<Research>CLSA: CTG DUTY-FREE's Results Forecasts Miss; Profitability Still Under Pressure
CTG DUTY-FREE Performance: CTG DUTY-FREE's 2Q25 and interim results forecasts did not meet market expectations due to volatility in its non-Hainan business, despite a slight increase in market share in Hainan.
Strategic Transformation and Profitability Challenges: The company is focusing on expanding its "Duty-Free+" product range and innovating its brands, but profitability remains under pressure from factors like deleveraging and changes in product and channel mix.
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CLSA Anticipates CTG DUTY-FREE's Purchase of DFS Will Enhance Greater China's Retail Network
Acquisition Announcement: CTG DUTY-FREE plans to acquire DFS's travel retail business in Hong Kong and Macau for up to USD395 million, which is expected to align with market expectations and have a limited impact on LVMH.
Strategic Benefits: The acquisition is anticipated to enhance CTG DUTY-FREE's retail network in Greater China, improve operations in Hong Kong and Macau, and support the expansion of Chinese premium brands, leveraging DFS's expertise in global duty-free retail.
HTSC: CTG Duty-Free (01880.HK) Aims to Acquire DFS HK/MO and Collaborate with LVMH for Improved Synergy; Rating Maintained at Buy
Acquisition Announcement: CTG Duty-Free's subsidiary, China Duty Free International, plans to acquire 100% equity of DFS Cotai Limitada and related assets for up to $395 million, with additional share offerings to LVMH and Shoppers Holdings HK.
Market Leadership Strategy: The acquisition is expected to consolidate CTG Duty-Free's market position, enhance operational efficiency, and expand its local market share in Hong Kong and Macau.
Synergy and Integration: The deal aims to integrate DFS brand and membership systems, leveraging operational experience to improve efficiency and facilitate the global distribution of Chinese goods.
Target Price Adjustment: Following the acquisition, Huatai Securities raised the target prices for CTG Duty-Free's shares, maintaining a "Buy" rating based on anticipated corporate profit growth.
UBS Assigns Buy Rating to CTG Duty-Free, Anticipates Over 25% Yearly Growth in Hainan Duty-Free Sales This Year
Hainan Duty-Free Sales Growth: Hainan's offshore duty-free sales increased by 47% year-on-year to RMB4.86 billion from December 18, 2025, to January 17, 2026, with Sanya accounting for approximately 69% of the total sales.
Increase in Shoppers and Spending: The number of duty-free shoppers rose by 30.2%, and per-capita spending increased by 12.7%, indicating a strong demand in the duty-free market.
Future Sales Projections: UBS forecasts that Hainan's offshore duty-free sales will grow by over 25% year-on-year in 2026-27, maintaining a positive outlook for the sector.
Investment Recommendations: UBS has rated CHINA DUTY FREE and CTG DUTY-FREE as "Buy," reflecting confidence in their market performance amidst a stable competitive environment.
CICC Reports: CTG Duty-Free (01880.HK) Purchases DFS Greater China Business, Partners with LVMH for Improved Synergy
Acquisition Announcement: CTG DUTY-FREE announced the acquisition of DFS Greater China retail business, including nine stores in Hong Kong and Macau, which is expected to enhance cooperation with LVMH Group and the Miller family.
Profit Forecasts: CICC predicts a 3% profit increase for CTG DUTY-FREE in 2024 due to the acquisition and maintains its profit forecasts for 2025 and 2026, with a new net profit estimate of RMB5.673 billion for 2027.
Market Position: G Sachs forecasts a stable competitive environment for Hainan duty-free sales, with CTG DUTY-FREE expected to maintain a market share of 70-80%.
Target Price Increase: CICC raised the target prices for CTG DUTY-FREE's A-shares and H-shares by 15%, reflecting optimism about the company's international expansion and collaboration with luxury brands.
Citi Anticipates CTG's Duty-Free (01880.HK) Acquisition of DFS Greater China Business Will Strengthen Market Leadership
Acquisition Announcement: CTG DUTY-FREE announced the acquisition of DFS' Greater China retail business for up to US$395 million, which includes nine travel retail stores in Hong Kong and Macau.
Share Issuance: The company plans to issue approximately 11.9675 million new H shares at $77 per share to LVMH's Delphine SAS and the Miller Family, raising net proceeds of up to $924 million.
Market Impact: Citi Research views this acquisition as strategically significant for consolidating CTG DUTY-FREE's market leadership in Greater China and enhancing its retail capabilities, with limited short-term financial impact.
Stock Rating: Citi Research maintained a Buy rating for CTG DUTY-FREE, with target prices of $100/RMB106 for its H-/A-shares, anticipating strong duty-free sales in Hainan as a short-term catalyst.
Midday Update: HSI Ends at 26,552, Down 11 Points; HSTI at 5,711, Down 38 Points; POP MART Rises Over 8%; LUK FOOK HOLD, NANSHAN AL INTL, CHINA EAST AIR, CTG DUTY-FREE, and CHINA TAIPING Reach New Highs
Market Performance: The Hang Seng Index (HSI) closed down 11 points at 26,552, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines.
Active Heavyweights: Notable stocks included Xiaomi and Tencent, both down approximately 1.5%, while Ping An saw a slight increase of 1.1%.
