CTG DUTY-FREE(SH:601888) Bank of China Securities·2025-12-26 08:29Investment Rating - The report maintains an "Outperform" rating for the duty-free industry, highlighting the increasing importance of domestic demand and supportive policies from the government [1]. Core Insights - The duty-free industry is entering a new era characterized by improved external conditions, enhanced policies, and rising industry sentiment, suggesting significant investment opportunities [1]. - The report emphasizes the expected growth in Hainan's offshore duty-free sales due to the launch of new policies, the peak tourist season, and a low base effect, with sales growth projected to continue [3]. - The recovery of international passenger flow and the expansion of the免税店 (duty-free store) market are anticipated to further boost sales in both port and city channels [3][39]. Summary by Sections Duty-Free Market Overview - The duty-free market is experiencing a recovery, with sales in Hainan showing a positive year-on-year growth of 27% in November, driven by new policies and an increase in tourist numbers [3][22]. - The report notes that the sales of high-value items like digital products and gold jewelry are contributing significantly to this growth [22]. Offshore Duty-Free Sales - Hainan's offshore duty-free sales have seen a turnaround, with a year-on-year increase of 3.4% in September, marking the first positive growth since March [22]. - The report indicates that the new policies implemented in October are expected to further enhance the shopping experience and increase the variety of products available [26]. Port and City Duty-Free Sales - The international passenger flow is gradually returning, with the number of inbound foreign tourists increasing significantly, which is expected to drive sales in port and city duty-free stores [39]. - The report highlights that the recent policy changes have expanded the range of products available in city duty-free stores, aiming to stimulate consumer demand [40]. Investment Recommendations - The report recommends focusing on leading companies in the duty-free sector, specifically China Duty Free Group, Wangfujing, and Zhuhai Duty Free Group, as they are well-positioned to benefit from the policy changes and market recovery [3].