2025-12-01 00:49Summary of China Tourism Group Duty Free Conference Call Company Overview - Company: China Tourism Group Duty Free (CTG) - Ticker: 601888.SS, 1880.HK - Industry: Consumer (China/Hong Kong) Key Points Industry and Market Dynamics - Opportunity from Relaxed Duty-Free Policy: As of November 1, 2025, the addressable market (TAM) expands due to: 1. International tourists departing Hainan can shop beyond the Rmb100K limit at designated duty-free areas. 2. Local Hainan residents are now allowed to shop at duty-free stores. 3. Potential for category expansion in product offerings [2][4] Development Projects - Sanya Duty-Free City Phase 3: - A significant project with a gross floor area (GFA) of 410,000 sq.m, featuring an open-plan design. - This project is four times larger than Swire's Chengdu Taikoo Li, with approximately 25,000 sq.m of commercial GFA. - Aims to enhance the traveler experience by increasing the duration of stay and spending [3][8] Financial Performance and Outlook - Sales Growth: - Double-digit growth in traffic to Sanya Duty-Free City since Q3 2025. - Sales also grew in double digits during October and November 2025. - Management expresses confidence in the 2026 outlook, supported by a diversified sales mix including consumer electronics, gold jewelry, and sportswear [8] Valuation and Stock Performance - Current Valuation: - CTG-A is valued at 32x 2026 P/E, while CTG-H is at 27x 2026 P/E based on Refinitiv consensus estimates. - Price target set at Rmb66.00, indicating a downside of 16% from the closing price of Rmb78.50 on November 27, 2025 [4][6] Risks and Considerations - Risks to Upside: - Favorable policy outcomes for Hainan Free Trade Zone and downtown duty-free shopping. - Improvement in consumer spending, particularly in beauty and luxury products [12][13] - Risks to Downside: - Overall economic slowdown affecting disposable income. - Price competition among various retail channels. - Insufficient supply of luxury products and potential deepening of H-A discount [12][13] Conclusion - The company is positioned to benefit from favorable policy changes and increasing consumer demand, particularly in Hainan. However, economic uncertainties and competitive pressures pose risks to its growth and valuation.