Core Viewpoint - The article highlights the vibrant growth of Hainan's duty-free shopping market, particularly through the Haikou Global Boutique Duty-Free City, which has become a key platform for international brands and consumer engagement in the region [1][3]. Group 1: Duty-Free Shopping Market - Hainan's duty-free shopping policy has been optimized multiple times, currently allowing an annual shopping limit of 100,000 yuan per person, covering 45 categories including cosmetics, alcohol, and electronics [3][4]. - The Haikou Global Boutique Duty-Free City has expanded significantly over the past four years, increasing its operational area from 3,000 square meters to nearly 40,000 square meters and growing the number of brands from 145 to over 600 [3][4]. Group 2: Consumer Experience - The duty-free stores in Hainan are perceived as a must-visit for tourists, offering a wide variety of products at competitive prices, with immediate pick-up options enhancing the shopping experience [4]. - The integration of duty-free shopping with tourism is being actively promoted, aiming to attract high-end consumer spending back to Hainan and create new growth points in consumption [4].

Investment Rating - The report maintains a "Recommended" rating for the social service industry [5]. Core Insights - The ongoing subsidy wars in the food delivery sector are beneficial for leading tea beverage brands, with platforms like Meituan and Alibaba continuing to offer significant discounts to attract consumers [9][12]. - The report anticipates that the average daily order volume in the food delivery sector will peak at over 200 million orders in Q3, with subsidies increasingly concentrated on top tea and coffee brands due to their capacity to handle high turnover [9][12]. Summary by Sections 1. Weekly Insights: Observations on Summer Food Delivery Subsidies - Meituan is offering "0 Yuan delivery coupons" redeemable for low-priced beverages, and has introduced various discount activities to enhance user engagement [12]. - Alibaba's Taobao is also providing substantial coupon packages to encourage food delivery orders [12]. - JD.com has normalized its "100 billion subsidy" activities over the weekend without large-scale concentrated subsidies [2]. 2. Industry Data - In May 2025, China's total retail sales of consumer goods reached 41,326 billion Yuan, with a year-on-year growth of 6.4%, marking the highest growth rate in nearly a year [14]. - Online retail sales grew significantly faster than offline sales, with online sales increasing by 8.5% year-on-year compared to 3.8% for offline sales [15]. 3. Industry News - The report highlights the impressive results of the Hainan duty-free shopping policy, which has seen shopping amounts reach 195.8 billion Yuan over five years, with a significant increase in shopping participants [55]. - The hotel industry is experiencing a trend of rising prices but declining occupancy rates, with RevPAR showing a year-on-year increase [31]. - High-end dining establishments are adapting to market demands by offering more affordable options to attract local customers [57]. 4. Market Performance - The social service industry saw a weekly increase of 2.11%, outperforming the CSI 300 index by 1.29 percentage points, with notable performances in professional services and tourism sectors [59]. - Individual stocks such as 澳博控股 and 永利澳门 have shown significant gains, reflecting positive market sentiment in the gaming sector [61]. 5. Key Stock Profit Forecasts and Valuations - The report includes profit forecasts for key companies, recommending 中免集团 and 学大教育, among others, with projected earnings per share (EPS) growth over the next few years [68].

Group 1 - The fourth Hainan International Duty-Free Shopping Festival has been launched, featuring "billion yuan subsidies + various duty-free activities" to stimulate consumer spending and create a new shopping experience for the summer [2] - The shopping festival will run until August and will cover multiple duty-free stores in Hainan, including CDF Haikou International Duty-Free City and CDF Sanya International Duty-Free City, offering over 45 categories of duty-free products and more than 800 well-known domestic and international brands [2] - During the event, over 30 new brand stores and pop-up shops will be introduced, allowing consumers to experience numerous product launches and exclusive duty-free packages, along with opportunities for celebrity interactions [2][3] Group 2 - A cash giveaway campaign will directly return policy benefits and consumer discounts to shoppers, with over one million duty-free vouchers distributed across six stores and the online official mall [3] - The campaign will combine government consumption vouchers and bank discounts, along with a customized shopping guide for a comprehensive "eat, stay, travel, shop, and entertain" package to attract tourists from across the country to enjoy duty-free shopping in Hainan [3]

