Investment Rating - The report maintains an "Outperform" rating for China Tourism Group Duty Free, expecting a relative return exceeding 10% over the next 12-18 months [22]. Core Insights - The company is poised for a rebound in performance due to the release of policy benefits, with Hainan's offshore duty-free shopping reaching 506 million yuan and 72,900 shoppers in the first week of the new policy, reflecting year-on-year increases of 34.86% and 3.37% respectively [2][9]. - The company plans comprehensive upgrades across various sales channels, including the Haitang Bay project, downtown duty-free stores, and airport duty-free stores, to enhance sales performance [3][10]. - The introduction of high-quality products, particularly in the gold and 3C electronics categories, is expected to drive additional sales growth, with a target of 2.5 billion yuan in sales for Apple products by 2025 [4][11]. - A growing membership base of 46 million, with a focus on high-net-worth clients and differentiated sales strategies, is anticipated to enhance customer engagement and increase average transaction values significantly [5][12]. - The company is managing capital expenditures efficiently while exploring investment and acquisition opportunities to support rapid growth [6][14]. Summary by Sections Policy Impact - The new offshore duty-free policy has led to a significant increase in shopping activity, validating demand resilience and setting a positive outlook for the company [2][9]. Channel Upgrades - The Haitang Bay project will be developed in three phases, focusing on one-stop shopping, taxed retail formats, and lifestyle experiences, while downtown and airport stores will leverage tax refund policies and enhance service offerings [3][10]. Product Diversification - The company is enhancing its product offerings with a focus on gold, 3C electronics, health products, and emerging categories like pet products and musical instruments, which are expected to contribute to sales growth [4][11]. Membership and Customer Engagement - The membership system is expanding rapidly, with strategies tailored for high-net-worth individuals and emerging customer bases, aiming to significantly increase transaction values and customer loyalty [5][12]. Financial Management - The company is focused on controlling capital expenditures and maintaining a strong cash flow, while actively seeking growth opportunities through strategic investments [6][14].

Summary of Key Points from Conference Call Records Industry Overview - The conference call focuses on the Hainan Free Trade Port and its impact on the transportation and duty-free retail sectors in Hainan Province, China. [1][2] Core Insights and Arguments - **Transportation Sector Recovery**: The transportation industry in Hainan is experiencing a recovery with significant increases in passenger and freight volumes, particularly during the traditional peak season from September to October, with some metrics nearing double-digit growth. [2] - **Impact of Hainan's Customs Closure**: The expected customs closure is projected to increase local residents' demand for shopping and travel by 10%-20%, which will benefit transportation companies without incurring additional capital or operational costs. [2] - **Asset Integration and Cost Management**: Transportation companies are actively pursuing asset integration and cost management strategies, such as consolidating airport operations and optimizing shipping routes, which are expected to lead to substantial operational improvements by 2026. [4] - **Duty-Free Sales Performance**: Recent data indicates strong performance in duty-free sales, particularly in mobile phones and luxury goods, with cosmetics also showing positive growth after a period of decline. [6] - **New Duty-Free Policies**: New policies allowing unlimited shopping are anticipated to generate significant revenue, with projections indicating a potential increase of tens of billions in sales, driven by high average spending per transaction. [3][7] - **Optimistic Market Outlook for 2026**: The duty-free market in Hainan is expected to see optimistic growth in 2026, supported by new product categories, local resident spending, and a shift in consumer behavior due to travel restrictions in Japan. [8][12] Additional Important Insights - **Cost Competitiveness in Aviation**: The establishment of the Free Trade Port is expected to enhance the cost competitiveness of Hainan's aviation sector through policies that reduce fuel costs by 10%-20% and lower corporate tax rates to 15%. [5] - **Limited Impact of Resale Market**: Current regulations and monitoring have limited the impact of the resale market on the duty-free sector, as strict policies make large-scale purchasing difficult. [9] - **Product Performance**: Mobile phones have become a standout category in the duty-free market, with leading brands capturing significant market share, while gold sales have also performed well but at a slower growth rate. [10] - **Future Policy Adjustments**: While initial effects of the Free Trade Port policies have been positive, future changes are expected to be moderate, with potential new product categories being introduced gradually. [11] This summary encapsulates the key points discussed in the conference call, highlighting the recovery and growth potential of the Hainan transportation and duty-free sectors, along with the implications of new policies and market dynamics.

