Citi Anticipates Hainan Duty-Free Sales Recovery Will Enhance CTG Duty-Free's 4Q Profits, Raises Target Price to $100

The analyst rating for CTG DUTY-FREE (01880.HK) was kept at "Buy" due to several factors contributing to the strong performance of Hainan's offshore duty-free sales. These factors include new duty-free policies, wealth effects, promotional activities, and festival concerts. Additionally, Citi Research noted an improvement in earnings for 4Q25, prompting them to raise their target price from $72 to $100 and adjust their earnings forecasts for 2026 and 2027 upwards. The overall positive outlook for Hainan's business recovery further supported the "Buy" rating.

Morgan Stanley's analyst rating of "Equalweight" for CTG DUTY-FREE is based on a positive outlook for the Hainan tourism retail industry, driven by factors such as the gradual recovery of the macro economy, positive wealth effects, expansion of product categories, and policy support. While the broker forecasts significant growth in the company's revenue, operating profit, and net profit for 4Q25, it also anticipates a decline in full-year revenue and profit. The current valuation, with a projected PE ratio of about 26x for 2026, is considered reasonable after recent gains, leading the broker to advise investors to wait for a better opportunity to accumulate shares. Consequently, the target price was raised from $60 to $89.

The analyst rating for CTG DUTY-FREE (01880.HK) was raised to "Buy" by UBS due to several key factors: 1. Improved Earnings Forecasts: UBS raised its earnings forecasts for 2026-27 by 7-12%, anticipating a significant recovery in net profit growth of 34% and 21% year-over-year for those years, reversing the declines expected in 2024 and 2025. 2. Recovery in Offshore Duty-Free Sales: The report suggests that the worst period for offshore duty-free sales in Hainan has passed, with expectations of growth in sales driven by an optimized shopping policy. 3. Expanded Customer Base: The new policy has broadened the range of duty-free goods and diversified the customer base, including cross-border travelers and Hainan residents, which is expected to enhance sales. 4. Return of Purchasing Agents: There is potential for the return of purchasing agents, who previously contributed significantly to sales, indicating a recovery in market dynamics. 5. Increased Sales Forecasts: UBS has elevated its forecasts for offshore duty-free sales in Hainan to 21% and 36% for 2026-27, reflecting strong growth expectations. 6. Target Price Increase: The target price for CTG DUTY-FREE was raised from HKD71.2 to HKD90.73, further supporting the positive outlook. Overall, these factors contribute to a bullish outlook on CTG DUTY-FREE, justifying the "Buy" rating.