Damo: China Exemption (01880) is expected to win the right to operate duty-free shops at Shanghai and Beijing airports to be rated “in sync with the market”

The Zhitong Finance App learned that Morgan Stanley released a research report saying that the bidding results for duty-free shops at Shanghai Airport and Beijing Airport are expected to be announced this month. Currently, the duty-free shops at both airports are operated by SUNRISE, a 51% shareholding company in China (01880). The bank expects that in the first half of this year, offline sales at Shanghai Airport will contribute about 10% and 0.7% of China's free revenue and net profit, respectively, while Beijing Airport's revenue contribution should be a low number of units. The bank currently has a target price of HK$60 for China Free H shares and RMB 66 for China Free (601888.SH) A shares, all of which have a “in sync with the market” rating.

The bank listed several hypothetical scenarios. The benchmark scenario is that China and China will each obtain a contract at Shanghai and Beijing airports and use their own wholly owned duty-free licenses. The group will add more high-profit products to offline channels and provide competitively priced products on the Sunrise online platform; in this case, the Group's stock price will be generally stable. If China were to obtain one contract each at Shanghai and Beijing airports and use their wholly-owned license and the SUNRISE license at the same time, the stock price could increase by 5 to 10%. If SUNRISE obtains a contract at each of the two airports at the same time, the free share price in China may drop by 5% to 10%.