China National Travel Service (601888): H1 tax-free business grows steadily

China National Travel Service (601888): H1 tax-free business grows steadily

[Event]China National Tourism Administration released the 2019 semi-annual performance report, which is expected to achieve a total revenue of 243.

4.4 billion, an annual increase of 15.

46%; net profit attributable to mother 32.

79 trillion, an increase of 70 in ten years.

87%; deducted non-attributed net profit 25.

00 trillion, the same increase of 30.

86%; earnings per share 1.

68 yuan / share.

19Q1 / Q2 achieved revenue of 136 in each quarter.

92 ppm / 106.

52 trillion, +54 for ten years.

72% /-12.

95%; net profit attributable to mother 23.

06 ppm / 9.

73 trillion, +98 a year.

80% / + 28.

19%; deducted non-attributed net profit of 15.

89 ‰ / 9.

11 trillion, +37 a year.

37% / + 20.


[Comment]1) 19Q2 revenue does not match the growth rate of net profit.

The 19Q2 mismatch in revenue and net profit growth was mainly due to the replacement of the China National Travel Service in January 19 (18 years of China National Travel Service’s revenue accounted for about 26% and gross profit accounted for only 6%).Influence, but does not affect the company’s profitability, and can generate a large amount of non-operating income in Q19.

0.5 billion.

2) The tax-exempt business has developed steadily and healthily, and China Travel will continue to grow.

As China Travel focuses on the main tourism retail business, its tax-free leading has gradually been further consolidated.

China Travel is continually integrating procurement channels and optimizing sales channels.

① Consolidate and develop the tax-free business of outlying islands. It is planned to invest 12.8 billion in the development and construction of Haikou Duty-Free City, and deepen its layout in Hainan.

② Optimize the airport tax-exempt business. The tax-exempt rate of Beishang Airport has been steadily increasing. Haihai’s assets are expected to be injected this year. The supply of Meilan Airport has been transferred to China Exempt Group.

③ Test the city’s tax-free business. In the first half of the year, the establishment of duty-free shops in Qingdao, Xiamen, Dalian, and Beijing has been resumed, which has basically improved the expansion of domestic tax-free channels.

3) Profit forecast: The company’s EPS for 2019-2021 is expected to be 2.



50 yuan, the corresponding PE is 38.



9 times.

We are optimistic about the expansion and operation efficiency of China National Travel Service, a duty-free leader, and give it a “Highly Recommended” rating. Risk warning: policy advancement is lower than expected; M & A integration is lower than expected; exchange rate risk.