CITS Alert:2016duty free sales up 13.9%yoy

2016 duty free sales increased 13.9% yoy

    On Feb 6, the Ministry of Commerce (MOFCOM) released 2016 Hainan duty free sales (Sanya + Haikou). 2016 duty free sales growth was 13.9% yoy.

    Based on MOFCOM data, 2016 duty free sales grew 13.9% yoy to RMB6.09bn from RMB5.35bn in 2015, and number of customers increased 12.1% yoy to 1.85m. This implies a 1.8% yoy expansion in ticket price to RMB3,298.

    As CITS resumes the rebate to local travel agencies in May and June 2016, we believe sales growth will rebound in 4Q16. As we can see in the chart below, sales in 4Q16 showed strong rebound from flattish 3Q and negative yoy 2Q.as we expected.

    In our view, given the promotion effort and accumulated demand, we expect 2017 duty free sales will keep a double digit growth (c.11% yoy).