Morgan Stanley has released a research report adjusting its forecasts for CTG DUTY-FREE (01880). Taking into account recent market trends and the company's first-quarter results, the investment bank has lowered its earnings per share estimates for 2026 and 2027 by 6% to 7% and reduced its revenue projections for the same periods by 13%. Consequently, the target price for the H-share has been revised down from HK$89 to HK$77, while the "Equal-weight" rating is maintained. The report indicates that duty-free sales in Hainan during March were slower than anticipated, and data from April suggests a further deceleration in growth. As a result, the full-year growth forecast has been adjusted downward from a range of 25%-30% to 20%-30%. Additionally, the company is currently reorganizing its duty-free shops at Shanghai and Beijing airports, a process expected to be completed in the second or third quarter of this year, though progress is slower than initially planned. CTG DUTY-FREE is also consolidating its online platforms, a transition period that could pose risks to sales. However, due to the lower profit margins associated with airport and online businesses, the impact on overall profitability is expected to be limited. The company's profit margin in the first quarter still outperformed expectations.
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