With the recovery of tourism, the "duty-free Mao" China Duty Free has also begun to regain lost ground.
At the beginning of 2024, ** and institutions will begin to review the investment situation of the previous year. In 2023, no one expected that the share price of China Duty Free, a leading duty-free business, would fall by 6289%, the total market value in 2023 has evaporated 279.1 billion yuan, more than CATL, which has evaporated 262.1 billion yuan in market value in one year.
At present, the share price of China Duty Free is 72HK$95 shares, just the highest point of 277A fraction of HK$79. However, before the official end of 2023, China Duty Free also set off a round of duty-free concept stocks with a trend of leading the rise of 8%.
According to the financial report, starting from 2022, China Duty Free, which has been running wildly, has pressed the "pause button", and the company's revenue and profit growth have both declined for the first time. In 2022, China Duty Free revenue will be 5443.3 billion yuan, down 19 percent year-on-year57%；The net profit attributable to the parent company was 50300 million yuan, a year-on-year decrease of 4787%, close to "halved".
In 2023, tourism and travel will usher in a recovery, but the performance of China Duty Free has declined again. In the first three quarters of 2023, China Duty Free achieved revenue of 5083.7 billion yuan, a year-on-year increase of 2914%；However, its net profit fell by 178% to 542.3 billion yuan.
On January 8, China Duty Free announced its 2023 annual performance report, and the company achieved an operating income of 6757.6 billion yuan, a year-on-year increase of 2415%, and the net profit attributable to shareholders of the listed company was 671.7 billion yuan, a year-on-year increase of 3352%。Among them, the operating income in the fourth quarter was 1673.9 billion yuan, a year-on-year increase of 1109%, and the net profit attributable to shareholders of the listed company was 151 billion yuan, a year-on-year increase of 27562%。The company's profitability also continued to be optimized, and the gross profit margin of its main business increased steadily. In 2023, the gross profit margin of the company's main business will be 3144%, an increase of 3 year-on-year42 percentage points. This shows that China's China Duty Free has begun to "regain lost ground" in terms of profitability.
As a long-time supporter of China Duty Free, Invesco Great Wall under the leadership of Liu Yanchun, the top star manager Liu Yanchun still holds a heavy position, and has expressed a optimistic attitude with real gold. More cautious investors believe that due to many influences such as geopolitics and economic environment, the consumer industry is facing a counter-cyclical, and it is difficult for China Duty Free to remain in the midst of it.
When crossing the cycle has become a common reason for secondary market investors, how to judge the bottom and how to support the valuation in the face of such a target as China Exemption?
According to the Financial Associated Press, China Duty Free was named "China International Travel Service" in the early days, which was jointly initiated and established by China International Travel Service Group and OCT Group Corporation in 2008, listed on the Shanghai ** Stock Exchange in 2009, and landed on the Hong Kong Stock Exchange in 2022. In 2011, it began to enter the tax-free business. Since 2017, the company has gradually focused on duty-free business by successively acquiring 51% of the equity of Sunrise Duty Free (China) and Sunrise Duty Free (Shanghai) and 51% of the equity of Hainan Duty Free***. By 2020, China Duty Free was mainly engaged in the commodity sales business.
As the only duty-free giant in China with a full duty-free license, the number of stores in China far exceeds that of other duty-free enterprises. In its disclosed prospectus, the domestic duty-free market share of China Duty Free in 2021 was as high as 86%, much higher than that of Haifa Holdings, Hailvtou and Zhuhai Duty Free. 6% and 27%。
During the period of 2019-2021, with the support of the policy for the duty-free industry, China Duty Free has achieved rapid development, and the financial report shows that the operating income of China Duty Free is 4861.5 billion yuan, 5259.8 billion yuan, 6767.6 billion yuan, and the net profit attributable to the parent company was 463.2 billion yuan, 61400 million yuan, 965.4 billion yuan, the performance has reached a new high year after year. Starting in 2022, China Duty Free has encountered the scene at the beginning of the article.
According to the statistics of **Times.com, China Duty Free is currently the most concerned of the 47 ** rated by institutions, and has won a total of 9 institutional ** rating records. On December 27, a number of institutions updated their ratings on China Duty Free, with Huatai**, Guolian**, and Soochow** all giving "**" ratings, and China Securities Construction Investment giving "overweight" ratings.
Broadening the timeline, in the past six months, a total of 22 institutions believe that China Exemption is worth it**, and 7 and 3 are "overweight" and "recommended" respectively. 37 institutions have released CDF-based research reportsIt is estimated that the highest net profit for the whole year is 1004.2 billion yuan, with an average of 683.6 billion yuan, an increase of 35 compared with last year90%, and the lowest estimate for its performance is 605.4 billion yuan.
On the whole, on behalf of the professional investment strength of the brokerage, in China Duty Free this ** still has not lost the expectation of stock price recovery, high-end consumer industry analyst Li Guoliang believes that this is mainly because the business of China Duty Free in the duty-free sector still has strong competitive barriers.
