HTSC·2026-04-01 06:44Investment Rating - The investment rating for the company is "Buy" [7] Core Views - The company achieved a revenue of 53.694 billion RMB in 2025, a year-on-year decrease of 4.92%, with a net profit attributable to shareholders of 3.586 billion RMB, down 15.96% year-on-year. The net profit margin for the year was 6.7%, a decrease of 0.9 percentage points year-on-year [1] - The company's performance in the Hainan duty-free market has shown signs of recovery, supported by subsequent mergers and acquisitions and organic growth, which will further solidify its leading position in the duty-free sector [1] - The company plans to distribute a cash dividend of 7.00 RMB per 10 shares, corresponding to an annual dividend payout ratio of 40.50% [1] Revenue Performance - In 2025, the company recorded revenue of 28.537 billion RMB in Hainan, a year-on-year decrease of 1.23%, but in the second half of 2025, revenue in Hainan increased by 11.6% year-on-year [2] - The total duty-free sales in Hainan for 2025 reached 30.38 billion RMB, a year-on-year decrease of 1.8%, but sales have been consistently positive since September 2025 [2] Profitability and Cost Management - The company maintained a stable gross profit margin of 31.92%, with a slight year-on-year increase of 0.41 percentage points. The sales expense ratio was 16.17%, and the management expense ratio was 4.11%, indicating effective cost control [3] - The company reduced its inventory from 17.348 billion RMB to 15.302 billion RMB, improving inventory turnover by approximately 10% [3] Strategic Developments - The company has successfully opened all 13 city duty-free stores in major cities like Shenzhen and Guangzhou, enhancing its channel network [4] - The acquisition of DFS's retail business in Greater China and the introduction of a strategic shareholder from LVMH will strengthen the company's brand and global supply chain [4] Earnings Forecast and Valuation - The company’s net profit forecasts for 2026 and 2027 are adjusted to 5.062 billion RMB and 6.034 billion RMB, respectively, with an introduction of a 2028 forecast of 6.738 billion RMB [5] - The target price for A shares is set at 101.15 RMB and for H shares at 94.31 HKD, reflecting a price-to-earnings ratio of 41x for A shares and 34x for H shares in 2026 [5]