CTG DUTY-FREE(601888) 群益证券·2024-02-27 16:00Investment Rating - The report assigns a "BUY" rating for China Duty Free Group (601888.SH/1880.HK) [1] Core Views - The company plans to increase investment in the Sanya International Duty-Free City project by RMB 1.07 billion, enhancing its duty-free business [3][4] - The company has seen a significant recovery in customer traffic, with daily visits to Sanya International Duty-Free City exceeding 60,000 during the Spring Festival, a year-on-year increase of 40.4% [4] - The projected net profits for 2023-2025 are RMB 6.72 billion, RMB 8.65 billion, and RMB 10.97 billion, representing year-on-year growth of 33.5%, 28.8%, and 26.8% respectively [4] Summary by Sections Company Information - Industry: Leisure Services - A-share price as of February 27, 2024: RMB 86.19 - Market capitalization: RMB 168.28 billion - Major shareholder: China Tourism Group Co., Ltd. (50.30%) [2] Financial Performance - Net profit for 2022 was RMB 5.03 billion, with a year-on-year decrease of 47.89% - Expected net profit for 2023 is RMB 6.72 billion, with a year-on-year increase of 33.52% - Earnings per share (EPS) for 2023 is projected at RMB 3.25, with a year-on-year increase of 11.45% [3][4] Investment and Growth Strategy - The company is focusing on enhancing its duty-free business in Hainan, with a comprehensive retail complex that includes duty-free shopping and high-end hotels [4] - The company has signed supplementary agreements with major airports to streamline future cooperation, which is expected to boost airport duty-free sales [4] Market Outlook - The report anticipates a steady recovery in international passenger flow, with January 2024's international passenger volume reaching 5.12 million, recovering to 72% of 2019 levels [4] - The projected price-to-earnings (P/E) ratios for 2023-2025 are 27x, 21x, and 16x respectively, indicating a favorable valuation [4]