HK Stock Market Move | China Tourism Group Duty Free Corporation (01880) fell nearly 4% intraday, with fourth quarter performance falling short of market expectations. The turning point in duty-free operations still awaits consumer recovery.

China Tourism Group Duty Free Corporation (01880) fell nearly 4% in midday trading, dropping 3.5% to HK$46.9 by the time of writing, with a turnover of HK$422.038 million. On the news front, China Tourism Group Duty Free Corporation disclosed preliminary financial reports, with a 16% year-on-year drop in revenue to RMB 56.5 billion in 2024, and a 37% year-on-year drop in net profit to RMB 4.2 billion. This implies a 19% year-on-year drop in fourth-quarter revenue to RMB 13.5 billion in the same year, and a 77% year-on-year drop in net profit to RMB 344 million. Citigroup believes that despite lowering expectations for the Hainan duty-free market, China Tourism Group Duty Free Corporation's fourth-quarter financial report last year still fell short of expectations, possibly due to the slower-than-expected recovery of airport duty-free shops, increased promotional activities putting pressure on gross profit margin, increased inventory provisions, and a management leverage that underperformed expectations. CITIC SEC stated that according to the Haikou Customs, Hainan's offshore duty-free sales in Q4 2024 decreased by 21.4% year-on-year, with a 19.4% decrease in shopping traffic, a 2.6% decrease in per capita consumption, mainly affected by weakening consumption demand under the macroeconomic backdrop, intensified competition from various taxed channels reducing conversions, and the continuous diversion of high-quality customer flow from outbound tourism growth. The bank believes that a turning point in duty-free operations still awaits a revival in consumer sentiment, but by 2025, as the pressure from base figures eases, the year-on-year performance of duty-free sales is expected to gradually improve.