China National Travel Service (601888): An in-depth analysis and overview of the broader city tax-free market

The main points of investment are generally two types of duty-free shops in the city, with different targets and specific policies.

(1) Duty-free shops in the city before departure; (2) Duty-free shops in the city after entry; (3) Duty-free shops in outlying islands.

  South Korea is the world’s largest duty-free market. The Chinese and their own nationals contribute 73% and 21%, respectively. Generally, they need to draw on their own advanced experience and attract them to return to consumption.

In 2018, Korea’s duty-free sales reached approximately 110 billion U.S. dollars, making it the world’s largest duty-free market. Among them, the sales of duty-free shops in the city accounted for over 80%, and the highest annual store efficiency and annual floor efficiency exceeded 240 billion and 3 million yuan, respectively.
The tax-free business in South Korea is targeted at both foreigners and nationals. Among them, (1) Chinese tourists contribute the most, accounting for 73% of consumption, and the per capita consumption is nearly 1.

8 million. Therefore, Korea is a country where the country needs to focus on attracting consumption backflow. (2) The proportion of domestic consumption in South Korea is not low, reaching 21%, and the purchase rate of Koreans with tax-free purchase qualifications has reached 70%, per capita.The shopping amount is 3 of the corresponding data for developing countries.

56 times, in addition to 杭州桑拿网 the high per capita GDP of South Korea, mainly because the duty-free shops in South Korea are open to South Korean citizens and shopping allowances of up to 3,000 US dollars.

  Tax exemption in the city before the country leaves the country: It will then become the first line of defense to intercept the demand for tax-free shopping by Chinese. The China Exemption with the sole license will fully benefit.

Currently, only China Duty Free has the operating qualification of duty-free shops in the city before leaving the country. In May 2019, China Free Duty Activated Beijing, Qingdao, Xiamen and Dalian licenses and set up duty-free shops. According to the Shanghai Municipal Government, Shanghai StoreComing soon.

According to the forecast of the Ministry of Commerce, the duty-free shops in the city will be gradually opened to 杭州桑拿网 Chinese people before entering the country; and the Shanghai government proposes to increase the duty-free quota for entry and exit from 8,000 yuan to 1.

30,000 yuan.

If the policy is liberalized, the duty-free shops in the city before departure will be the first line of defense for intercepting tax-free consumption by Chinese, and China Free Trade, as the sole licensee, will fully benefit.

We used different methods to calculate the duty-free shops in Shanghai and Beijing before leaving the country. It is estimated that two years after the policy was released to Chinese people, the total revenue of duty-free shops in Shanghai and Beijing before leaving the country may total 15 billion and 20 billion.The deducted non-attributed net interest rate may exceed 10%.

  Tax exemption in the city after entry: At present, only a number of companies have qualifications. If it can replace the merger of licenses, China Exemption Group will achieve full license operation.

After entering the city, the duty-free shops in the city have an independent shopping limit of 5,000 yuan. At present, there are two licenses in China: (1) Medium-duty service: there are currently 11 duty-free shops (7 in-city stores and 4 port stores).5 new city stores and 1 port store were newly added; (2) China Overseas Chinese: There is only one imported city store in Harbin, which is the subsidiary holding company of China Travel Group and China Travel.

According to the information provided by the service, the annual tax-free sales in the city after the entry and exit in 2018 was about 800 million yuan.

At present, China’s exemption of ownership alone lacks the tax-free license in the city after entry. If it is integrated, China’s exemption will achieve full license operation.

  Outlying island tax exemption: China Exemption will control the Hainan outlying island tax exemption market, and many factors have prompted its new round of growth.

At present, only Hainan and Hainan have the duty-free operating licenses for outlying islands in Hainan. With the joint efforts of certain companies, Hainan’s duty-free industry has achieved rapid development. In 2018, the scale of duty-free in Sanya and Haikou reached 77.

71 and 23.

2.9 billion.

Outlying island tax-free tickets = number of outlying island tourists * proportion of outlying islands tax-free covered people * shop-in rate * shopping rate * customer unit price. As subsequent indicators have upward driving factors, Hainan outlying island tax-free is expected to enter a new round of growth.

Subject to the successful acquisition of Haiwai by China National Tourism Administration, China Waiver will control the Hainan outlying island tax-free market.

  Earnings forecast and rating: China National Travel Service is the leading white horse leader in the tourism sector that we have recommended from the end of 2016 to the present. After the gradual release of tax-free policies in the city, overseas tax-free consumption has gradually accelerated. As a tax-free giant with a market share of over 85%,The company will fully benefit, and we continue to be optimistic about the future development of the company.

  We expect the company’s attributable net profit for 2019-2021 to be 47.



79 trillion, EPS is 2 respectively.



01, the PE corresponding to the closing price on May 29 is 31.



5 times, for a period of time “prudent increase” rating.

  Risk reminders: (1) policy risks; (2) exchange rate risks; (3) less-than-expected advancement of duty-free shops in the city; (4) intensified market competition.