China National Travel Service (601888): Duty-free goods are emerging, high-income airport channels increase incremental contribution

China National Travel Service (601888): Duty-free goods are emerging, high-income airport channels increase incremental contribution

Event: Recently, the company released the semi-annual report for 2019, and realized operating income of 243 in the first half of the year.

4.4 billion, an annual increase of 15.

46%; Net profit attributable to shareholders of listed companies.

7.9 billion, an annual increase of 70.

87%; non-recurring net profit attributable to shareholders of listed companies is 2.5 billion US dollars, an annual increase of 30.

86%; basic return 1.

68 yuan.

Investment Highlights: Duty-free goods are pre-set to increase.

Break through the company’s revenue structure in the first half of the year, of which tourism service business achieved operating income5.

US $ 9.9 billion, mainly due to the completion 杭州桑拿 of the replacement of the China National Tourism Organization, since February this year, no longer consolidated, so the revenue has plummeted; the commodity sales business achieved revenue of 235.

2.7 billion, an annual increase of 52.

2%.

The growth of merchandise sales business was mainly due to the contribution of duty-free business. The company’s duty-free merchandise sales business achieved operating income of 229.

08 million yuan, an annual increase of 53.

26%.

On the cost side, the company actively promoted integration with the Japanese procurement system, strengthened negotiations and cooperation with suppliers, effectively reduced procurement costs, increased gross profit margin, and achieved a gross profit margin of 50 in the first half of its main business.

76%, an increase of 9 over the same period 佛山桑拿网 last year.

86 averages.

On the expense side, the period expense ratio reaches 32.

66%, an increase of nearly 7 percentage points compared with the same period of the previous year. Among them, the selling expenses were significantly increased by 51 due to the increase in rental fees and expenditures caused by the operation of the airport duty-free business.

7%, the management expenses were flat compared with the same period last year.

In the future, large-scale centralized procurement will bring more cost advantages. The channel advantages and synergies that replace tax-free sales will continue to improve the company’s profitability.

New performance is eye-catching: the space of Hong Kong Airport and Baiyun Airport is expected.

The number of visitors to Hong Kong in the first half of the year was close to 35 million, an increase of over 13.

9%, of which the number of mainland visitors to Hong Kong exceeded 27 million, an increase of 16.
.

The 4% increase in tourist arrivals helped boost the sales volume of Hong Kong Airport’s duty-free shops in the first half of the year, and achieved tax-free business income in the first half of this year.

9.6 billion, an annual increase of 36.

13%, but in July and August, the continuous violent demonstrations caused a sudden drop in the number of people going to Hong Kong, and the sales growth of Hong Kong Airport duty-free shops may occur in the second half of the year.

Last year, Guangzhou Baiyun Airport T2 was officially opened, and the T2 outbound store operated by China Free Trade opened smoothly. In the first half of this year, there were over 9.2 million inbound and outbound passengers, a significant incremental contribution. In addition to the existing T1 outbound duty-free stores, Guangzhou Airport Duty FreeRealize tax-free sales income for half a year8.

4.4 billion.

Baiyun Airport has dense coverage of Asian routes, especially Thailand, Japan, Vietnam, South Korea, Malaysia, and Singapore, which are rich in short-haul destinations. As of August 27 this summer, Baiyun Border Inspection has cumulatively inspected and released more than 3 million passengers.The year-on-year growth of 9%, the steady increase in passenger flow provided support for the initial growth of duty-free, and the future growth space of Baiyun Airport duty-free shops is expected.

Sanya’s tourism market performed dull in the first half of the year, and Haitang Bay’s duty-free sales grew steadily.

According to preliminary statistics from Haikou Customs, in the first half of 2019, the Customs supervised a total of 893 duty-free goods in Sanya, Haikou and Qionghai.

650,000 pieces with a sales amount of 65.

820,000 yuan, purchased 169 passengers.

790,000 person-times, an increase of 27 respectively over the same period last year.

54%, 26.
56% and 15.
98%.

Among them, Sanya Haitang Bay Duty Free Shopping Mall realized tax-free business income51.

810,000 yuan, an increase of 28 in ten years.

5%.

In fact, in the first half of the year, the tourism market in Sanya performed mediocrely compared to previous years. From the scale of tourists, the number of tourist hotels in the city from January to June increased only.

9%, a decrease of 4 over the same period last year.

6 average values, so with the increase in passenger traffic, the impact of increased per capita shopping restrictions has become the main driving force for high growth.

At present, Hainan ‘s outlying islands ‘duty-free shopping policy fully covers the“ air, sea, and iron ”outlying island approach. In the long run, the increase in passenger traffic growth has contributed greatly to the elasticity of performance.

Shanghai and Beijing airports are still the main contributions.

Shanghai Shanghai mainly operates duty-free shops at Pudong Airport and Hongqiao Airport, and achieved tax-free income in the first half of the year73.

770,000 yuan, bringing an increase in tax-free business income by 35.

4.3 billion (consolidated consolidated statements since March 2018); Capital Airport duty-free shops (including T2 and T3 terminals) achieved tax-free business income43.

65 ppm, an increase of 9 in ten years.

87%.

Daxing International Airport has completed the final review of the general acceptance of civil aviation engineering industry acceptance and use license review, and formal operations are imminent. In the first half of the year, the first half of the duty-free business of Daxing Airport was successfully awarded the tobacco and alcohol, food and second tender sectionsThe 10-year duty-free operation right of the boutique bidding segment is committed to setting a new benchmark for duty-free retail at world airports. The huge passenger flow of Daxing International Airport in the future will become another boost to the growth of tax-free income.

Maintain the “Recommended” level.

Considering the replacement of the China National Tourism Administration, we expect the company’s EPS to be 2 in 2019-2021.

17 yuan, 2.

72 yuan and 3.

56 yuan, corresponding to the current expected PE is 44 times, 35 times and 27 times.

Risk reminder: the risk of the macroeconomic downturn, the risk that Hainan’s passenger growth is not up to expectations, and the policy risk of the duty-free industry.