Goldman Sachs issued a research report stating that CTG DUTY-FREE (01880) achieved a net profit of RMB 2.35 billion in the first quarter, a 21% year-on-year increase from a low base in the previous year. This represents 44% of the bank's full-year forecast, slightly below the historical seasonal level of over 50% seen in the same period from 2023 to 2025. Typically, the first and fourth quarters are the peak seasons for the company. The target price has been lowered from HK$67 to HK$64, with a "Neutral" rating.
The report noted that the company's EBIT grew 9% year-on-year to RMB 2.7 billion during the period, implying a margin expansion of 1.2 percentage points to 15.9%. This was primarily driven by a 7% year-on-year decline in selling, general, and administrative expenses (SG&A), as well as an improvement in gross margin from 33% in the first quarter of last year to 33.6%. The appreciation of the renminbi against the US dollar and euro contributed positively to 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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