Morgan Stanley: Lowers China Tourism Group Duty Free Corporation (01880) target price to HK$77, slower growth in Hainan duty-free sales than expected.

Morgan Stanley released a research report stating that considering the recent market trends and the first quarter performance of China Tourism Group Duty Free Corporation (01880), the company's earnings forecast for 2026 to 2027 has been lowered by 6% to 7%, and revenue forecast has been lowered by 13%. The target price for the H shares has been lowered from HK$89 to HK$77, with a rating of "in line with the market". The bank pointed out that duty-free sales in Hainan were slower than expected in March, and data for April also showed a further slowdown in growth. The annual growth forecast has been revised from 25% to 30% to 20% to 30%. At the same time, the company is adjusting duty-free shops at Shanghai and Beijing airports, with expectations to complete the process from the second quarter to the third quarter of this year, progress slower than expected. The company is also integrating its online platform, with potential risks to sales during the transition period. Due to the lower profit margins in airport and online businesses, the impact on earnings is relatively small; however, the first quarter profit margin still exceeded expectations.