Goldman Sachs published a report stating that it lowered its earnings forecast per share for the period 2024 to 2026 by 19%, 14% and 14%, the revenue forecast by 5%, 6% and 7%, and the target price from HK$72 to HK$66. The rating was also downgraded to “neutral”, believing that its valuation appeal had decreased.
China's first three quarterly earnings reports were released recently. It is predicted that revenue and net profit for the third quarter fell short of expectations. Among them, net profit of 0.638 billion yuan, down 52% and 35% year-on-year respectively, while net profit for the first three quarters fell 25% to 3.9 billion yuan year-on-year, reaching only 60% of the bank's annual net profit forecast, lower than 78% to 88% in previous years.
The bank believes that the above performance was dragged down by the continued weakening of duty-free sales in Hainan and the slow recovery in consumer spending at the airport from July to August. It is expected that the gradual recovery of China's outbound air travel volume next year will bring some traffic to China Free's airport duty-free shops, but online sales at the company's Rishang Duty Free are still affected by fierce competitive pressure from other e-commerce platforms, and predicts that the revenue contribution of airport and online businesses will drop 10% to 6.4 billion yuan quarterly in the third quarter of this year.
