CSC SECURITIES (HK) LTD·2026-01-06 07:09Investment Rating - The report assigns a "Buy" rating to the company, indicating a potential upside in the stock price [6][10]. Core Insights - The company has secured the operating rights for the T3 duty-free store at Beijing Capital Airport, which is expected to enhance profitability despite a reduction in operational area compared to the previous round [7][10]. - The first-year guaranteed fee for the duty-free store is approximately 480 million RMB, with a sales commission starting at 5% and increasing by 1% annually after the first year [7][10]. - The company anticipates a long-term positive impact on profits due to the high volume of international travelers at T3, which accounts for over 80% of the airport's international passenger traffic [10]. - The report highlights a significant increase in duty-free sales in Hainan, with a 14.9% year-on-year growth in sales from September to November, and a 54.9% increase in the first week of the Hainan closure [10]. - The earnings forecast for 2025-2027 has been revised upwards, with expected net profits of 3.72 billion, 4.55 billion, and 5.17 billion RMB respectively, reflecting a recovery in duty-free sales and inbound/outbound travel [10][12]. Summary by Sections Company Information - The company operates in the leisure services industry, with a current A-share price of 90.29 RMB and a market capitalization of approximately 176.29 billion RMB [2]. - Major shareholder is China Tourism Group, holding 50.30% of the shares [2]. Recent Ratings - The company has had a series of ratings, with the most recent being "Buy" on December 18, 2025, following a series of "Trading Buy" ratings earlier in the year [3]. Financial Performance - The company reported a net profit of 5.03 billion RMB in 2022, with projections for 2025, 2026, and 2027 showing a recovery trend in profitability [12]. - The earnings per share (EPS) is expected to increase from 1.80 RMB in 2025 to 2.50 RMB in 2027, with corresponding price-to-earnings (P/E) ratios of 50, 41, and 36 [12]. Market Position - The company is positioned to benefit from the recovery of international travel and duty-free shopping, with supportive policies expected to enhance long-term growth prospects [10].