healthy development of duty-free retail [6][7]. - The notice improves duty-free policies in four areas: optimizing domestic product tax refund policies, expanding duty-free categories, relaxing duty-free store approval, and enhancing convenience and regulation [7][8]. - The optimization of in-city duty-free pickup is expected to significantly enhance shopping convenience and expand the market size for in-city duty-free stores [8]. Summary by Sections Policy Improvements - The notice allows for the sale of more domestic products in duty-free stores and encourages the inclusion of products reflecting Chinese culture [7]. - New categories for duty-free sales include popular items such as cellphones, drones, sports goods, health foods, OTC drugs, and pet food [7]. - Approval processes for duty-free stores are being relaxed to allow local optimization of store layouts [7]. Market Potential - The new policy allows travelers to pick up duty-free goods at port entry stores after making reservations at in-city stores, which is expected to enhance consumer experience and expand the market [8]. - The opening of in-city duty-free stores in major cities like Shenzhen and Guangzhou is anticipated to contribute positively to performance growth [8].