HUAXI Securities·2025-11-09 14:44Investment Rating - The report assigns an "Accumulate" rating to the company [5]. Core Insights - The company's operations are showing signs of recovery, with Q3 revenue and net profit indicating a narrowing decline, suggesting a gradual bottoming out and rebound [1][13]. - The upcoming Hainan customs closure is expected to provide long-term benefits for the offshore duty-free policy, with recent policy optimizations further enhancing the shopping experience [2][20]. - The company is actively expanding its city duty-free store projects, aiming to create new growth drivers [3][29]. Summary by Sections Company Operations - For the first three quarters of 2025, the company achieved revenue of 39.862 billion and net profit of 3.051 billion, reflecting year-on-year declines of 7.34% and 22.13% respectively. Q3 alone saw revenue of 11.711 billion and net profit of 0.452 billion, with declines of 0.38% and 28.94% [1][13]. - In September 2025, Hainan's offshore duty-free sales saw a year-on-year increase of 3.4%, marking a return to positive growth for the first time in 18 months [1][13]. Hainan Customs Closure - The offshore duty-free policy has been further optimized ahead of the customs closure, expanding the product categories to 47 and allowing for multiple purchases within a year for island residents [2][20]. - From November 1 to 7, 2025, Hainan's offshore duty-free shopping amounted to 0.506 billion, with a year-on-year increase of 34.86% in shopping amounts and 3.37% in the number of shoppers [2][20]. City Duty-Free Stores - The company has been awarded new city duty-free store projects in six cities, bringing the total to 12 cities, indicating a strategic move to establish new growth areas [3][29]. Financial Forecast and Investment Recommendations - The company is projected to achieve revenues of 53.084 billion, 58.328 billion, and 67.418 billion for 2025, 2026, and 2027 respectively, with corresponding net profits of 3.413 billion, 4.704 billion, and 6.041 billion [4][34]. - The report anticipates a turnaround in the company's operations, driven by the benefits of the customs closure and the expansion of city duty-free stores, leading to a new growth phase [4][35].