China Tourism Group Duty Free has received approval from the Hong Kong stock exchange’s listing committee for its flotation on the main board, according to a filing late on Tuesday. The company will start book building as soon as Friday and aims to raise around US$2.7 billion in what could be the biggest initial public offering (IPO) in the city this year, according to market sources. The company’s mainland stock has lost at least 7.8 billion yuan (US$406 million) in market value so far this week as Covid-19 disruptions took hold in Hainan province . This marks the second attempt by the world’s largest travel retailer by sales to sell shares in Hong Kong, after it shelved the plan in December , citing sluggish market conditions. The Shanghai-listed company is hoping to capture more of the billions of dollars Chinese consumers are spending in the tax-free shopping zone on Hainan island, a revenue source that has gained more importance as the country’s zero-Covid policy continues to limit international travel. The company operates five duty-free shops in Hainan and has one under construction in the provincial capital, Haikou. It also operates the world’s biggest duty-free complex in Sanya and accounts for about 90 per cent of the market there. Hainan is expected to account for half of a US$40 billion duty-free market by 2025 . The local government in Sanya imposed a citywide lockdown on Sunday amid a spike in new infections, leaving about 80,000 tourists stranded. With market capitalisation of around 382.7 billion yuan (US$56.6 billion), China Tourism Group Duy Free’s share price has slid 10 per cent so far this year amid China’s zero-Covid policy, which has addressed pandemic flare-ups with lockdowns in several cities including Shenzhen and Shanghai. China lockdown in Hainan hits duty-free retailing giant as stock slumps Although the pandemic has dented duty-free sales, the market still shows strong growth momentum, said Kenny Ng Lai-yin, Everbright Securities International strategist. “The company’s sales scale takes the lead in the industry,” he said. “Coupled with the industry’s licensing barriers, investors’ response to the IPO will be better than the overall IPO performance in the first half of this year.” China Tourism plans to use the proceeds from its IPO to invest in new stores at airports, border crossings, railway stations and seaports. It will also spend some of the funds to expand downtown duty-free stores in Haikou and Sanya. State-owned CTG, previously known as China Travel Agency Hong Kong, is China Tourism’s controlling shareholder, with a 53.3 per cent stake. CICC and UBS are joint sponsors of the deal. In an exchange filing on July 28, the company said net income for the first half of 2022 probably fell 26 per cent from a year earlier because of a 37 per cent drop in the number of tourists amid a resurgence in Covid-19 cases and disruptions to the logistics supply chain during the Shanghai lockdown.