ab 12 September 2025 Global Research China Tourism Group Duty Free - H Hainan performance is likely to improve in H225 Net profit to increase YoY in Q425E We cut 2025-27E EPS for CTG Duty Free 14-12% as: 1) although the Q225 revenue decline YoY narrowed, as expected, the magnitude was below consensus due to weakness at Sunrise Shanghai; and 2) GPM and NPM deteriorated YoY due to the impact of COGS and selling expenses. We reiterate our Buy rating on CTG-H, as we expect that in H225: 1) Hainan duty-free sale ...

We are also watchful about Hainan's free-trade-zone policy and impact to duty-free operators. The Hainan government has not yet released any details, but we expect it to do so later this year as Central government targets opening the FTZ in 2025. Recap of March-2025 Hainan offline DF trends: Avg daily sales Rmb94mn (-5% YoY vs -13% YoY in 2M25); Daily shoppers 17.7K (-26% YoY) and spending per shopper Rmb6.5K (+28%). The ASP growth could be helped by more electronic product sales which might not translate t ...