As the "first brother of tax exemption" in A-shares, China Duty Free is one of the few operators that holds tax exemption qualifications. The last time China issued a tax-free license was in 2020, and so far only 10 entities have a tax-free business licenseCDFG is the only retail operator with a fully duty-free sales channelIt can operate airport stores, city stores, and outlying island duty-free stores at the same time.
The scarcity of licenses and the comprehensiveness of business coverage together constitute the China Duty FreeWang Nan, a veteran investor, made an analogy. "China Duty Free is actually similar to Alibaba, not in the business of producing its own products, but providing a platform to help the world's top consumer brands build sales channels. In a sense, this is a sustainable business, because even if someone can take the shop next to the China Duty Free to open a store by themselves, it is impossible to enjoy the tax exemption policy, which will impact the China Duty Free. ”
This irreplaceability is also reflected in the financial report of China Duty Free, which shows that China Duty Free achieved operating income of 149 from July to September7.9 billion yuan, a year-on-year increase of 2787%, net profit attributable to shareholders of listed companies 134.1 billion yuan, a year-on-year increase of 9422%。The first quarter of 2023 is the highest quarter in the history of CDF, reaching 207700 million yuan, gross profit of 602.4 billion yuan, deducting non-net profit of 229.6 billion yuan.
As of the third quarter, China Duty Free has achieved a total operating income of 5083.7 billion yuan, an increase of 29 over the same period last year14%, the net profit attributable to the parent company and the net profit deducted from the non-attributable parent are both positive and significantly higher than in 2022**, with an increase of 1249% and 1326%。
In addition to earnings fundamentals, CDF's cash flow has also been relatively good. According to the information disclosed in the financial report of the first three quarters, the net operating cash flow of China Duty Free was 1344.3 billion yuan, an increase of 435 over the same period of the previous year44%, a significant increase, and the latest operating cash flow performance in the third quarter was outstanding, recording 48700 million yuan, a year-on-year increase of 95153%, an increase of 323 month-on-month97%。
Sufficient ammunition gives China Duty Free more room to play, and in March 2023, China Duty Free invested 122.8 billion yuan, becoming the second largest shareholder, with 49% of the equity. From June to October, CDFG launched the 5th Outlying Islands Duty Free Shopping Festival in Sanya to further stimulate demand-side consumption and drive performance growth.
After the epidemic passed, the investment market's preference has shifted from optimism to conservative, and from the perspective of the performance of the gross profit margin of China Duty Free, it is not impossible for the scale and profit to grow in a balanced manner. In the first three quarters of 2023, the gross profit margin performance of China Duty Free will remain **, respectively. 27%。
A closer look at the financial report of China Duty Free will find that the gross profit margin that is being repaired has not actually stopped the decline in net profit margin.
In the first three quarters, the net profit margin of China Duty Free increased from 14 in the same period last year03% slipped to 1067%, Q1 to Q3 to achieve a net profit of 316.4 billion yuan, a year-on-year decrease of 2493%。Li Guoliang said that this is because the CDF is still digesting the impact of the epidemic.
China Duty Free is a retailer of duty-free products, and the epidemic has blocked international exchanges, and the customer base that can spend in China Duty Free stores has shrunk sharply, but the impact from 2020 to mid-2022 is not large, mainly due to the offshore duty-free business and online tax-based business. Especially from 2020 to 2021, the year-on-year growth rate of China Duty Free revenue was respectively. 67%, and the year-on-year growth rate of net profit attributable to the parent company was respectively. 23%, the main pillar supporting the growth of performance is the tax business.
According to Gelonghui statistics, the scale of tax-exempt business in 2020 will be close to 20 billion yuan, and the tax-exempt business income will exceed the tax-free income in 2022, reaching 2797.4 billion yuan.
The business logic of taxable goods is to pay back taxes by being exempted from taxes, so that the previous duty-free goods can be sold online, which can be said to be cutting meat and clearing inventory. The profitability of this part of the business is much lower than that of the tax-free business, and the gross profit margin is basically 20% to 30%.
With the opening up of the international environment in 2023, China Duty Free has begun to reduce the proportion of sales of taxable goods, which is also the impact that Li Guoliang needs to eliminate. In the first three quarters, the overall gross profit margin of China Duty Free was 3175%, compared to more than 50% before the epidemic, an increase of only 053%, and the confidence of many investors in the secondary market has been damaged as a result.
It is worth mentioning that, according to the Financial Associated Press, the high leasing fees may be another reason for the erosion of net profit for China Duty Free. From 2017 to 2019, the duty-free shop rent paid by CDF's subsidiary, Sunrise Shanghai, to Shanghai Airport was 255.5 billion yuan, 368.1 billion and 52100 million yuan, accounting for the proportion of the year's operating income. 53% and 476%, and the rent of duty-free shops is increasing year by year.
