2025-10-31 01:53Summary of China Tourism Group Duty Free Conference Call Company Overview - Company: China Tourism Group Duty Free (601888.SS, 601888 CG) - Industry: Consumer (China/Hong Kong) - Market Cap: Rmb149,440 million - Stock Rating: Equal-weight - Price Target: Rmb66.00, with a downside of 10% from the current price of Rmb73.10 as of October 30, 2025 Key Financial Highlights - 3Q25 Revenue: Rmb11,405 million, flat year-over-year (yoy) after six consecutive quarters of decline [8][9] - Net Profit: Declined 29% yoy to Rmb662 million, impacted by higher finance costs and selling expenses [8][9] - Gross Profit Margin (GPM): Remained stable at 32.0% [8] - Dividends: Declared a dividend per share (DPS) of Rmb0.25, representing 17% of the net profit for the first nine months of 2025 [8] Operational Insights - Sales Recovery: Hainan's offline duty-free market sales showed signs of stabilization with a 3% growth in September 2025 [8] - Sales Channels: Improvement in airport and online sales contributed to the sequential revenue growth compared to 2Q25, which saw an 8% decline yoy [8] Future Outlook - Key Focus: Recovery of the Hainan business is critical for profitability and valuation [8] - Monitoring Demand: The company is closely observing demand trends in 4Q25, especially in light of policy relaxations and developments in free-trade ports [8] Valuation and Risks - Valuation Methodology: A 20% discount is applied to the A-share valuation, suggesting a 2026 estimated P/E of 20x [9] - Risks to Upside: Favorable policy outcomes for Hainan Free Trade Zone and increased consumer spending, particularly in beauty products [12][13] - Risks to Downside: Economic slowdown, price competition, and insufficient supply of luxury products [12][13] Conclusion - The company is experiencing a stabilization in revenue after a prolonged decline, but net profit continues to face challenges. The recovery of the Hainan market and consumer spending trends will be pivotal for future performance. The current valuation reflects cautious optimism amid ongoing economic uncertainties.