--- title: "Hainan's Free Trade Port Takes Shape — Can China Duty Free Ride the Tailwind?" type: "Topics" locale: "zh-HK" url: "https://longbridge.com/zh-HK/topics/39624746.md" description: "On the evening of Mar 30, $CHINA TOURISM GROUP DUTY FREE(601888.SH) released its FY2025 annual report. Since a preliminary earnings flash was already published, there is no expectation gap (Bloomberg consensus was simply not updated in time). Dolphin Research therefore reads the results from two angles: ① the latest trend signals emerging from quarterly performance; ② granular data points disclosed only in semi-annual/annual reports. Details below: 1) On the top line, CTG Duty Free delivered total revenue slightly above RMB 13.8bn, up 3% YoY — the first positive growth since 2024. Policy stimulus and progress toward Hainan's customs seal-off are clearly driving an improving trajectory..." datetime: "2026-03-30T17:38:47.000Z" locales: - [en](https://longbridge.com/en/topics/39624746.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39624746.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39624746.md) author: "[Dolphin Research](https://longbridge.com/zh-HK/news/dolphin.md)" --- > 支持的語言: [English](https://longbridge.com/en/topics/39624746.md) | [简体中文](https://longbridge.com/zh-CN/topics/39624746.md) # Hainan's Free Trade Port Takes Shape — Can China Duty Free Ride the Tailwind? On the evening of Mar 30, $CTG DUTY-FREE(601888.SH) released its FY2025 report. As a flash update had already been disclosed, there should be no surprise vs. expectations (the Bloomberg consensus lagged updates). Dolphin Research reviews from two angles: (1) quarterly trends and inflections; (2) line items only available in semi/full-year reports, detailed as follows: **1)** On revenue, **total sales slightly topped RMB 13.8bn, up 3% YoY, marking the first positive growth since 2024. The turnaround reflects benefits from Hainan’s customs closure and policy support.** Industry data show **Hainan offshore duty-free sales rose 19% YoY in Q4,** also the first positive print since 2024. In terms of price/volume drivers, **the recovery was mainly driven by higher spend per capita as the duty-free product scope expanded, while traffic recovery remains muted.** That said, **as the customs closure started only in mid-to-late Dec, its impact on Q4 was limited, which is not surprising.** Subsequent trends in traffic recovery warrant monitoring. **2)** By revenue type, **taxable goods revenue still fell about 22% YoY, with little improvement vs. 1H.** The drag from the strategic exit of transitional taxable biz. built during the pandemic has not fully ended. Meanwhile, **taxable sales growth turned positive to about +11% in the same period,** indicating **duty-free is indeed recovering.** Also noteworthy, **for 2025 as a whole, Hainan region sales dipped only 1% YoY,** while **Shanghai** (mainly airport channels) **fell a sharp 25% YoY.** This suggests **policy-backed Hainan is rebounding, but other channels remain weak.** **3) Gross profit: in Q4, GP reached RMB 4.6bn and GPM rose from 31.8% in Q3 to 33.4%,** a much larger improvement vs. 28.5% a year ago. By revenue mix GPM, the **2H25 uplift was driven by: a) a lower mix of low-margin taxable sales; b) a notable margin improvement in taxable sales; c) duty-free margins were broadly flat.** **4)** **Selling exp. were RMB 2.23bn in the quarter, down 1.8% YoY.** While opex is fairly rigid, the higher sales base delivered scale benefits, **narrowing the selling-exp.-to-revenue ratio by ~80bps YoY.** With **higher GPM and lower selling-exp. ratio,** **GP less selling exp. reached RMB 2.4bn, up ~50% YoY and QoQ.** The corresponding margin expanded by ~360bps YoY, paving the way for a strong profit rebound. **5)** Non-marketing **other expenses dragged profit.** **Taxes as a % of revenue** rose by 20bps, likely due to a higher duty-free mix. Net financial income also dipped slightly YoY. **G&A jumped from RMB 590mn to RMB 910mn,** but this reflects a **one-off goodwill impairment at a subsidiary this quarter.