Morgan Stanley: Raises China Tourism Group Duty Free Corporation (01880) target price to 90 Hong Kong dollars, rates it as "outperforming the market".

Macquarie released a research report stating that it has raised the target price of China Tourism Group Duty Free Corporation (01880) to 90 Hong Kong dollars, with a rating of "outperform". Macquarie stated that the company's business in Hainan further improved in October, with conversion rates and average transaction ticket size both increasing. Excluding the impact of low-profit electronic device sales, the gross profit margin is expected to increase by 0.5 percentage points year-on-year. The company's third quarter sales decreased by only 0.4% year-on-year, which is better than Macquarie's growth expectations. Operating profit decreased by 7.5%, compared to a 26.5% decrease in the second quarter. Macquarie has revised down its net profit expectations for the fiscal years 2025/2026 by 13%/5.9% respectively, mainly due to non-operating items and actual data for the third quarter of 2025. The bank has raised its revenue expectations for the fiscal years 2025/2026/2027 by 0.6%/4%/9.6%, due to the inclusion of actual data for the third quarter of 2025 and the recovery of sales in Hainan duty-free shops. The gross profit margin expectations for the fiscal years 2025/2026/2027 have been revised down by 0.4/0.8/0.6 percentage points respectively, primarily due to an increase in the proportion of low-profit margin products. The operating profit margin expectations for the fiscal years 2025/2026 have been revised down by 0.7/0.5 percentage points respectively, due to actual data for the third quarter of 2025 and revised gross profit margin expectations.