Hong Kong Stock Concept Tracking | The hardware and software conditions for Hainan's customs closure operations are already in place, and institutions expect subsequent policies to be implemented (with concept stocks attached)

On April 14, at the 2025 Hainan Free Trade Port Global Industry Investment Conference, Hainan Provincial Party Secretary Feng Fei introduced the construction status of the Hainan Free Trade Port and its core policies. Feng Fei stated that investing in the Hainan Free Trade Port is timely, promising, and has a bright future. Since the beginning of this year, the closure operation and expansion of opening up have been a significant milestone in the construction of the Hainan Free Trade Port. Currently, the hardware and software conditions for the closure operation are already in place. According to Zhitong Finance APP, the "14th Five-Year Plan for the Construction of Hainan Free Trade Port" clearly estimates a total investment of approximately 11.5 billion yuan for project construction during the "14th Five-Year" period. Additionally, according to relevant plans, the "second-line ports" in various port areas of Hainan need to have the hardware conditions for closure by the end of 2023, complete all preparations for closure by the end of 2024, and successfully launch "island-wide closure" before 2025. In 2025, Hainan will achieve island-wide closure. Closure means that the first line is open, the second line is controlled, and there is freedom within the island. "The first line is open" means smoother connectivity between the Hainan Free Trade Port and the world; "the second line is controlled" indicates moderate regulation of the connectivity between the Hainan Free Trade Port and the mainland. Zhitong Finance APP learned that CITIC Securities released a research report stating that the Hainan Free Trade Port will welcome the official closure window period in 2025. This round of Hainan's closure market may refer to the situations in Shanghai in 2019 and Hengqin in 2024. In terms of policy rhythm, it is recommended to pay attention to the central government's specific plans, supporting documents from ministries, and local meeting events as catalysts. It is expected that the Hainan Free Trade Port market will gradually shift from policy expectations to reality, and then from reality to substantial fundamental changes. Investment opportunities should focus on four main lines: infrastructure, service industry, new productivity, and state-owned enterprise reform in Hainan. Hainan closure involves related Hainan sectors: MEILAN AIRPORT (00357): The only major airport in Hainan that releases capacity, it is the main recipient of the incremental passenger flow and the benefits of the Free Trade Port construction. The company positions itself as the international core hub of the Hainan Free Trade Port, returning to state-owned management after restructuring, with the controlling shareholder having a background in Hainan's state-owned assets. Sanya Phoenix Airport's capacity has been saturated in 19/23 (Sanya Phoenix can accommodate 20-25 million passengers, with no clear expansion plans), and the incremental passenger flow is mainly undertaken by Haikou Meilan (with a designed capacity of 35 million passengers). Haikou Meilan Airport has a leading duty-free operating area of 40,000 square meters (with 18,000 square meters already in use), and luxury brands have been gradually introduced, narrowing the gap with downtown stores. The company's duty-free discount rate is about 15%, significantly lower than its peers. In the post-pandemic era, the discount rates for major categories at peer airports range from 20% to 36%. The duty-free operating agreements for Meilan's T1/T2 terminals will expire at the end of 24 and 26, respectively, and the discount rates are expected to be repriced. China Duty Free Group (01880): The company's sales are closely related to the entry and exit of travelers and the number of visitors to Hainan, as well as the conversion rate of travelers' purchases. With the implementation of the downtown duty-free store policy, China Duty Free is expected to benefit first. On August 27, the downtown duty-free policy was implemented, allowing Chinese citizens to shop in downtown stores and pick up goods at the port within 60 days before departure, with no shopping limit. A total of 19 duty-free stores have been converted into new types of downtown duty-free stores for outbound tourists, and approval has been granted to establish one downtown duty-free store each in eight cities: Guangzhou, Chengdu, Shenzhen, Tianjin, Wuhan, Xi'an, Changsha, and Fuzhou The first batch of transformed city stores are all from the China Duty Free Group, and the company is expected to be the first to benefit from the market expansion driven by city stores