China Tourism Group Duty Free (601888.SS/1880.HK): Data Update; Minor EPS Adjustments for FY26-28E
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Goldman Sachs has published a data update for China Tourism Group Duty Free (601888.SS/1880.HK), applying a minor adjustment of less than 1% to its FY26-28E earnings per share forecasts due to recent exchange rate movements. As the firm deems this revision immaterial, it maintains a Neutral rating and its 12-month target prices of RMB 77 for the A-share and HK$67 for the H-share.
The investment thesis continues to navigate a complex landscape of fundamental headwinds and selective catalysts. Near-term operations face pressure from soft consumer sentiment, outbound travel diversion, intensifying online competition, and the potential threat of Hainan's transition to full-island duty-free status. However, the new municipal duty-free store regulations, effective October 2024, are expected to unlock incremental sales by offering departing passengers more flexible shopping options.
From a valuation perspective, the current A-share trading level of roughly 27.5 times FY26E P/E no longer appears inexpensive relative to the historical mid-cycle multiple of 30 times. Furthermore, the stock trades at a 20-30% premium to the broader China consumer leisure sector. The A-share target price is derived by applying 30 times FY26E P/E to existing operations (RMB 7.39 per share) plus an incremental valuation for the new municipal stores (RMB 3.0 per share). The H-share target incorporates a consistent 20% discount.
Key upside risks include consumer stimulus policies and potential consumption tax reforms. Conversely, intensified e-commerce pricing competition, weakening luxury spending, and domestic retail price erosion remain primary downside risks.