China Tourism, duty-free juggernaut, wins stock admirers as spending spree in Hainan fuels earnings rebound
- China Tourism stock will probably rise more than 40 per cent backed by luxury spending at home, according to analysts’ consensus target
- Shares have risen to a record this year after China tripled the quota on duty-free spending on Hainan island to spur domestic consumption
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.
“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.
