CHINA. China Tourism Group Duty Free Corporation (CTGDF) has posted a +19.9% year-on-year increase in first-half net profit to CNY3.1 billion (US$457.9 million) for the period ended 30 June.
However, revenue eased -1.99% year-on-year to CNY27.59 billion (US$4.07 billion).
The performance was revealed in CTGDF’s preliminary results for the period announced yesterday. More detailed figures and comment, as always, will be revealed later in the year.
CTGDF – parent of China Duty Free Group (CDFG) – said, “During the reporting period, the company fully capitalised on the opportunities presented by the island-wide special customs operations in the Hainan Free Trade Port and the implementation of new offshore duty-free policies.
“It continuously consolidated its advantageous position in the Hainan market, with both operating results and market share achieving growth.
“At the same time, the company continued to drive operational improvements and enhancements at duty-free stores in key airports. The acquisition of DFS’s retail business in Greater China also delivered solid integration results and favorable economic returns following the closing.”
In a note, Goldman Sachs Research said the hike in net profit might have surprised the market positively, although the firm said the increase was entirely driven by lower tax expenses and minority interest.
“EBT remained soft (-20% year-on-year to RMB948 million in Q2 26 with -1.6pts year-on-year margin slippage to 8.9% (vs. 10.4% in Q2 25), as group revenue dipped to -6% year-on-year in Q2 26 (vs. +1% in Q1 26),” the company said.
Will there be another voucher boost?
It attributed this softness to weaker sales across various channels. While Hainan offshore duty-free sales rose +5% year-on-year to RMB6 billion (US$886.2 million), airport & online channels were down -18% year-on-year (vs. -38% in Q1 26 by Goldman Sachs’ estimate).
Gross margin was broadly steady at 33.9% vs. 33.6% in Q1 26, reflecting the group’s pricing discipline (refraining from offering excessive discounts during the off-peak season in April-June), the company noted.
Goldman Sachs added, “Hainan’s DFS normalised to +5 year-on-year in Q2 26 (vs. +19%/+28% year-on-year in Q4 25/Q1 26) in the absence of a significant boost from government vouchers as in the prior two quarters.
“Against weak consumption sentiment, we still believe H2 26 DFS sales momentum will largely depend on whether the Hainan government will give out more cash vouchers as it did late last year and early this year.
“We now model +10% year-on-year Hainan DFS sales growth for CTGDF in H2 26, adding up to +15% for the full year (vs. +20% previously).”
Airport and online sales decline narrows despite weaker traffic
Goldman Sachs said international passenger traffic trends had largely normalised to pre-pandemic levels but Q2 had seen growth ease due to external circumstances.
Outbound international air traffic growth at three major airports (Shanghai Pudong, Beijing Capital and Guangzhou Baiyun) slowed further to +6% year-on-year in Q2 26 (vs. +17%/+13% in Q5 25 and Q1 26).
“This could also be attributed to heightened airfares in May-June (+30-40% year-on-year) based on fuel surcharges following the outbreak of the Middle East conflict,” the report said.
“On a positive note, after several consecutive quarters of decline, per-passenger spending at the airports has somewhat stabilised at RMB80-150 (US$11.50-22.16).
“Taking into account additional revenue contribution from its recently acquired DFS businesses in Hong Kong and Macau, revenue decline from CTGDF’s other channels (outside Hainan) narrowed to -18% year-on-year in Q2 26 (vs. -38% in Q1).”
Completed renovation of CDFG’s Mainland airport stores towards year-end should boost business, the report observed.✈
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