Hong Kong stock IPO|China CDF, the global leader in travel retail, raises US$5 billion through hearings
According to recent reports from Hong Kong media, China’s CDF expects to raise only US$5 billion (approximately HK$39 billion) this time, which is about half of the original estimate of the highest fund-raising amount. The previous estimate was that China’s CDF plans to raise US$7 billion to US$10 billion in the IPO. If calculated based on the highest fundraising amount, its fundraising amount will reach about 77.6 billion Hong Kong dollars.
According to Frost & Sullivan’s data, in 2020, the company accounted for 22.6% of the global travel retail industry market share, ranking first in the world in terms of retail sales in 2020, and it is also the only retailer in China that covers tax-free sales channels. Covering port shops, outlying island shops, city shops, cruise shops, inflight shops and foreign ship supply shops, the company has the largest number of duty-free shops in the country.
The prospectus disclosed that the company’s market position relies on the history and regulatory pattern of China’s tax-free industry. As of December 31, 2020, the company is the only group operating all types of duty-free shops in China. The company operates 195 stores, including 187 stores in 29 provinces, municipalities and autonomous regions in China, as well as 8 overseas duty-free stores, 6 in Hong Kong, Macau and Cambodia, and 2 cruise stores. Among them, outlying island stores accounted for 72.5% of the company’s total revenue in the first five months of 2021. The so-called outlying island stores are all the company’s stores in Hainan.
According to Frost & Sullivan’s data, although the world is in the midst of the new crown epidemic, during the National Day Golden Week of 2021, more than 510 million people chose to travel domestically, of which about 3.7 million traveled to Hainan. In contrast, about 4 million people arrived in Hainan on National Day in 2019 before the new crown epidemic.
Although the number of tourists has not fully recovered to the pre-epidemic level, Hainan is still a popular destination for tourists, and the sales of outlying island tourism retail channels have increased significantly. During the National Day Golden Week in 2021, the sales of outlying islands’ duty-free goods were approximately RMB 1.5 billion, and the sales of outlying islands’ duty-free goods significantly exceeded the level before the new crown epidemic. The sales of outlying islands’ duty-free goods during the National Day Golden Week in 2019 were only about RMB 390 million. Since the company is the largest participant in China’s outlying island duty-free market, with a market share of at least 95.0%, the company has become the main beneficiary.
The prospectus stated that the current Chinese anti-monopoly law did not have a significant adverse impact on the business, based on the following: the company confirmed that it has not abused its dominant market position, and it has been investigated or penalized by an ungovernmental organization; it has been authorized by the State Council to engage in tax-free business, In addition, more international duty-free operators have entered China in recent years, and it is expected that more tax-free operators will enter China in the future. Therefore, tourists are generally free to choose duty-free shops to buy.
With this fundraising, CDFG will continue to increase the barriers to competition in existing businesses and consolidate its leading position in the industry; expand incremental business opportunities and explore more profit opportunities; continue to explore overseas channels to further enhance global competitiveness; use capital to operate, Deepen the competitive advantages of the upstream supply chain and domestic and foreign markets; strengthen the construction of core capabilities to provide impetus for sustainable development; attract and retain high-quality strategic talents to ensure corporate human resources
In terms of finance, for the years ended December 31, 2018, 2019 and 2020, CDF’s revenue was RMB 34.619 billion, RMB 48.009 billion and RMB 52.597 billion, and net profit was RMB 3.867 billion, RMB 5.47 billion and RMB 7.109 billion, respectively. From 2018 to 2020, the company’s revenue is at a compound annual growth rate of 23.3%, and the company’s net profit is at a compound annual growth rate of 35.6%.
As of the first five months of 2020 and 2021, the company’s revenue was 14.466 billion and 30.466 billion, and net profit was 211 million and 5.803 billion, respectively. The increase in net profit was mainly due to the increase in the company’s gross profit and the decrease in sales costs.Return to Sohu to see more
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