CTG DUTY-FREE(SH:601888)2025-09-19 03:15Summary of Key Points from the Conference Call Industry Overview - Industry: Inbound Travel Retail in China - Key Growth Indicators: - By the end of August 2025, there were 10,000 merchants in China eligible for tax-free shopping, which is three times the number from December 2024 [1] - The number of shoppers claiming tax refunds increased by 248% year-over-year (YoY) in the first eight months of 2025, while retail sales from tax-refund shopping grew by 98% YoY [1] Core Insights - Government Support: The Central government is focusing on expanding "service consumption," with inbound travel being a key area for policy support aimed at boosting consumption [2] - Market Acceleration: The growth rates for tax-free shopping have accelerated compared to the first half of 2025, where the YoY growth was 186% for shoppers and 95% for retail sales [1][2] Stock Implications - Beneficiaries: Shopping malls and duty-free operators in China are expected to benefit significantly from this trend. Notable companies include: - Hang Lung Properties (101.HK) rated Overweight [3] - China Tourism Group Duty Free (601888.SS/1880.HK) rated Equal-weight [3] - Potential Risks: The strong growth in tax-free shopping in Shenzhen may negatively impact Wharf REIC (1997.HK), which is rated Underweight, due to potential spending leakage [3] Additional Data - Retail Sales Performance: - Retail sales with tax refunds showed a YoY increase of 98% overall in China, with specific growth rates of 72% in Shanghai and 160% in Shenzhen [5] - Market Sentiment: The overall industry view is currently rated as In-Line, indicating expectations of performance in line with the broader market [8] Risks and Opportunities - Upside Risks: - Faster-than-expected recovery in retail sales and tourism could enhance growth prospects [17] - Favorable policy outcomes for duty-free zones may further stimulate consumption [18] - Downside Risks: - Economic slowdown and pressure on disposable income could hinder growth [18] - Price competition among retail channels and insufficient supply of luxury products may pose challenges [18] This summary encapsulates the key points discussed in the conference call regarding the inbound travel retail sector in China, highlighting growth indicators, stock implications, and potential risks and opportunities.