However, in the first half of the year, the gross profit margin of China Duty Free is picking up, Wang Nan analyzed that this means that the proportion of taxable goods in the China Duty Free territory has further declined, and there may be some duty-free goods on sale**.
It is estimated that about 70% of duty-free goods and 30% of tax-free goods will be tax-free goods, and the gross profit margin of both taxable and duty-free goods will decrease by about 1% compared with 2022. It is believed that with the recovery of passenger flow, this discount** will be reduced, and the proportion of taxable goods will continue to decline. Although the gross profit margin in the future may not be comparable with the pre-epidemic period, it will definitely recover greatly.
Another item that thins net profit income is expenses, which will increase against the trend in 2023, and the Dolphin Investment Research report shows that the marketing expenses of China Duty Free will rise to 2.2 billion yuan, accounting for 14 percent of revenue8%。Due to the recovery of passenger flow at the airport, the rental fees of China Duty Free stores have also been adjusted, and some venues have taken the initiative to reduce rents during the lockdown phase during the epidemic, and some agreements have clarified that the fees are linked to passenger flow, so the money during the epidemic has been saved.
But in 2023, the tourism market will show the best growth, according to the China Tourism Academy, the number of domestic tourists in China during the summer vacation alone will reach 183.9 billion person-times, significantly higher than the same period in 2019 and achieved revenue of 121 trillion yuan. Statistics from the National Immigration Administration also point out that outbound travel averages 139 per day in the two peak season months70,000 person-times, an increase of 19 month-on-month88%。
Coupled with the discount of the three-year backlog of inventory due to the epidemic, the asset impairment loss of China Duty Free in the first three quarters was 47.8 billion yuan, an increase of 43%. Fortunately, this loss is basically a temporary impact, and at present, the number of days has decreased by 38 days, the number of days has decreased by about 17% compared with the same period in 2022, and the operational efficiency has improved.
From a fundamental point of view, the strength of China Duty Free is stable enough. Li Guoliang concluded: "CDFG must be the strongest owner in the duty-free industry, holding all the licenses of duty-free products, covering the national duty-free distribution system, and selling luxury goods such as perfume, jewelry, tobacco and alcohol, with clear advantages. ”
As for whether the downgrade in consumption will lead to a long-term decline in performance, the market can also be optimistic about the macroeconomic level. According to central bank data, RMB deposits increased by 25 in the first 11 months of 202365 trillion yuan, an increase of 130.1 billion yuan year-on-year, in terms of total amount, consumers are not "no money", but are spending money more carefully.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, believes that the central bank has put base money through a variety of tools to maintain reasonable and abundant market liquidity and guide the financing cost of the real economy to decline steadily. At the same time, with the gradual recovery of the economy and the increase in the activity of micro subjects, the M2-M1 scissors gap will gradually narrow.
Long-term concern about China's China Duty Free big V Sanyuan proposed,In such a situation, the company does not encounter a cold winter, but a process of squeezing water. He once went to Hainan for field research, combined with offline visits and data mastered, Sanyuan believes that the essential reason for the decline in penetration rate and consumption amount is the influx of real consumption and the outflow of ** business that has sprung up during the epidemic.
Although the current data of squeezing out part of the water is lower than that of the epidemic, it is significantly better than that in 2019, with the penetration rate rising from about 13% to 20%, and the per capita consumption amount increasing from 3,587 yuan to about 5,600 yuan, and the overall scale is still expanding. These data all show that the real consumption level is improving, the fundamentals of China Duty Free have improved, but the stock price has returned to the level of the same period in 2019, so there is no need to worry. ”
Wang Nan also said that in the past, most people who were exempted from investment costs were 150 yuan to 200 yuan, because they only looked at the fundamentals and ignored the impact of the economic environmentNow the China Duty Free has fallen back to about 78 yuan, corresponding to a market value of 160 billion yuan.
Similarly, from the mainstream view of the market in the first quarter, the performance of China Duty Free this year can reach 11 billion yuan, and now investors are gradually returning to rationality, the "cognitive bubble" is bursting, and the mainstream expectation is returning to around 7 billion, and there is little room for China Duty Free to reduce its performance. "Up to now, what we have to be wary of is not the halo of "tax-free Mao", it is meaningless to blindly look at the past decline, we must prevent being coerced by the pessimism spread by the market, and do not be emotionally bearish. ”
On December 26, 2023, China Duty Free signed supplementary rental agreements with Shanghai Airport and Capital Airport, and the subsequent actual fees will be based on the model of guaranteed sales commission and actual sales commission, whichever is higher. There is a view that this may be a concession at the airport, giving China Duty Free more room for discounts, and exchanging price for quantity and sales.
Barron's pointed out that the recovery of Hainan's tourism population, the gradual liberalization of international travel, and the increasing national income have a definite impact on the performance of China Duty Free, and the business model and leading position remain unchanged. In the long run, the investment value of China Duty Free remains unchanged, "just wait for better opportunities to appear, and leave the rest to enterprises to create value." ”
Author |You Glass.
Kunpeng Project