Summary of China Duty Free Group Conference Call Company Overview - **Company**: China Duty Free Group (中国中免) - **Industry**: Duty-Free Retail and Tourism in Hainan, China Key Points and Arguments Industry Performance - Hainan's duty-free shopping in May saw a slight year-on-year decline of 0.86%, but the cumulative decline for the first five months narrowed to 9.59% [2][4] - The average spending per person increased from 4,000-5,000 RMB last year to 5,000-6,000 RMB, indicating an improvement in consumption quality [2][5] - The duty-free policy remains unchanged, with a yearly limit of 100,000 RMB per person [5] Company Strategies - China Duty Free Group is expanding its product range by introducing exclusive items and self-branded products, and attracting high-net-worth customers through charter flights [2][6] - The company is leveraging new media marketing to enhance customer conversion rates and is collaborating with government tourism activities and consumption vouchers to boost performance [2][6] - The core customer demographic is concentrated in the 20-49 age range, contributing 94% of total spending, with plans to target Gen X, Gen Z, seniors, and family groups for future growth [2][8] Future Projections - The company expects Hainan's business to stabilize or grow by 2025, with inbound and outbound business maintaining double-digit growth [2][9] - Overall revenue and profit are projected to increase steadily, although specific figures are yet to be disclosed [2][10] Customer Insights - The current customer base primarily consists of individuals aged 20-49, with strategies being developed to cater to various consumer segments [2][8] - The company is focusing on enhancing the shopping experience and product offerings to meet the preferences of different demographics [2][8] Marketing and Promotions - Marketing expenses are relatively low compared to competitors, with many promotional activities funded by brand partners [2][13] - The company has seen significant sales boosts from government-issued consumption vouchers, which have a reported multiplier effect of 1:18 [2][7] Economic Impact - The depreciation of the RMB is seen as beneficial for luxury goods demand, as it may enhance the attractiveness of domestic shopping [4][16] - Despite a pessimistic economic outlook, there are positive indicators such as strong performance from luxury brands like Hermès, suggesting potential for recovery in consumer spending [14][15] Brand and Product Management - The company is actively optimizing its brand matrix by phasing out underperforming brands and introducing new ones that meet market demand [4][17] - The product mix includes cosmetics (40% of sales), jewelry and watches (over 30%), with electronics and health products also contributing to sales growth [2][13] Shareholder Returns - China Duty Free Group has increased its dividend payout ratio to over 50% for the past two years, indicating a commitment to returning value to shareholders [2][23] - The company is considering stock buybacks but currently prioritizes cash dividends for direct shareholder benefits [2][24][25] Data Transparency - The company plans to continue updating key operational metrics such as conversion rates and average transaction values to provide better insights to investors [2][27] Additional Insights - The attractiveness of Hainan as a tourist destination is bolstered by large events and improved visa policies, which are expected to drive consumer spending [19][22] - The luxury goods market is anticipated to remain strong, with consumer demand likely to rebound as economic conditions improve [20][21]

Group 1 - The company reported its Q1 2025 earnings, showing a revenue of 16.746 billion yuan, a year-on-year decline of 10.96%, and a net profit attributable to shareholders of 1.938 billion yuan, down 15.98% year-on-year [1] - The Hainan market remains under pressure, but the company is actively optimizing operations, with inventory improving continuously. As of the end of Q1 2025, inventory stood at 15.751 billion yuan, a decrease of 9.21% from the beginning of the year [1] - The company's gross profit margin for Q1 2025 was 32.98%, a slight year-on-year decrease of 0.33 percentage points, while the sales expense ratio was 13.12%, a slight increase of 0.28 percentage points [1] Group 2 - The number of visa-free countries and international flight volumes are increasing, leading to a positive trend in airport duty-free business. Duty-free store revenue at Beijing airports grew over 115% year-on-year, while Shanghai airports saw a nearly 32% increase [2] - The company is responding to policy changes by adding city duty-free store projects, with 13 foreign exchange commodity duty-free stores transitioning to city duty-free stores within three months, enhancing the synergy between various sales channels [2] - The company is optimistic about the growth of duty-free business in Hainan post-border closure, with city duty-free business expected to contribute to performance in upcoming quarters [3]

Core Viewpoint - The overall consumption in China shows steady growth, with specific segments like national subsidy products and service consumption continuing to perform well [2][5]. Group 1: Sales Performance - During the Labor Day holiday in 2025, key retail and catering enterprises in China reported a sales increase of 6.3% compared to the same period last year, although this represents a slight decline from the 6.8% growth seen in 2024 [2]. - The sales of home appliances, automobiles, and communication equipment saw significant year-on-year growth of 15.5%, 13.7%, and 10.5% respectively during the holiday [2]. - The restaurant sector also performed well, with a year-on-year increase of 8.7% in sales for monitored catering enterprises [2]. Group 2: Service Consumption - Travel orders during the Labor Day holiday increased by 30% compared to the same period in 2023, with hotel bookings reaching a historical peak [2]. - Data from Douyin indicated a remarkable growth in accommodation group purchase orders by 79% and hotel scenic area package orders by 116% during the holiday period [2]. Group 3: Inbound and Duty-Free Sales - Inbound tourism spending in Beijing reached 1.13 billion yuan, marking a 48% year-on-year increase [3]. - Shanghai's duty-free sales saw a year-on-year increase of 120%, with the tax refund amount also rising by 130% [3]. Group 4: Duty-Free Shopping Trends - During the Labor Day holiday, duty-free shopping in Hainan amounted to 510 million yuan, reflecting a year-on-year decline of 7.3%, but the drop was less severe compared to the 15.9% decline during the Spring Festival [4]. - The average spending per person in duty-free shopping increased by 1.1% compared to the previous year, continuing the upward trend observed during the Spring Festival [4]. Group 5: Structural Highlights in Consumption - The national subsidy policy has expanded its coverage and increased subsidy amounts, leading to significant growth in sales of home appliances and other electronic products [5]. - The demand for investment-grade gold products has risen, alongside a growing preference for well-designed and branded gold jewelry [5]. - Emotional consumption is on the rise, with products based on popular IPs, such as blind boxes and figurines, performing exceptionally well [5].