Top Gainers and Losers: Pop Mart surged by 8.5%, while Wuxi AppTec fell by 4.6%. Other significant movers included China Overseas and China Res Land, both showing positive gains.
Short Selling Activity: High short selling ratios were observed across various stocks, with Xiaomi and Meituan leading in short selling amounts, indicating market caution.
CLSA Anticipates CTG DUTY-FREE's Purchase of DFS Will Enhance Greater China's Retail Network
Acquisition Announcement: CTG DUTY-FREE plans to acquire DFS's travel retail business in Hong Kong and Macau for up to USD395 million, which is expected to align with market expectations and have a limited impact on LVMH.
Strategic Benefits: The acquisition is anticipated to enhance CTG DUTY-FREE's retail network in Greater China, improve operations in Hong Kong and Macau, and support the expansion of Chinese premium brands, leveraging DFS's expertise in global duty-free retail.
HTSC: CTG Duty-Free (01880.HK) Aims to Acquire DFS HK/MO and Collaborate with LVMH for Improved Synergy; Rating Maintained at Buy
Acquisition Announcement: CTG Duty-Free's subsidiary, China Duty Free International, plans to acquire 100% equity of DFS Cotai Limitada and related assets for up to $395 million, with additional share offerings to LVMH and Shoppers Holdings HK.
Market Leadership Strategy: The acquisition is expected to consolidate CTG Duty-Free's market position, enhance operational efficiency, and expand its local market share in Hong Kong and Macau.
Synergy and Integration: The deal aims to integrate DFS brand and membership systems, leveraging operational experience to improve efficiency and facilitate the global distribution of Chinese goods.
Target Price Adjustment: Following the acquisition, Huatai Securities raised the target prices for CTG Duty-Free's shares, maintaining a "Buy" rating based on anticipated corporate profit growth.
UBS Assigns Buy Rating to CTG Duty-Free, Anticipates Over 25% Yearly Growth in Hainan Duty-Free Sales This Year
Hainan Duty-Free Sales Growth: Hainan's offshore duty-free sales increased by 47% year-on-year to RMB4.86 billion from December 18, 2025, to January 17, 2026, with Sanya accounting for approximately 69% of the total sales.
Increase in Shoppers and Spending: The number of duty-free shoppers rose by 30.2%, and per-capita spending increased by 12.7%, indicating a strong demand in the duty-free market.
Future Sales Projections: UBS forecasts that Hainan's offshore duty-free sales will grow by over 25% year-on-year in 2026-27, maintaining a positive outlook for the sector.
Investment Recommendations: UBS has rated CHINA DUTY FREE and CTG DUTY-FREE as "Buy," reflecting confidence in their market performance amidst a stable competitive environment.
CICC Reports: CTG Duty-Free (01880.HK) Purchases DFS Greater China Business, Partners with LVMH for Improved Synergy
Acquisition Announcement: CTG DUTY-FREE announced the acquisition of DFS Greater China retail business, including nine stores in Hong Kong and Macau, which is expected to enhance cooperation with LVMH Group and the Miller family.
Profit Forecasts: CICC predicts a 3% profit increase for CTG DUTY-FREE in 2024 due to the acquisition and maintains its profit forecasts for 2025 and 2026, with a new net profit estimate of RMB5.673 billion for 2027.
Market Position: G Sachs forecasts a stable competitive environment for Hainan duty-free sales, with CTG DUTY-FREE expected to maintain a market share of 70-80%.
Target Price Increase: CICC raised the target prices for CTG DUTY-FREE's A-shares and H-shares by 15%, reflecting optimism about the company's international expansion and collaboration with luxury brands.
Citi Anticipates CTG's Duty-Free (01880.HK) Acquisition of DFS Greater China Business Will Strengthen Market Leadership
Acquisition Announcement: CTG DUTY-FREE announced the acquisition of DFS' Greater China retail business for up to US$395 million, which includes nine travel retail stores in Hong Kong and Macau.
Share Issuance: The company plans to issue approximately 11.9675 million new H shares at $77 per share to LVMH's Delphine SAS and the Miller Family, raising net proceeds of up to $924 million.
Market Impact: Citi Research views this acquisition as strategically significant for consolidating CTG DUTY-FREE's market leadership in Greater China and enhancing its retail capabilities, with limited short-term financial impact.
Stock Rating: Citi Research maintained a Buy rating for CTG DUTY-FREE, with target prices of $100/RMB106 for its H-/A-shares, anticipating strong duty-free sales in Hainan as a short-term catalyst.
Midday Update: HSI Ends at 26,552, Down 11 Points; HSTI at 5,711, Down 38 Points; POP MART Rises Over 8%; LUK FOOK HOLD, NANSHAN AL INTL, CHINA EAST AIR, CTG DUTY-FREE, and CHINA TAIPING Reach New Highs
Market Performance: The Hang Seng Index (HSI) closed down 11 points at 26,552, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines.
Active Heavyweights: Notable stocks included Xiaomi and Tencent, both down approximately 1.5%, while Ping An saw a slight increase of 1.1%.
Top Gainers and Losers: Pop Mart surged by 8.5%, while Wuxi AppTec fell by 4.6%. Other significant movers included China Overseas and China Res Land, both showing positive gains.
Short Selling Activity: High short selling ratios were observed across various stocks, with Xiaomi and Meituan leading in short selling amounts, indicating market caution.
