CITS Alert:Cut TP to RMB32.5on 2:1stock split;4M17duty free sales up 20.5%yoy

Adjust target price to RMB32.5 on 2:1 stock split

    We adjust down our target price proportionately to RMB32.5 from RMB65 to reflect the recent stock split. CITS recently conducted a 2-for-1 stock split, which increased the current number of shares outstanding to 1,952 million. Our net profit forecasts remain unchanged, and we adjust EPS to RMB1.13 for 2017E and RMB1.22 for 2018E to account for the split.

    April-17 Duty free sales increased by 42.7% yoy

    The Ministry of Commerce (MOFCOM) released April’s Hainan duty free sales (Sanya + Haikou) today. April 2017 duty free sales increased by 42.7% yoy to RMB551m. We believe this is mainly due to the 35.4% yoy growth of number of customers.

    Based on MOFCOM data, 4M17 duty free sales grew 20.5% yoy to RMB3.18bn and number of customers increased 24.7% to 0.88 million. This implies a 3.4% yoy decrease of ticket price to RMB3,609. In our view, given the promotion efforts and accumulated demand, we expect 2017 duty free sales will keep a double digit growth.