Citi: China Tourism Group Duty Free: More Optimistic Hainan Offshore Duty-Free Outlook; 30-Day Upside Catalyst Watch Initiated
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Citi observes that Hainan offshore duty-free sales have trended stronger than expected since the fourth quarter of 2025. Sales grew 13% year-over-year in October and accelerated to 27% in November. During the first week of the island's customs closure operation from December 18–24, 2025, sales surged 54.9%. Momentum further accelerated into 2026, with sales rising 88% year-over-year from January 1–7, including a 129% jump during the first three days.
This robust performance is attributed to new duty-free policies effective November 1, 2025, the wealth effect, promotional activities, and festival-driven concerts. Management expects sales momentum to continue through the winter peak season and the Spring Festival Golden Week. Consequently, Citi raised its 2026 Hainan sales growth forecast to over 20%, up from the prior 5% estimate.
The firm increased its 2026 and 2027 earnings forecasts by 5.0% and 6.6%, respectively, driven by the improved sales outlook and valuation roll-over. However, the 2025 earnings estimate was lowered by 6.3% due to a weaker-than-expected third quarter, partially offset by anticipated fourth-quarter improvements.
Citi upgraded its target prices from RMB 78 to RMB 106 for A-shares (601888.SS) and from HKD 72 to HKD 100 for H-shares (1880.HK). The Buy rating is maintained, and Citi initiated a 30-day upside catalyst watch, pointing to the ongoing winter peak season and favorable policy enhancements, including unlimited duty-free purchases for Hainan residents.