Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Equity Bottom-Up

China Tourism Group Duty Free Corp Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH) </a> (CTG) share price has plunged by 63% despite solid 9M23 profits growth and cash flushed balance sheet </li>
<li>Underlying fundamentals is solid, Chinese people still buying duty free goods, albeit tilting towards value than decadence purchases </li>
<li>CTG is cheap relative to its own history on all valuation metrics (PE, P/Book, P/FCF) and many technical indicators suggest it is in OVERSOLD territory </li>
</ul>



China Tourism Group Duty Free Corp Ltd (601888 CH)  (CTG) share price has plunged by 63% despite solid 9M23 profits growth and cash flushed balance sheet 
Underlying fundamentals is solid, Chinese people still buying duty free goods, albeit tilting towards value than decadence purchases 
CTG is cheap relative to its own history on all valuation metrics (PE, P/Book, P/FCF) and many technical indicators suggest it is in OVERSOLD territory 


China Tourism Group (601888 CH, BUY, TP: CNY106): How to Catch a Falling Knife

<ul>
<li>China stock market despair has brought down  <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> to its lowest forward valuation in the past ten years   </li>
<li>Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins </li>
<li>Using the company's lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)  </li>
</ul>


China stock market despair has brought down  China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years   
Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins 
Using the company's lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)  


2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>CTGDF reported preliminary 3Q financial data with revenue increasing by +27.9% YoY to RMB15.0bn, gross margins expanding to 34.3% (1Q/2Q: 28.8%/32.5%), and net profits growing +93.1% to RMB1.3bn.</li><li>The quarter’s revenue was apparently flattish compared to that of 2Q, and that should not come in as a surprise to the market given the trajectory we observed in the visitation momentum to Hainan (6M: 30.3% YoY vs 8M: 38.6% YoY).</li><li>Other than that, a slightly lower pre-tax margin of 10.8% (2Q: 11.9%) caught our attention and that was probably owing to higher revenue shares to airports. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CTGDF reported preliminary 3Q financial data with revenue increasing by +27.9% YoY to RMB15.0bn, gross margins expanding to 34.3% (1Q/2Q: 28.8%/32.5%), and net profits growing +93.1% to RMB1.3bn.The quarter’s revenue was apparently flattish compared to that of 2Q, and that should not come in as a surprise to the market given the trajectory we observed in the visitation momentum to Hainan (6M: 30.3% YoY vs 8M: 38.6% YoY).Other than that, a slightly lower pre-tax margin of 10.8% (2Q: 11.9%) caught our attention and that was probably owing to higher revenue shares to airports. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CTGDF (601888 CH) – 3Q Prelim Rev/Np +28%/93%; Estimates Unchanged

<ul><li>1H results were reportedly in line with preannouncement, with 1H/2Q revenue growing +29.7%/+38.8% YoY to RMB35.9bn/15.1bn and net profits changing by -1.9%/+13.8% YoY to RMB3.9bn/1.6bn, respectively.</li><li>We hold our view that near-term earnings expectation is settling, and we assert a symmetric earnings outlook for 2H, when visitation momentum to Hainan (7M23: +38% YoY) is likely to hold into the remainder of the year.</li><li>Meanwhile, efforts in upholding a disciplined pricing promotion is bearing fruit, in our view, with 2Q GPM improving 3.8pp QoQ to 32.8%. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1H results were reportedly in line with preannouncement, with 1H/2Q revenue growing +29.7%/+38.8% YoY to RMB35.9bn/15.1bn and net profits changing by -1.9%/+13.8% YoY to RMB3.9bn/1.6bn, respectively.We hold our view that near-term earnings expectation is settling, and we assert a symmetric earnings outlook for 2H, when visitation momentum to Hainan (7M23: +38% YoY) is likely to hold into the remainder of the year.Meanwhile, efforts in upholding a disciplined pricing promotion is bearing fruit, in our view, with 2Q GPM improving 3.8pp QoQ to 32.8%. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CTGDF (601888 CH) – 2Q in Line with Profit Alert; Subtle Recovery Ahead

