Core Viewpoint - Beijing Capital International Airport's operating performance in 2025 was slightly below the industry average, with passenger traffic growth of 5.0% YoY compared to the overall industry growth of 5.5% YoY in China's civil aviation sector [1] Group 1: Passenger Traffic and Competition - The airport experienced flat domestic passenger volumes while international passenger volumes increased by 11% YoY [1] - The weaker performance was attributed to intensified competition from Beijing Daxing International Airport and constraints from saturated slot capacity [1] - Monitoring the ramp-up of slot capacity in 2026 is recommended [1] Group 2: Duty-Free Shopping Contracts - New duty-free shopping contracts were awarded to China Tourism Group Duty Free Corporation and Wangfujing Group, introducing a dual-operator structure for Terminal 3 and Terminal 2 [2] - The contracts will commence on February 11, 2026, or upon asset handover, and will expire on February 10, 2034 [2] Group 3: Rental Framework and Financial Implications - The new contracts adopt a "guaranteed minimum plus commission" model, with the first year's guaranteed minimum set at Rmb590 million, up from Rmb560 million under the previous contract [3] - The commission rate on DFS sales is set at 5% for the first year, increasing by 1 percentage point per year from the second billing year, capped from the fifth billing year onward [3] - Under a static traffic and sales scenario, rental payments under the new contracts would be approximately 10% higher than under the original agreement [4] Group 4: Financial Forecasts - Earnings forecasts for 2025 and 2026 were lowered to -Rmb308 million and Rmb122 million, respectively, due to lower assumptions for passenger traffic growth [5] - A new earnings forecast for 2027 of Rmb458 million was introduced, assuming 5% YoY passenger traffic growth and high single-digit YoY DFS sales growth [5] - The stock is trading at 0.8x 2026e P/B, with a target price maintained at HK$2.9, offering a 10% upside, and an OUTPERFORM rating is maintained [5]