Bank of Construction International's research report pointed out that China Tourism Group Duty Free Corporation (01880.HK) profit in the third quarter fell by 53% year-on-year, with the airport duty-free shop's recovery insufficient to offset the negative impact of Hainan, while the long-term potential of downtown duty-free shops is yet to be explored. The bank expects that with the increase in demand related to tourism activities and programs, as well as the low base from last year, the company's revenue decline in the fourth quarter will narrow to 9%; it is expected that the profit in the fourth quarter will decrease by 14%, as the negative operational leverage and more sales and marketing activities will affect the profit.

The bank reiterated a 'neutral' rating on the company, with the hong kong listed target price raised from 50 yuan to 51 yuan, and expected the operational environment in Hainan to remain challenging for the company in the short term. The bank has separately raised profit forecasts for the next two years by 4% and 3% to reflect higher gross margin.