Global tax exemption is booming, Chinese tourists are still the key point
A third party predicts that the global tax exemption will continue to maintain a compound growth rate of 11.76% from 2022 to 2025. This is mainly due to the contribution of Asia, especially the Chinese market. By then, China’s tax exemption will account for more than 30% of the global duty-free market. According to the current growth trend of high-end consumption, it is estimated that the proportion of Chinese luxury goods consumption will be much higher than 30%, which means that there is still some consumption outflow, which means that the return of consumption is a long-term strategy. However, with regard to the development of duty-free islands, we still believe that the creation of a high-volume, multi-category, large-scale, and convenient shopping environment will bring opportunities for the development of Hainan’s comprehensive high-end shopping. By 2025, the island’s duty-free market will reach 250 billion yuan. In the rapid growth stage, it is most important to continue to provide Chinese tourists with affordable, transparent information and convenient shopping experience. The growth rate of the market cake can completely solve the problem of market share allocation.
The scale advantage is rapidly strengthening, and the tourism retail complex is the general trend.
Through the rapid growth of Hainan’s outlying islands and online business, CDFG will rank first in the global travel retail scale in 2020. At the same time, according to the disclosed supplier data, CDFG has a closer procurement relationship with the world-renowned fragrance boutique group. The follow-up business scale advantage will contribute to the enrichment of categories and the optimization of costs. The Haikou New Seaport Duty Free City project with an investment of nearly 6 billion yuan and 150,000 square meters of commercial retail area will be unveiled next year. The Sanya International Duty Free City with an investment of about 3.7 billion yuan will also bring 77,000 square meters of land in 2023. The additional construction area will greatly help CDFG expand the duty-free business area of Hainan’s outlying islands and form a high-end shopping district with its own traffic. The 10-year results of the Haitang Bay project have fully proved that through the self-built and self-owned property management model, costs can also be effectively controlled and profits can be maximized.
Investment advice: The company’s planned Hong Kong stock IPO is expected to further enhance global competitiveness, stabilize domestic and increase overseas shares, and further improve the supply chain and operational efficiency. At the same time, it will help protect the expansion of Haikou International Duty Free City and Sanya Duty Free City. Smooth progress. Under the epidemic, brand owners are facing post-epidemic operating pressure, and will further embrace the tax-free channel while focusing on the growing Chinese consumer market. The exploration of domestic tax-free online channels leads the world, and the scale and strength continue to grow. In the future, we should be more confident in the face of global competition. CDFG’s advantages in scale and operation under the epidemic are irreversible, and will continue to have core competitiveness even after international navigation.Of which we expectChina Free21-23 yearsprofit predictionIt is 117.6/157.7/21.22 billion yuan. No new shares are considered for the time being. At this stage, the corresponding PE is 50/37/28 times respectively, and the “overweight” rating is maintained.
Risk warning: The epidemic in some areas has repeatedly impacted population mobility; the company’s new project construction progress is not as expected; intensified price competition affects profit margins, etc.
(Article Source:China SecuritiesSecurities Co., Ltd.)
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