中国中免：出入境免税高增长，离岛免税短期仍承压

Investment Rating - The report maintains a "Buy" rating for China Tourism Group Duty Free Corporation (601888 SH/01880 HK) with a target price of 79 82 RMB for A-shares and 61 87 HKD for H-shares [5][24] Core Views - The company reported a 15 4% YoY decline in revenue to 430 2 billion RMB and a 24 7% YoY drop in net profit to 39 2 billion RMB for the first three quarters of 2024 [1] - Despite the overall decline, the company saw a significant recovery in outbound and inbound duty-free sales, with Beijing airport duty-free store revenue growing over 140% and Shanghai airport duty-free store revenue increasing nearly 60% [2] - Hainan duty-free sales remained weak due to factors such as consumer spending pressure and the impact of Typhoon Muji, with a 38 4% YoY decline in September 2024 [19] Financial Performance - The company's gross margin improved by 1 4 percentage points YoY to 33 1% for the first three quarters of 2024, driven by operational improvements and tighter discounts [2] - However, the net profit margin declined by 1 1 percentage points YoY to 9 1% for the same period [2] - For Q3 2024, the company's revenue was 117 6 billion RMB, down 21 5% YoY, with a net profit of 6 4 billion RMB, a 52 5% YoY decline [1] Business Segments - Duty-free business: Expected to generate revenue of 413 1 billion RMB in 2024, a 6 6% YoY decline, but projected to grow by 13 8% and 10 5% in 2025 and 2026, respectively [20] - Taxable business: Expected to generate revenue of 184 2 billion RMB in 2024, a 17 6% YoY decline, with a recovery projected in 2025 and 2026 [20] - Other businesses: Expected to remain stable, with revenue of 10 6 billion RMB in 2024, growing at a 10% annual rate [21] Future Outlook - The company is expected to benefit from the recovery of international passenger traffic and the potential growth of urban duty-free stores [2] - Hainan duty-free sales are expected to bottom out and recover in Q4 2024, driven by the peak season and macroeconomic recovery [24] - The company's leading position in the industry and competitive advantages are expected to support its performance recovery [24] Valuation and Peer Comparison - The company's 2024E PE ratio is 28 5x, with a projected PE of 22 8x and 19 7x for 2025 and 2026, respectively [3] - Compared to peers such as Wangfujing and Tianhong, the company's valuation is considered reasonable given its industry leadership and growth potential [25]