CHINA. China Duty Free Group (CDFG) parent company, China International Travel Service Corporation (CITS), has acquired a 51% stake in Hainan Duty Free Company Ltd (HNDF).
CITS made the announcement to the stock exchange yesterday, CDFG confirmed to The Moodie Davitt Report.
Hainan Duty Free, which has operations at Haikou Meilan International Airport on Hainan Island, is part of HNA Group, the influential and ambitious Chinese aviation-to-hospitality company.
The acquisition by CTS follows increased recent collaboration between CTS and HNA Group.
As reported, the two companies signed a strategic cooperation agreement in Haikou in April. This will see them work together across aviation and duty free retailing to promote Hainan’s duty free sector.
Markets reacted well to the acquisition. In a note, analyst Osbert Tang of CFA said: “We view the acquisition of a 51% stake in Hainan Duty Free Co Ltd (HNDF) by China International Travel Service as a positive move. HNDF has solid profitability and financial position – 8.1% net margin, 34% ROE and net cash of TMB580m. What’s more, it is making good profit even in 1Q20 and the deal was priced at just 15.4x PER.”
As reported, the annual offshore duty free allowance for shoppers visiting Hainan Island is to be raised from RMB30,000 (US$4,215 at current exchange rate) to RMB100,000 (US$14,050) as part of sweeping government plans announced this month for the creation of Hainan Free Trade Port.
