Recently, the number of listed companies that have opened up the dual financing platform of "Aspirh" is increasing, and China is about to be included in the list.

On August 9, 2022, China Tourism Group China exemption Co., Ltd. (hereinafter referred to as "China exemption") was listed through the Hong Kong Stock Exchange, according to the Hong Kong Stock Exchange. According to foreign media, China China waiver plans to list in Hong Kong on August 25 and began its offering on August 15, which has attracted nine cornerstone investors, and the Hong Kong share offering has been fully subscribed.

Data show that China exemption was established in 2008, formerly known as China Travel Service Co., Ltd. October 2009China waiver (601888.SH) $Listed on the main board of the Shanghai Stock Exchange.

At present, China has been the world's largest tourism retail operator for two consecutive years. China China has the largest number of duty-free shops in the country, according to the prospectus. It is understood that China exemption already owns four of the only 10 duty-free licenses in the country, making it the only group holding a business license to operate all kinds of duty-free shops in China.

China's exemption performance has increased significantly in the past three years. From 2019 to 2021, its revenue was 48.013 billion yuan, 52.598 billion yuan and 67.676 billion yuan respectively, and its net profit was 5.471 billion yuan, 7.109 billion yuan and 12.441 billion yuan respectively. The compound annual growth rate of income was 18.7%, and the compound annual growth rate of net profit was 50.8%. By the end of 2021, the company's domestic duty-free market share reached 86.0% in terms of sales revenue, accounting for 24.6% of the global tourism retail market share. There is no doubt that the company is a supergiant in the industry.

1. Take advantage of the wind: exemption from "internal and external repair" has become the first in the world.

The growth of giants is inseparable from the dividend of the times.

The duty-free industry is a relatively mature industry in the world, with a very high threshold, which plays an important role in promoting cross-border tourism consumption and promoting economic prosperity and development. In recent years, new breakthroughs have been made in the development of China's tax-free industry.

Take Hainan as an example, in 2011, Hainan officially launched the pilot project of duty-free shopping for tourists on outlying islands, becoming the fourth international tourism and outlying island duty-free shopping area in the world after Okinawa in Japan, Jeju in South Korea and Penghu in Taiwan. At the end of 2018, the policy of duty-free shopping on outlying islands covers all kinds of transportation modes: sea, land and air.

Under the background of building a new development pattern with the domestic big cycle as the main body and the domestic and international double cycles promoting each other, it is increasingly important to expand domestic demand and play the basic role of consumption, and China's tax-free industry has also ushered in new opportunities for development.

In June 2020, the overall plan for the construction of a free trade port in Hainan was announced to the public, including relaxing policy restrictions for the sixth time, no longer limiting the number of duty-free shopping for visitors from outlying islands, raising the shopping quota to 100000 yuan, increasing the number of duty-free goods on outlying islands to 45, abolishing the ceiling of duty-free amount for individual goods, and so on, the new development pattern of duty-free economy is accelerating.

China is exempt from rising in the wind under the tide of the times.

As early as 2014, China exemption has actively promoted a variety of tax-free formats and accumulated rich experience in duty-free operation.

In 2017, China exemption ranked only eighth in the world in terms of market share, but through "endogenous development + epitaxial mergers and acquisitions", it rose to the top of the global market share ranking in a short period of time, with an amazing speed.

From 2017 to 2021, China exemption completed the acquisition of 51 per cent of Rishang China, 51 per cent of Shanghai, 51 per cent of Hainan duty-free goods and the entire equity of Hong Kong China Travel Service Asset Co., Ltd.

The acquisition of Japanese entities enabled the company to gain access to airports in Beijing and Shanghai, the first and second busiest airports in China by passenger flow before the COVID-19 outbreak in 2019, as well as two of the top 10 busiest airports in the world.

The acquisition of Hainan Duty Free Group enables China exemption to occupy an important market share in China's outlying islands duty-free market and make full use of the benefits of Hainan's outlying islands duty-free policy. Through mergers and acquisitions, China exemption has been allocated four of the only 10 duty-free licenses in the country, further consolidating China's leading position in the tax-free industry.

