CTG DUTY-FREE(601888) 中国银河·2024-03-29 16:00Investment Rating - The report maintains a "Recommend" rating for the company [1] Core Views - The company achieved revenue of 67.54 billion yuan in 2023, a year-on-year increase of 24%, with net profit attributable to shareholders of 6.71 billion yuan, up 33% year-on-year [2] - In Q4 2023, the company's revenue was 16.7 billion yuan, up 11% year-on-year, and net profit attributable to shareholders was 1.51 billion yuan, a significant increase of 275% year-on-year [2] - The company's core sales channels, including Hainan and airport duty-free, showed recovery growth, with Hainan revenue reaching 39.65 billion yuan, up 14% year-on-year [3] - The company's Q4 2023 gross margin was 32%, the best level since Q4 2021, driven by improved management efficiency and optimized marketing strategies [4] - The company proposed a dividend of 1.65 yuan per share, with a dividend payout ratio of 51%, reflecting its commitment to shareholder returns [5] Business Performance and Strategy - The company's Haikou International Duty-Free City achieved revenue of 6.83 billion yuan in 2023, accounting for 24% of the Sanya business, and generated a profit of 33 million yuan [3] - The company's airport duty-free business, particularly in Shanghai, saw revenue of 17.8 billion yuan, up 26% year-on-year, with a net profit margin of 1.4% [3] - The company has expanded its investment in Hainan, including the second phase of Sanya Phoenix Airport Duty-Free Shop and the upgrade of Sanya International Duty-Free City, further solidifying its competitive advantage [3] - The company's gross margin for duty-free and taxable businesses in 2023 was 39.5% and 15.3%, respectively, with a slight increase in duty-free gross margin and a decrease in taxable gross margin [4] Financial Projections - The company is expected to achieve net profit attributable to shareholders of 8.2 billion yuan, 9.8 billion yuan, and 11.4 billion yuan in 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 22X, 18X, and 16X [5] - The company's revenue is projected to grow by 15.06%, 15%, and 10% in 2024, 2025, and 2026, respectively, reaching 77.71 billion yuan, 89.37 billion yuan, and 98.31 billion yuan [9] - The company's EPS is expected to increase from 3.25 yuan in 2023 to 5.51 yuan in 2026, with a gradual improvement in dividend yield [9] Industry and Market Position - The company is well-positioned in the domestic duty-free market, with a multi-dimensional layout covering island, airport, online, and urban duty-free, which is expected to drive sustained growth [5] - The recovery of international flights and the optimization of airport rental agreements are expected to significantly improve the company's profitability in 2024 [4] - The company's introduction of top luxury brands like LV in Hainan further strengthens its competitive position in the island duty-free market [3]