Investment Rating - The report maintains a "Buy" rating for the wholesale and retail trade industry, indicating an expected investment return exceeding 15% over the next 6-12 months compared to the market benchmark index [5]. Core Insights - The retail and catering sales during the 2025 Labor Day holiday increased by 6.3% year-on-year, showing a recovery from the previous quarter's growth of 4.1% [1][2]. - Key categories such as national subsidies and service consumption continue to perform strongly, with significant sales growth in home appliances (15.5%), automobiles (13.7%), and communication devices (10.5%) [1]. - Service consumption also saw high growth, with restaurant revenues up 8.7% year-on-year and travel orders increasing by 30% compared to 2023 [2]. - The report highlights a narrowing decline in offshore duty-free sales, with a total of 510 million yuan spent during the holiday, a decrease of 7.3% year-on-year, and an increase in per capita spending by 1.1% [3]. Summary by Sections Retail Sales Performance - The 2025 Labor Day retail sales showed a year-on-year increase of 6.3%, with a slight decline from 6.8% in 2024 but an improvement from 4.1% in the previous quarter [1]. Key Categories - National subsidy-related categories saw significant sales growth, with home appliances, automobiles, and communication devices showing increases of 15.5%, 13.7%, and 10.5% respectively [1]. - E-commerce platforms also reported over 20% growth in smart home product sales [1]. Service Consumption - Restaurant revenues increased by 8.7% year-on-year during the holiday period, outperforming the overall market [2]. - Travel-related orders surged, with a 30% increase in orders compared to 2023, and hotel bookings reached a historical peak [2]. Offshore Duty-Free Sales - The report notes a narrowing decline in offshore duty-free sales, with total spending of 510 million yuan during the holiday, down 7.3% year-on-year, and a decrease in the number of shoppers by 8.0% [3]. Overall Consumption Trends - The report indicates steady growth in overall consumption, with specific attention to national subsidy categories, gold and jewelry retail, and emotional consumption products [4].

Core Insights - During the "May Day" holiday from May 1 to May 5, 2025, the duty-free shopping market in Hainan experienced significant consumer activity, with a total shopping amount of 510 million yuan [1] - The number of shoppers reached 79,100 during this holiday period, indicating a robust interest in duty-free shopping [1] Summary by Category - **Market Performance** - The total duty-free shopping amount reached 510 million yuan during the holiday [1] - The number of shoppers was recorded at 79,100 [1]

Core Insights - The Hainan duty-free shopping market experienced a surge in consumption during the May Day holiday, with a total shopping amount of 5.1 billion yuan and 79,100 shoppers [1] Group 1: Market Performance - The Haikou Customs reported a total duty-free shopping amount of 5.1 billion yuan during the holiday period [1] - The number of shoppers reached 79,100, indicating strong consumer interest [1] Group 2: Consumer Experience - The shopping experience has shifted from being "price-driven" to "experience-driven" over the years [1] - Various delivery options have been introduced, including mailing, on-island pickup, and immediate pickup, enhancing consumer convenience [1] Group 3: Promotional Strategies - The China Duty Free Group's Sanya International Duty-Free City implemented government consumption support measures, offering discounts, multiple points, and gifts during the holiday [1] Group 4: Regulatory Measures - Haikou Customs enhanced smart regulatory measures to monitor the inventory flow of duty-free goods and improve service quality [1]

Investment Rating - The report maintains a "Buy" rating for the company [7][8] Core Views - The company's performance in Q1 2025 showed a revenue of 16.746 billion, a year-on-year decrease of 10.96%, with a gross margin of 32.98% [1] - The decline in offshore duty-free sales is expected to stabilize, with a potential recovery in operations as demand improves [1] - The company is positioned to benefit from various supportive policies, a rebound in inbound tourism, and an expansion of product offerings, which could enhance profitability [1][3] - The introduction of new tax refund policies is anticipated to boost consumer spending among inbound tourists [3] - The long-term value of the company remains promising, with target prices set at 79.1 RMB for A-shares and 73.08 HKD for H-shares [4] Summary by Sections Financial Performance - Q1 2025 revenue was 16.746 billion, with a net profit of 1.938 billion, reflecting a year-on-year decrease of 15.98% [1] - The company expects EPS for 2025, 2026, and 2027 to be 2.26, 2.56, and 2.91 RMB respectively [4] Market Trends - The sales figures for offshore duty-free in January, February, and March 2025 were 3.13 billion, 5.28 billion, and 2.90 billion respectively, with a narrowing year-on-year decline [2] - The recovery in airport passenger traffic is evident, with significant increases in international passenger throughput [2] Policy Impact - New tax refund policies are expected to enhance the shopping experience for inbound tourists, potentially increasing their spending [3] - The company is actively expanding its city store channels, which are expected to capture additional inbound tourist traffic [3]