On October 30, Caixin reported that hainan outlying island duty-free shopping is under pressure, with china tourism group duty free corporation (601888.SH) experiencing a significant 50% drop in net income attributable to shareholders in Q3 compared to the same quarter last year. Analysts told Caixin that the further decline in china tourism group duty free corporation's performance is mainly due to the decrease in tax-free consumption demand, and it is expected that consumer demand will remain relatively low in the short term.

According to the announcement, in the first three quarters of this year, china tourism group duty free corporation achieved revenue of 43.021 billion yuan, a decrease of 15.38% year-on-year; net income attributable to shareholders of listed companies was 3.919 billion yuan, a decrease of 24.72% year-on-year.

It is worth mentioning that in Q3, the quarterly revenue reached 11.756 billion yuan, a decrease of 21.52% year-on-year; net income attributable to shareholders was 0.636 billion yuan, compared to 1.34 billion yuan in the same period last year, a decrease of approximately 52.5% year-on-year.

china tourism group duty free corporation stated in the announcement that the decline in net income attributable to shareholders in Q3 was mainly due to insufficient consumer willingness to spend and the impact of factors such as typhoons in September, resulting in a decrease in company sales revenue.

The diversion caused by the popularity of outbound tourism is just one of the factors. Zhou Mingqi, founder of Jingjian Think Tank, told Caixin that the sales of duty-free on offshore hainan island have been declining steadily throughout the year in terms of the amount of duty-free shopping, actual number of visitors, and number of duty-free shopping items, mainly due to a decrease in market demand for duty-free goods.

According to the latest statistics from Haikou Customs, from January to September this year, the accumulated duty-free shopping amount was 24.0599 billion yuan, a decrease of 31.3% year-on-year; the actual number of duty-free shopping visitors was 4.466 million, a decrease of 14.9% year-on-year; and the number of duty-free shopping items was 26.017 million, a decrease of 37.3% year-on-year. In September, the duty-free shopping amount decreased by 38.4%, the actual number of duty-free shopping visitors decreased by 40%, and the number of duty-free shopping items decreased by 52%.

In addition, it was noted that in china tourism group duty free corporation's semi-annual report, in the non-private equity investment projects, the commercial section of Phase 2 of Sanya International Duty-Free City, Zone C of Sanya International Duty-Free City, officially commenced operations on December 28, 2023. In February of this year, the company made an additional investment of 1.07 billion yuan in this project. However, the new project did not reverse the declining trend in china tourism group duty free corporation's performance.

In response to this, Zhou Mingqi stated that this is mainly because, on the basis of restricted consumer demand, coupled with the positioning of China Tourism Group Duty Free Corporation's project being too skewed, the cost increase from opening new stores did not bring about profit conversion to enhance corresponding revenue, resulting in further pressure on overall profit.

"From an overall trend perspective, I believe that the aforementioned various duty-free consumption indicators may show a slow and sustained decline in the short term," Zhou Mingqi further stated.