China’s biggest duty-free shop operator is winning over admirers amid a spate of policy support to drive domestic tourism, and analysts are not shying away from forecasting more gains even after the stock has more than doubled this year. China Tourism Group Duty Free Corp may rise to 263.43 yuan (US$39.40) in the coming 12 months, according to the consensus among estimates by analysts polled by Bloomberg. That implies a 42 per cent per cent upside from its current level. Citic Securities, the most bullish of them, predicted a rise to 307.40 yuan while the least optimistic Huatai Research has a 229.35 yuan target. The group, which operates more than 240 outlets nationwide, stands to be the biggest beneficiary of state efforts to reverse more than US$200 billion of annual outbound spending as the coronavirus pandemic slammed global travels. “China Tourism is the leading player in the industry, having edges in brand procurement and supply-chain management,” said Liu Zhangming, an analyst at Tianfeng Securities. “The policy change has unleashed great industry potential.” The government in July allowed tourists visiting Hainan Island to buy duty-free items for up to 100,000 yuan annually from 30,000 yuan previously. As a bonus, consumer electronics and liquors were added to the categories of tax-exempted goods. The tripling of quota at the nation’s southernmost tourism hotspot has produced an immediate impact, with duty-free shopping surging 228 per cent in the third quarter from a year earlier, according to customs data. This will add fuel to the stock rally, according to Tianfeng and New Times Securities. The group reported a 142 per cent jump in third quarter earnings to 2.23 billion yuan from a year earlier, reversing a 72 per cent slump in the first half of the year, according to a company filing. Earnings growth will probably accelerate 537 per cent this quarter, according to Bloomberg data. The company’s shares fell 3.8 per cent to 185.68 yuan in Shanghai on Monday, pegging its valuation at more than 200 times earnings. They have, however, more than doubled this year. Owning the stock comes with some risks, the biggest being the low barrier of entry from competitors which can potentially squeeze margins. China granted new duty-free licenses in June after a nine-year freeze , allowing retailer Wangfujing Group and Gree Real Estate to bid for a piece of the pie. Alibaba Group Holding, the e-commerce behemoth and owner of this newspaper, has also entered the fray. Asia’s most-valuable company agreed this month to set up a joint venture with Switzerland-listed Dufry to focus on airport duty-free shops. The room may be large enough to accommodate more players, which underscores the bullish forecasts in the market. While China Tourism has retreated by about a fifth from its record high in July, the stock is one of the best performers among members of the CSI 300 Index that tracks the biggest companies listed in Shanghai and Shenzhen. “Given its leading position and its competitive edge in the industry, China Tourism can resist the volatility brought by the competition,” said Zhao Yue, an analyst at Sealand Securities. China Tourism’s size and advantages can shield it from future competition, some analysts said. Its dominance in market share could still grow to 90 per cent this year from 84 per cent in 2019, according to Zheshang Securities.