Group 1 - The new duty-free policy in Hainan, effective from November 1, significantly expands the range of products eligible for duty-free sales, including domestic goods like clothing, coffee, and tea, which are treated as exports for tax purposes [1][2] - As of November 17, the customs department reported a 28.52% year-on-year increase in duty-free sales, amounting to 1.325 billion yuan [1] - The policy allows both departing travelers and local residents to purchase duty-free items, enhancing the customer base for duty-free shopping [2] Group 2 - Duty-free stores in Sanya are customizing products and services to meet the needs of departing travelers and local residents, implementing promotional activities to attract customers [2] - The tax department in Sanya is providing comprehensive tax guidance to businesses, facilitating store renovations and supply chain adjustments to capitalize on the policy benefits [2] - The first week of the new policy saw 255 departing travelers purchasing 886 duty-free items, generating sales of 2.2047 million yuan, while local residents contributed 356,100 yuan in sales [2] Group 3 - The tax bureau in Wanning has established a specialized support team to assist companies like Wangfujing International Duty-Free Port in understanding and implementing the new policy [3] - The first day of the new policy led to a 23% increase in sales, a 41% rise in customer traffic, and a 12% increase in the number of items purchased at Wangfujing International Duty-Free Port [3] - The tax department plans to continue enhancing policy promotion and tax services, ensuring that the benefits of the new duty-free policy are effectively realized for the high-quality development of Hainan's duty-free industry [3]

Core Insights - The new duty-free policy in Hainan, effective from November 1, significantly expands the range of products available for sale and enhances compliance requirements for businesses [1][2] - The policy allows domestic goods to be sold in duty-free shops, treating them as exports for tax purposes, which is expected to boost local brands and product variety [1][2] - The tax authorities are actively providing support and guidance to businesses to ensure they can effectively adapt to the new regulations and maximize benefits [3] Group 1 - The new policy includes "island residents" in the duty-free shopping category, allowing them to purchase unlimited "immediate purchase and pick-up" items once a year when leaving the island [2] - Duty-free sales in Hainan reached 1.325 billion yuan, a year-on-year increase of 28.52% as of November 17 [1] - The first week of the new policy saw 255 departing travelers purchasing 886 duty-free items, totaling 2.2047 million yuan in sales [2] Group 2 - The tax department in Sanya is providing comprehensive tax guidance to businesses, focusing on store renovations, supply chain adjustments, and tax incentives [2] - The new policy has created a long-term, low-cost international trade platform for domestic brands, reducing the barriers for local products to enter international markets [2] - The Wangfujing International Duty-Free Port reported a 23% increase in sales, 41% increase in customer traffic, and 12% increase in items purchased on the first day of the new policy [3]

Core Viewpoint - The new duty-free shopping policy in Hainan, effective from November 1, has led to a significant increase in tourism consumption, marking the 10th optimization adjustment of the policy since its implementation [3]. Group 1: Policy Implementation and Impact - The first week of the new duty-free shopping policy saw a total shopping amount of 5.06 billion yuan, with 72,900 shoppers, representing a year-on-year increase of 34.86% and 3.37% respectively [3]. - Hainan's major duty-free stores have launched various promotional activities to attract travelers, preparing a range of hot-selling products for immediate purchase [7]. Group 2: Operational Preparedness - The sales department of Sanya International Duty-Free City quickly organized training for all employees to effectively respond to consumer inquiries regarding the new policy [9]. - Haikou Customs conducted demand research and system upgrades in advance to ensure the smooth implementation and efficient operation of the new duty-free shopping policy [10].

三亚国际免税城销售部总监助理 苏海云：我们在新政发布之后快速组织工作准备，关于所有员工的全面培训，以及上机实操，准备应对消费者进店后，快 速回答消费者提出关于新政的问题。 为保障此次离岛免税新政平稳落地、高效运行，海口海关提前开展需求调研，做好系统升级准备，对免税企业实施信用分级监管试点，以精准投放监管资源 提升效能，构建全链条、智能化、高效率的海关监管服务模式。 11月1日起，海南离岛免税购物新政正式实施。新政实施首周，海口海关共监管海南省离岛免税购物金额5.06亿元。 离岛免税新政实施首周，海南旅游消费市场持续升温，这是该政策实施以来第10次优化调整。据海口海关统计，11月1日至7日，海口海关共监管海南省离岛 免税购物金额5.06亿元，购物人数7.29万人次，同比分别增长34.86%和3.37%。为抓住离岛免税新政政策机遇，海南各大免税店开展了各类优惠促销活动， 提前备好了"即购即提"适用的一系列热销商品，吸引了大量的旅客前来购买。 游客：原计划我们是坐飞机赶到港澳去购物，销售跟我们说现在有这个新政策，所以我们就在这里买，东西会比较便宜。 ...