Duty-free, a good business

2022-05-04 0 By

We also don’t know when the epidemic will be completely over, whether it will be immune or just slip away like SARS. Of course, what we investors are most concerned about is which industries can be developed under the normal situation of the epidemic, which is worth our attention.Epidemic outbreak, home economy let small household appliances industry to soar, there is a let everyone unexpected, is tax exemption, today we talk about this business.A, resulted in consumption reflux words before the outbreak of the Chinese people leave the country in the world, the consumption of outflow to Japan, South Korea, Britain, Singapore and other countries around the duty-free shop earn rich, ark elder sister see americans abroad seems like to see the mobile wallet,, placement, popular payment for purchasing the goods is hard to find, even a few ark elder sister attitude very bad also!The sudden outbreak of the epidemic directly suppressed this “arrogance”, restricted exit, overseas consumption of Chinese people directly decreased by more than 30%, so the consumption flow back. In 2021, the consumption amount of luxury goods in China reached about 420 billion YUAN, an increase of 35% year on year!In airports at home and abroad, consumers are often seen carrying large and small bags of goods in duty-free shops. Why are duty-free prices so attractive with such advantages?Want to know a terminal price = customs value of imported goods + import tariff + import link tax + VAT + + VAT + circulation circulation circulation consumption tax surcharge + cost plus, and duty-free goods is cut down a lot of intermediate link, based on the ex-factory price and operating cost is the commodity sale price, etc.For consumers, of course, cheap and good quality is king!twoTax free, good business, it’s a good business why is it a good business?1. First of all, up to now, the vast majority of duty-free resources in China have been exempted from tax.As a central enterprise, AFTER stripping the business of CITS Head Office in 2019, China Free has fully focused on the main business of duty-free. From the fourth in the world in 2019 to the first in 2020, its market share in China has reached more than 90%, and other brands besides China Free occupy the largest market share of only 3%.This is essentially equivalent to the domestic duty-free market to form an administrative monopoly, with absolute pricing power.In addition, to do duty-free business, it is necessary to obtain a duty-free license plate, how valuable is this license plate?To give you an example, after Wangfujing obtained the eighth license in China in 2020, its share price increased by more than 400%.And avoid in China is the only one to have a full channel nature of the company, said that this is a solid barrier is not too much!2. Self-acquisition mode, the unit price of its products reaches the lowest in the world.At present, the unit price of popular duty-free products under THE company has reached the lowest level in the world. Even if the epidemic is relieved in the future, we will be able to reduce customers. Who would feel sorry for the inexpensive goods?At present, China is actively implementing policies to promote the return of domestic consumption. It is expected that the domestic consumption of luxury goods will account for about 50% in 2025.(Data source: Deppon Research Institute) And, for leading duty-free shop brands such as China Free, the main mode is self-acquisition.That is to say, directly purchase from the supplier (other brand duty-free shops have agent mode or cooperate with other duty-free shops), directly cut the link of the middleman to earn the price difference, and the profit space is broad!3. Policy promotion and dividend release.The following figure shows the revenue and net profit of China Mintel in the past ten years. It can be seen that the performance before 2018 was growing, but stable. In 2018, there was a big leap, mainly because mintel began to acquire Japan Mintel, Japan Mintel Shanghai, and China Mintel: Japan Mintel:Responsible for duty free shop business of Beijing Capital Airport, including Terminal T2 and T3;Shanghai: Responsible for the duty free shop business of Shanghai Airport, including Pudong Airport T1, T2 terminal and Hongqiao Airport T1 Terminal;That is to say, the acquisition of Japan makes China free directly win the duty-free market in Beijing and Shanghai, pushing up performance!And the acquisition of Sea free (with Meilan Airport duty-free shop, Haikou city duty-free shop and many other duty-free shops), is absolutely such as tiger add “hundred million”!This is because in July 2020, hainan island’s new duty-free policy was officially implemented, which relaxed various restrictions on consumer shopping (the amount of duty-free shopping increased from 30,000 yuan to 100,000 yuan per person per year, and there is no limit on the number of times).The number of duty-free products increased from 38 to 45, including mobile phones and other consumer electronic products.At the same time, the tax exemption limit of 8000 yuan per item has been cancelled.In the seven days of this year’s Spring Festival, sanya Customs supervised the duty-free sales of nearly 1.2 billion offshore islands!With the release of policy dividends, Hainan’s positioning as an international tourism and consumption center becomes more obvious. It is expected that the tax-free income of the offshore islands will reach more than 150 billion yuan in 2025.There are a total of nine duty-free shops in Hainan, among which 5 are owned by China Duty-free. Among them, sanya International Duty-free City, the largest duty-free commercial complex in the world, is still in the expansion layout.The other four are divided by each brand, and China Free directly occupy half of the country!So also benefited from this, in last year, the free revenue and mother’s net profit took off again, the revenue of 67.669 billion, a year-on-year growth of 28.65%, mother’s net profit of 9.592 billion, a year-on-year growth of 56.23%!3.Looking from now, with the construction of free trade port, dividend policy released a long time, but it was also during this time to exempt also poses a deterministic performance in the future, with the current national economic sustainable development, people’s disposable income rising purchasing power, and travel customers to buy duty-free limit relax (like chongqing and other places,Both have eased restrictions) and both are expected to boost China’s future growth.In addition, in the first half of last year, We successfully introduced 5 fragrance brands including Cartier perfume, 3 fashion brands including Thom Browne, and 4 children’s wear brands.The rich SKU is also the performance of its operation capacity improvement. In addition, I will discuss with you later that the current layout of duty-free shops in China will become its new growth point!Please continue to pay attention to the research of flying Whale!As one of the enterprises in the “Consumption 20” list, Flying Whale is looking forward to its future development!Flying Whale Investment Research long-term tracking feature list: “Growth 50” : summary of hot industries with growth potential stocks;Pharmaceutical 20: The most certain stock in the pharmaceutical industry;Consumer 20: The biggest stocks to watch in the big consumer sector.More exciting, please continue to pay attention to flying whale research.Flying whale investment research: smart investors are paying attention!Source: Flying Whale Research