Goldman Sachs issued a research report on CTG DUTY-FREE (01880), noting that against a low base from the previous year, the company's first-quarter net profit increased by 21% year-over-year to RMB 2.35 billion. This figure represents 44% of the bank's full-year forecast, which is slightly below the historical seasonal level of over 50% typically seen in the first quarter for the 2023-2025 period. The first and fourth quarters are generally the peak seasons for the company. The target price has been lowered from HK$67 to HK$64, with a "Neutral" rating maintained.
The report stated that the company's EBIT for the period grew by 9% year-over-year to RMB 2.7 billion, implying a margin expansion of 1.2 percentage points to 15.9%. This improvement was primarily driven by a 7% year-over-year decrease in selling, general, and administrative expenses, as well as a rise in gross margin from 33% in the first quarter of the previous year to 33.6%. The appreciation of the renminbi against the US dollar and the euro was cited as a contributing factor, benefiting the performance of imported products.
Considering the decline in sales at airport duty-free shops and the impact of the completed share placement to LVMH, the bank has lowered its earnings per share forecasts for 2026 to 2028 by 5% to 6%.
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