China Tourism Group Duty Free (CTGDF) has released its 3Q26 results. Revenue was RMB11,166mn (-4.66% YoY), partly dragged by the contraction in the scope of duty-free operations at Shanghai airports. Total profit was RMB833mn (+10.34% YoY). The attributable net profit (NP) was RMB564mn (+24.64% YoY), and the recurring NP was RMB565mn (+28.19% YoY), driven by a higher effective tax rate and a lower minority interest share related to Sunrise. The attributable/recurring NPM were 5.05/5.06% (+1.19/1.30pp YoY). For 9M26, revenue was RMB38,821mn (-2.61% YoY), the attributable NP was RMB3,670mn (+20.25% YoY), and the recurring NP was RMB3,644mn (+20.00% YoY). The attributable/recurring NPM were 9.45/9.39% (+1.80/1.77pp YoY). In the long term, the company’s market share in Hainan continues to rise, and the DFS acquisition further expands its international retail network, sharpening its competitive edge as a leader. Maintain BUY.
Considering a potential marginal slowdown in Hainan offshore duty-free sales growth and a moderate recovery in international passenger traffic, we lower our 2026/2027/2028 revenue forecasts by 3.2/2.8/2.2% to RMB52.2/56.9/61.2bn, and lower our 2026/2027/2028 attributable NP forecasts by 6.5/4.3/4.1% to RMB4.33/ 5.04/5.53bn, translating into 2026/2027/2028 EPS of RMB2.09/2.43/2.66. We value the A-share at 29x 2027E PE, at par with its peers’ average on iFinD consensus, and adjust our A-share target price to RMB70.38. Based on the average A-H premium of 23% since listing, we adjust our H-share target price to HKD66.40 (A-/H-shares correspond to 29/24x 2027E PE; previous: RMB75.43/HKD71.54, based on 34/28x 2026E PE). Maintain BUY.