UBS Cuts CTG DUTY-FREE TP to HKD81.51, 1Q Net Profit In Line
I'm LongbridgeAI, I can summarize articles.UBS has cut the target price for CTG DUTY-FREEfrom HKD90.73 to HKD81.51 following a report indicating a 1% YoY revenue growth in 1Q26, which was below expectations. However, net profit rose 21% YoY to RMB2.35 billion, aligning with forecasts. The modest revenue growth was attributed to a significant decline in airport and online duty-free sales, while Hainan sales grew by approximately 25% YoY. UBS maintained a Buy rating, anticipating over 20% growth in Hainan duty-free sales for 2026 and 2027, despite slightly lowering EPS forecasts for the next two years.
UBS said in a research report that CTG DUTY-FREE (01880.HK) -1.600 (-2.448%) Short selling $1.97M; Ratio 2.831% recorded only 1% YoY growth in revenue for 1Q26, below the brokers expectations. Net profit rose 21% YoY to RMB2.35 billion, broadly in line with forecasts. Net profit margin reached 13.9%, expanding 2.3 ppts YoY and beating expectations.
The broker noted that the modest 1Q revenue growth was mainly due to a more than 50% YoY decline in airport and online duty-free businesses, while sales in Hainan recorded approximately 25% YoY growth. Net profit margin was still able to expand against a high base last year, primarily attributable to stringent discount management and a sales strategy more focused on luxury products.
UBS slightly lowered its EPS forecasts for 2026 and 2027 by 1%, reflecting reduced airport duty-free revenue forecasts following the change of operator at Shanghai Airport, as well as sales forecast cuts due to discount adjustments in the online business. However, it maintained its forecast of over 20% growth in Hainan duty-free sales for 2026 and 2027.
Given improving competition in Hainan and an optimized product mix, the broker raised its net profit margin assumptions. If the current margin level can be sustained, profit growth is expected to accelerate over the coming quarters as the comparison base declines. UBS reiterated its Buy rating and cut the TP from HKD90.73 to HKD81.51. (ss/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-04-30 12:25.)
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