In the "addition" at the same time, China exemption also seize the opportunity to use "subtraction" to make the company light.

China International Travel Service (CITS), which sold its 100 per cent stake in February 2019, is an example. Its 2018 operating profit is only 50 million, while its net profit contribution is already negative.

After some operation, China Free has the largest number of duty-free shops in the country. As of August 2022, the company operated 193 stores, including 184 stores in 100 cities in 28 provinces, municipalities and autonomous regions of China, and 9 overseas duty-free shops, including 7 in Hong Kong, Macao and Cambodia and 2 cruise duty-free shops.

According to Frost Sullivan, from 2019 to 2021, the airport, which is store-free, served more than 2.2 billion passengers.

According to the Frost Sullivan report, the global ranking of China exemption in terms of sales revenue has been rising over the past decade, from 19th in 2010 to 12th in 2015, and to fourth in 2019. And ranked first in the world in 2020 and 2021.

two。 Go against the Wind: China's overall layout of exemption tamps its competitive advantage

Some people say that the duty-free industry is essentially a license monopoly retail, so there are doubts that with the continuous opening of tax-free licenses in the future, China's moat currently built by franchises will narrow and the company's leading position will be shaked. but this argument is hard to hold up.

First, the advantages of license plates: duty-free business licenses are uniformly managed by the state, creating high barriers to entry in the industry. Duty-free goods sales channels are mainly divided into port duty-free (airport and land), intra-city tax-free and outlying island tax-free, operators need to obtain the corresponding license to carry out the corresponding business. China exemption currently owns 4 of the 10 duty-free licenses in China, and is the only full-license duty-free operator. China exemption has an absolute advantage in the industry with a domestic market share of 86.0% in 2021.

The second is the advantage of scale: from the perspective of sales revenue, the global ranking of China exemption continues to rise. The continuous expansion of the size of the company brings the company a greater say in business negotiations, so that China exemption can continuously optimize the procurement business terms and improve the profitability of China exemption in an all-round way.

Third, operational advantages: the company has professional modular data analysis and planning capabilities, continuously improve operational efficiency through digitization, and build a moat; at the same time, the company is the first in China to put forward a tax-free online booking platform to achieve online and offline (32.27% + 0.37%, diagnosis unit) integrated and efficient operation, with more than 23 million registered members.

Fourth, channel advantages: China China Free has the most complete duty-free retail channel and the best market resources, the company has a total of 193 sales outlets, China's only fully duty-free retail channel. The company fully occupies the core channel of duty-free sales in Hainan, strategically arranging airport duty-free shops, tourism retail complexes, city stores and experience centers throughout the island.

The company has opened a Sanya international duty-free city with a retail area of more than 70,000 square meters in Haitang Bay, Sanya, and continues to provide tourists with one-stop leisure duty-free shopping experience. In 2021, the exclusive duty-free shop of Terminal T2 of Haikou Meilan International Airport was opened, and the French Garden expansion project of Sanya Phoenix International Airport is under way. What is particularly noteworthy is that the Haikou International duty-free city, which is expected to open in September, will greatly change the volume of exemption, and is expected to shape the second growth curve.

At the same time, the policy of duty-free shops in the new city is expected to be introduced in the next few years. At present, China exemption has opened in-city stores in Beijing, Shanghai, Xiamen, Dalian, Qingdao and Harbin, and has successfully operated in-city stores overseas and has rich experience in in-city store management. Specifically, it has won the concession for the sale of duty-free tobacco and alcohol at the Hong Kong International Airport and won the duty-free license of the Macao International Airport. It has operated 5 duty-free shops in Hong Kong, Macau, Phnom Penh, Siem Reap and Sihanouk overseas.

Some analysts point out that duty-free operators are essentially a bridge between brands and consumers, on the one hand, the sales channels of brands, and on the other hand, the shopping platform of customers. From the point of view of the brand, the main factors determining the supply price are the shipping volume and stability of the channel; from the consumer's point of view, the core elements of choosing the purchase platform are the richness and price of SKU, which promote each other, which is a typical cross-border network model. Considering the current direct mining layout and the volume of the island, it is expected that the follow-up "super-pluralistic" pattern on the island will be difficult to break, and the market share of the tax-free industry on the outlying islands will maintain an absolutely dominant position.

