Summary of China Tourism Group Duty Free Conference Call Company Overview - **Company**: China Tourism Group Duty Free (601888.SS, 601888 CG) - **Industry**: Consumer sector in China/Hong Kong - **Market Capitalization**: Rmb161,767 million - **Current Stock Price**: Rmb78.99 (as of Nov 7, 2025) - **Price Target**: Rmb66.00, indicating a downside of 16% from the current price [6][6][6] Key Takeaways Sales Performance - **Hainan Offline Duty-Free Sales**: Increased by 35% year-over-year (YoY) in early November 2025, reaching Rmb506 million with 73,000 shoppers [9][9][9] - **Growth Drivers**: The growth is attributed to a lower base effect, increased electronics sales, and a new policy allowing local residents to purchase duty-free items [9][9][9] - **Historical Context**: Daily duty-free sales in November are typically 40% higher than in September, suggesting potential for continued growth in November 2025 [9][9][9] Financial Projections - **Earnings Per Share (EPS)**: Projected EPS for 2025 is Rmb2.23, with estimates increasing to Rmb3.09 by 2027 [6][6][6] - **Revenue Forecast**: Expected net revenue for 2025 is Rmb54,387 million, with growth anticipated to Rmb66,525 million by 2027 [6][6][6] - **Valuation Metrics**: - P/E ratio for 2026 is estimated at 24x, which is 1 standard deviation below the average since 2017 [10][11][11] - Dividend yield projected to increase from 1.4% in 2025 to 2.0% by 2027 [6][6][6] Risks and Opportunities - **Upside Risks**: - Favorable policy outcomes for Hainan Free Trade Zone and downtown duty-free shopping [13][14][14] - Improvement in consumer spending, particularly in beauty and luxury products [13][14][14] - **Downside Risks**: - Overall economic slowdown affecting disposable income [13][14][14] - Price competition among various retail channels [13][14][14] - Insufficient supply of luxury products [13][14][14] Market Sentiment - **Analyst Rating**: The stock is rated as Equal-weight, indicating a neutral outlook compared to the market [6][6][6] - **Investor Day**: An upcoming investor day in Sanya, Hainan, is expected to provide further insights into the company's development and management's outlook [9][9][9] Conclusion China Tourism Group Duty Free is experiencing a significant rebound in sales, particularly in Hainan, driven by favorable policies and consumer behavior. However, the company faces challenges from economic uncertainties and competitive pressures. The stock is currently rated as Equal-weight, with a price target suggesting a potential decline from current levels. Investors should monitor upcoming events and market conditions closely.