HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

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

<p>Duty free sales in Hainan reached Rmb2.219bn for 1-27 Jul, an impressive 234.2% YoY growth on the back of the government's introduction of favourable duty free policies starting Jul. Average duty free spending of the Hainan shoppers was Rmb7,897 in Jul, a significant 134% YoY increase. In our view, these figures are supportive towards the positive earnings outlook for <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 Duty Free).</p><p>Moreover, the new policies have encouraged more high value duty free sales in Hainan, with sales of items with individual value of over Rmb8,000 accounted for 27.7% of total sales, up from 15.6% in Jul 2019 and 17.4% in Jun 2020. The introduction of more premium brands and shops, for example, Bulgari and <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>, in Haikou in end-Jul/early-Aug, we expect CTG Duty Free's 2H20 sales will be benefited in a period where outbound travel remains lacklustre.</p>

Duty free sales in Hainan reached Rmb2.219bn for 1-27 Jul, an impressive 234.2% YoY growth on the back of the government's introduction of favourable duty free policies starting Jul. Average duty free spending of the Hainan shoppers was Rmb7,897 in Jul, a significant 134% YoY increase. In our view, these figures are supportive towards the positive earnings outlook for China Tourism Group Duty Free Corp Ltd (601888 CH) (CTG Duty Free).Moreover, the new policies have encouraged more high value duty free sales in Hainan, with sales of items with individual value of over Rmb8,000 accounted for 27.7% of total sales, up from 15.6% in Jul 2019 and 17.4% in Jun 2020. The introduction of more premium brands and shops, for example, Bulgari and Chow Tai Fook Jewellery (1929 HK), in Haikou in end-Jul/early-Aug, we expect CTG Duty Free's 2H20 sales will be benefited in a period where outbound travel remains lacklustre.

CTG Duty Free Corp (601888 CH): Solid Jul Duty Free Sales in Hainan

China

Wangfujing Group Co., Ltd. owns and operates department stores in Beijing, Guangzhou, Chengdu, Wuhan, and other cities in China.  The Company also develops residential real estate.

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Wangfujing Group Co., Ltd. (600859 CH)

CTG Duty Free Corp (601888 CH): Solid Jul Duty Free Sales in Hainan

Duty free sales in Hainan reached Rmb2.219bn for 1-27 Jul, an impressive 234.2% YoY growth on the back of the government's introduction of...

Osbert Tang, CFA

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