** **Ex-impairment, G&A should be largely stable YoY.** **6)** Despite the drag from other expenses, the larger improvement in GP less selling exp. still drove a clear earnings rebound. **OPM came in at 5.9%, up 50bps YoY** (8% ex the one-off G&A impact), with OP at RMB 820mn, +14% YoY. The key profit metric, ex-non-recurring attributable NP, was RMB 510mn, +95% YoY (also off a very low base). With operating leverage kicking in, the earnings recovery was meaningful. **7)** On dividends, **the company declared an annual DPS of RMB 0.45, totaling ~RMB 935mn.** Together with the previously announced **~RMB 490mn interim dividends** at Q3, total FY25 dividends equate to **~1.2% of current market cap.** The yield is not high (given a rich multiple), but **roughly equals 40% of full-year NP—modest but not stingy.** **Dolphin Research View:** In brief, the quarter extends the repair that began in Q3, with stronger momentum. As sales stabilize, prior de-leveraging and diseconomies of scale started to reverse at the margin. Meanwhile, profits in 2024 and recent quarters of 2025 were at historical lows, so the low base amplified both YoY and QoQ improvements this quarter. The key driver is the ‘Hainan customs closure’ we highlighted last quarter, with two major effects: 1) In Oct, ahead of closure, the Gov. ‘upgraded’ offshore duty-free policy: a) **broadened duty-free categories** to add pet supplies, carry-on musical instruments, mini-drones, small appliances, etc., lifting categories from 45 to 47; b) **expanded eligible shoppers,** allowing departing tourists and Hainan residents with annual departure records to make unlimited duty-free purchases; c) **expanded sourcing,** allowing certain domestic goods to be sold in offshore duty-free stores with VAT/consumption-tax exemption, including apparel, footwear, ceramics, scarves, coffee, tea, etc. (previously limited to imports). 2) From Dec 18, 2025, after customs closure, the **near-term impact** is much easier intl access to/from Hainan, which should **bring more traffic and potential duty-free shoppers.** **Over the medium to long term,** leveraging the free-trade port positioning, Hainan could **build stronger re-export trade, manufacturing and supporting services,** attract quality companies and migrants, and **lift overall consumption power.** Recent data suggest **the Q4 sales recovery was driven more by the Oct policy easing than by the Dec customs closure.** Shopper counts were still negative (-8% YoY) in Q4, while per-capita spend/ATV rose nearly 30% YoY, indicating limited traffic growth in Q4 and a benefit mainly from the expanded product scope. Given closure started mid-Dec, the limited Q4 impact is expected. **In Jan–Feb 2026, offshore duty-free shopper counts turned positive at +21%/+13% YoY, showing policy easing plus closure is now lifting traffic.** The growth driver has shifted from almost purely price to a healthier price-and-volume mix. Not all news is positive. In the recent Shanghai Airport duty-free tender, **the company won only PVG T2 and SHA T1&T2, losing PVG T1.** Moreover, **PVG T2 and SHA T1&T2 will be operated by a JV between the company and Shanghai Airport** (51%/49%), which falls short of the market’s hope for 100% interest and **implies lower attributable profit**—effectively a higher airport commission. This aligns with the results showing the Shanghai channel still weakening even as offshore duty-free recovers. Other channels remain under pressure. Valuation-wise, after a surge on closure/policy headlines and a slump on the partial tender loss at Shanghai Airport, the stock has largely round-tripped to pre-closure-news levels. Looking ahead, Wind consensus pegs 2026 attributable NP at ~RMB 5.0bn, while buy-side may be higher at RMB 5.5–6.0bn, vs. ~RMB 3.5bn this year. This implies low-teens revenue growth and margin recovery to ~9%, broadly