Bank of China Securities·2026-01-21 00:54Investment Rating - The report maintains a "Buy" rating for the company [1][4]. Core Views - The company is set to deepen its international business layout through the acquisition of DFS's Greater China operations for up to $395 million, which is expected to enhance its profitability and strengthen its market position in the Hong Kong and Macau regions [4][9]. - The company is benefiting from favorable policies in Hainan's duty-free sales, which supports the positive outlook for its performance [4]. - The adjusted earnings per share (EPS) forecasts for 2025-2027 are set at RMB 1.92, RMB 2.54, and RMB 3.08 respectively, reflecting a long-term growth potential as the duty-free industry recovers [6][8]. Financial Summary - The company’s projected revenue for 2025 is RMB 53,507 million, with a growth rate of -5.3%, followed by a recovery to RMB 60,833 million in 2026, representing a growth rate of 13.7% [8]. - The EBITDA for 2025 is estimated at RMB 7,076 million, increasing to RMB 9,449 million in 2026 [8]. - The net profit attributable to the parent company is forecasted to be RMB 3,962 million in 2025, with a significant increase to RMB 5,258 million in 2026 [8]. - The company’s price-to-earnings (P/E) ratio is projected to be 50.2 for 2025, decreasing to 37.8 in 2026 and further to 31.2 in 2027, indicating a potential valuation improvement as earnings grow [6][8]. Acquisition Details - The acquisition of DFS's Greater China business includes assets in Hong Kong and Macau, which are expected to contribute significantly to the company's profits, with estimated net profits from DFS's operations in these regions being RMB 1.5 billion for 2025 [9]. - The partnership with LVMH through a share issuance is anticipated to enhance the company's brand and supply chain advantages, fostering a mutually beneficial relationship [9].