2025-11-18 09:41Investment Rating - The report assigns a "Buy" rating for China Tourism Group Duty Free Corp (CTGDF) [4] Core Insights - Encouraging sales trends have emerged since the new duty-free policy took effect on November 1, with Hainan offshore duty-free sales increasing by 34.86% year-on-year during the first week of November [1][2] - The online platform in Hainan saw a significant growth in Gross Merchandise Value (GMV) of 40.4% during the Double 11 shopping festival, indicating a positive shift in consumer behavior [1][2] - The number of buyers has shown positive growth, particularly in categories such as mobile phones and gold accessories, suggesting a recovery in consumer spending [2] - Management expresses confidence in peak season performance, supported by new policies, marketing campaigns, and concert events in Hainan [2] Sales Performance - Hainan offshore duty-free sales reached Rmb506 million during the first week of November, with a notable increase in per capita spending by 30.5% year-on-year [2] - Daily sales exceeded Rmb100 million on November 11, indicating strong consumer engagement during the shopping festival [2] - The growth in sales is attributed to a combination of new policies, a wealth effect, and a low base from the previous year [1] Pricing Strategy - The company has adopted a less aggressive pricing discount strategy this year, focusing on balancing gross profit margin (GPM) and sales [2] - Over 200 popular cosmetics SKUs are offered weekly, with 80% having a price advantage compared to competitors [2] Category Performance - The cosmetics category has shown recovery, with positive growth since Q3 2025, while luxury goods performance remains mixed [3] - The watch category has lagged, whereas gold & jewelry and boutique categories have experienced growth [3] Valuation - The DCF-based target price for CTGDF is set at Rmb78, reflecting the long-term structural growth potential of its duty-free business [6]