in line with 2022 and slightly below ~10% in 2023. On current market cap (taking the lower HK listing), the 2026 PE is ~20–21x. While not cheap in absolute terms, it is conservative for this name. Thus, the valuation looks fair; performance will hinge on delivery vs. expectations. Historically, execution has been mixed, so Dolphin Research remains cautious. Treat the name as a beta play on Hainan customs closure, rather than expecting much alpha from company-specific execution. **Details below:** **I. Revenue finally turns up on closure tailwinds** **In Q4 2025, total revenue slightly topped RMB 13.8bn, +3% YoY, the first positive growth since 2024.** Driven by Hainan customs closure and offshore duty-free policy easing, the company’s trend is improving at the margin. By Hainan offshore duty-free industry data, **Q4 offshore duty-free sales rose 19% YoY, the first positive since 2024,** showing a clear rebound. From price-volume drivers, **the Q4 recovery mainly came from higher per-capita spend** (both spend per capita and ASP per item up ~30% YoY), **while traffic recovery remains weak** (shopper counts still -8% YoY despite a narrower decline). As **closure only started in mid-to-late Dec, Q4 impact was limited.** Watch whether the recovery strengthens in Q1 this year. **II. Duty-free outperforms taxable; offshore beats airport** On the semiannual revenue split, **taxable goods revenue still declined ~22% YoY, similar to 1H.** The ongoing exit of transitional taxable biz. from the pandemic period continues to weigh on total sales. At the same time, **taxable sales growth turned positive to ~+11% in 2H25,** broadly in line with ~+9% offshore duty-free growth over the same period, indicating **the core duty-free business is recovering.** **Also note: for full-year 2025, Hainan region sales** (offshore duty-free + taxable; ~54% of total) **fell just 1% YoY,** while **Shanghai** (mainly airports; 23% of total) **dropped 25% YoY.** Thus, **Hainan is recovering on policy support, but other channels remain weak.** **III. GPM recovery appears more from taxable biz.** **Q4 GP was RMB 4.6bn, with GPM up to 33.4% from 31.8% in Q3,** and well above 28.5% a year ago. Drivers: a lower mix of **low-margin taxable sales,** **higher margins within taxable,** and **flat duty-free margins in 2H25 vs. 1H25.** Thus, the closure has yet to lift duty-free margins meaningfully. YoY, duty-free GPM still rose 140bps off a low base. **IV. Selling down slightly; scale effects matter** **Selling exp. were RMB 2.23bn in Q4, -1.8% YoY.** Despite rigid spending, the larger revenue base delivered scale, **narrowing the selling-exp. ratio by ~80bps.** As the second-busiest season after the CNY quarter, Q4 saw the selling-exp. ratio compress to 16.9%, down 150bps QoQ. With **higher GPM and a lower selling-exp. ratio,** **GP less selling exp. reached RMB 2.4bn, up ~50% YoY and QoQ,** and the margin expanded ~360bps YoY, underpinning profit improvement. **V. Operating leverage unlocked; profits improved** However, **other expenses weighed on profits.** **Taxes as % of revenue** rose by ~20bps alongside the higher duty-free mix, and net financial income was slightly lower YoY. Notably, **G&A rose from RMB 590mn to RMB 910mn,** which, per disclosure, **reflects a one-off goodwill impairment at a subsidiary** (estimated at ~RMB 300mn). **Ex this charge, G&A should be broadly flat YoY.** Overall, despite some drag from other expenses, the larger improvement in GP less selling exp. drove **OPM to 5.9%, up 50bps YoY** (8% ex one-off G&A). OP reached RMB 820mn, +14% YoY. Ex-non-recurring attributable NP was RMB 510mn, +95% YoY on a low base and renewed operating leverage. The earnings recovery was substantial. Risk disclosure and disclaimer: [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### 相關股票 - [CTG DUTY-FREE (01880.HK)](https://longbridge.com/zh-HK/quote/01880.HK.md) - [CTG DUTY-FREE (601888.CN)](https://longbridge.com/zh-HK/quote/601888.CN.md)