UBS: China Tourism Group Duty Free (1880.HK) 1Q26 Results In Line, Net Profit Margin Expands YoY on High Base
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UBS reports that China Tourism Group Duty Free delivered first quarter 2026 results broadly in line with expectations, with net profit margin expanding year-over-year despite a high comparison base. Revenue grew approximately 5% to RMB 15 billion, while net profit increased about 8% to RMB 3 billion. The net profit margin rose 0.5 percentage points to 20.0%, primarily reflecting lower operating expense ratios.
The first quarter of 2025 benefited from a strong Spring Festival peak season, creating an elevated baseline. Nevertheless, 1Q26 still achieved growth. Hainan offshore duty free sales increased 6% year-over-year and accounted for roughly 70% of total revenue. Airport duty free revenue climbed 15%, driven by ongoing international flight recovery. The gross margin remained stable at 38.5%, and selling and administrative expense ratios declined 0.8 percentage points to 12.5%. Operating cash flow improved 10% to RMB 2.5 billion.
Management guided toward 8% to 10% full-year revenue growth and 10% to 12% net profit growth for 2026. Key monitoring points include potential Hainan duty free policy optimizations and international flight capacity restoration pace. UBS maintained its Buy rating, emphasizing improving operating efficiency, stable core operations, and favorable long-term growth prospects, though macroeconomic uncertainty and competitive intensity remain notable risks.