<ul><li>2Q pre-announced. After market close last Friday (7 July), CTGDF preannounced major financial data for its 1H23 results.</li><li>Revenue came in at RMB35.9bn, up 29.7% YoY, when net profits reported at RMB3.9bn, down 1.9% YoY.</li><li>This implies 2Q23 revenue and net profits to be RMB15.1bn and RMB1.6bn, up 38.8% and 14.3% YoY, respectively. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

2Q pre-announced. After market close last Friday (7 July), CTGDF preannounced major financial data for its 1H23 results.Revenue came in at RMB35.9bn, up 29.7% YoY, when net profits reported at RMB3.9bn, down 1.9% YoY.This implies 2Q23 revenue and net profits to be RMB15.1bn and RMB1.6bn, up 38.8% and 14.3% YoY, respectively. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CTGDF (601888 CH) – Earnings Expectation Is Settling

China

China Tourism Group Duty Free Corporation Limited engages in sales of duty free goods and tax goods. The Company sells tobacco, wine and spirits, perfume, cosmetics, fashion and accessories, watches, jewelry, food, luggage products,and other products. China Tourism Group Duty Free also engages in investment and development of tourism destination commercial complexes.

China Tourism Group Duty Free Corp Ltd (601888 CH)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Tourism Group Duty Free Corp Ltd (601888 CH)

China Tourism Group (601888 CH, BUY, TP: CNY106): How to Catch a Falling Knife

China Tourism Group underperformed CSI 300 despite stellar profits and equally positive outlook. It is deemed a falling knife, but we see great...

Mohshin Aziz

2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees

China's stock market decline has led to a record low valuation for China Tourism Group, but long-term growth potential and government support make...

Mohshin Aziz

CTGDF (601888 CH) – 3Q Prelim Rev/Np +28%/93%; Estimates Unchanged

CTGDF reported preliminary 3Q financial data with revenue increasing by +27.9% YoY to RMB15.0bn, gross margins expanding to 34.3% (1Q/2Q: 28.8%/32.5%)

CMB International

CTGDF (601888 CH) – 2Q in Line with Profit Alert; Subtle Recovery Ahead

1H results were reportedly in line with preannouncement, with 1H/2Q revenue growing +29.7%/+38.8% YoY to RMB35.9bn/15.1bn and net profits changing...

CMB International

CTGDF (601888 CH) – Earnings Expectation Is Settling

2Q pre-announced. After market close last Friday (7 July), CTGDF preannounced major financial data for its 1H23 results.

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Tourism Group (601888 CH, BUY, TP: CNY106): How to Catch a Falling Knife

​China Tourism Group underperformed CSI 300 despite stellar profits and equally positive outlook. It is deemed a falling knife, but we see great...

Mohshin Aziz

2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees

​China's stock market decline has led to a record low valuation for China Tourism Group, but long-term growth potential and government support make...

Mohshin Aziz

CTGDF (601888 CH) – 3Q Prelim Rev/Np +28%/93%; Estimates Unchanged

CTGDF reported preliminary 3Q financial data with revenue increasing by +27.9% YoY to RMB15.0bn, gross margins expanding to 34.3% (1Q/2Q: 28.8%/32.5%)

CMB International

CTGDF (601888 CH) – 2Q in Line with Profit Alert; Subtle Recovery Ahead

1H results were reportedly in line with preannouncement, with 1H/2Q revenue growing +29.7%/+38.8% YoY to RMB35.9bn/15.1bn and net profits changing...

CMB International

CTGDF (601888 CH) – Earnings Expectation Is Settling

2Q pre-announced. After market close last Friday (7 July), CTGDF preannounced major financial data for its 1H23 results.

CMB International

China Tourism Group underperformed CSI 300 despite stellar profits and equally positive outlook. It is deemed a falling knife, but we see great...

China's stock market decline has led to a record low valuation for China Tourism Group, but long-term growth potential and government support make...