With the continuous improvement of scale, market share, category structure, supply chain management and membership system, the ability to avoid and stabilize the disturbance to the company's operation caused by the pressure of external market environment will continue to be enhanced.

Some research institutions believe that the deregulation of epidemic control and the resumption of international routes are conducive to the expansion of the market scale of the duty-free industry to speed up again, the market position of exemption is stable, and the new duty-free benchmark stores on outlying islands will be centrally put into operation in 2022 / 2023 and re-enter the channel to increase market share. although it is greatly affected by the epidemic in the short term, in the medium to long term, it is optimistic that China will benefit from cross-provincial and outbound tourism as a leading tourism retailer.

3. Conforming to the trend: the long-term Development of China's exempt Capital Operation

China exemption from more than 30 years of ups and downs has witnessed the growth of China's tax-free industry, but also sharpened its strong physique in the international business world.

Embracing the Hong Kong stock market is also the proper meaning of adapting to the development of the times and "strengthening the body".

Some analysts believe that opening up the "Atroph" dual financing platform will not only enhance the close connection between the international and domestic markets, but also further broaden financing channels, improve financing efficiency, enhance financing capacity, improve operation quality, service level and profitability, and systematically optimize the industrial chain, innovation chain, value chain layout and so on.

Especially in terms of financing, the advantages of two financing platforms built by "Atroph" can make the follow-up financing of enterprises not subject to the rules and conditions of a single market; the multiple financing channels brought about by dual financing platforms will greatly enhance the financing capacity of enterprises.

From the perspective of corporate influence, opening up the "Amush" double financing platform will enable enterprises to achieve global issuance in a real sense, and the issuing influence will also be reflected on a global scale, which will greatly enhance the market image and international popularity of the enterprise.

From the point of view of the enterprise's own value discovery, the investor base will be more extensive if we get through the "Aspirh" double financing platform, which will help the enterprise value to be deeply excavated and recognized.

It is worth noting that China exemption's second application for listing on the Hong Kong Stock Exchange has attracted a number of brokerage institutions. According to media statistics, only after the company announcement, a number of institutions have issued research reports, such as CITIC Construction Investment (26.70% + 0.04%, diagnosis stock), Guoxin Securities (9.22 + 0.22%, diagnosis stock), Huatai (13.14 + 0.08%, diagnosis stock) and so on. Collectively bullish on the re-capitalization of the company.

Guoxin Securities Zengguang research team believes that, "if the company comes to Hong Kong for financing and landing, there may be a short-term dilution risk, the middle line is expected to accelerate the company's expansion at home and abroad and the improvement of supply chain capacity, and does not rule out the possibility of introducing war investment." it will comprehensively consolidate its position as the first duty-free place, at the same time, Hainan has accelerated its recovery recently, and new expectations have been brought about by the new harbour major project in the second half of the year. If we come to Hong Kong for financing in the future, we cannot rule out the possibility of accelerating the growth of mid-line profits. "

"China exemption is the absolute leader of tax exemption on outlying islands, complete supply chain construction and the landing of a large number of projects, and the follow-up market share is expected to remain high. Liu Yang, a researcher at Caitong Securities (7.44 + 0.27%, clinic stock), pointed out in the latest research report that the current tax-free sales on outlying islands in China are concentrated in the fragrance category, as the follow-up boutique category and the surrounding formats continue to be rich, it is expected to further raise the performance ceiling of the company. "

In the IPO materials, China Zhongmeng revealed that the company's future development strategy is to "continue to build competitive barriers to existing business, consolidate industry leadership" and "actively expand incremental business opportunities." explore more profit growth opportunities "," use capital operation to deepen the competitive advantages of upstream brands and domestic and foreign channels "," further strengthen core competence building " Provide the driving force for the sustainable development of the company "," attract and retain high-quality strategic talents, and protect the human resources of the enterprise ".