Daigou stabilizes in the second quarter (brief performance review)
After the market closed on July 28th, China Duty Free Group (CDFG) released its first-half unaudited financial report for 2022, providing a brief overview of its financial data. The main points are as follows:
1. The overall performance is "weak," which is reasonable.
In H1 2022, the company's operating income was RMB 27.6 billion, a 22% YoY decrease; net profit attributable to shareholders was RMB 3.938 billion, a 26% YoY decrease; and net profit margin attributable to shareholders was 14.2%.
Calculations show that in Q2 2022, the company achieved operating revenue of RMB 10.868 billion, a 38% YoY decrease; net profit attributable to shareholders was RMB 1.374 billion, a 45% YoY decrease; and net profit margin attributable to shareholders was 12.6%. Excluding the lease contract return, CDFG's operating profit in Q2 is approximately RMB 600-700 million.
Considering that the number of tourists to Hainan in Q2 2022 decreased significantly due to the pandemic, with outbound flow at Hainan Airport decreasing by 79% and 66% for May and April, respectively, and a cumulative decrease of 37% for H1 2022, CDFG's sales decline was better compared to the decline in passenger traffic. Therefore, although CDFG's performance in this quarter was poor, it is not disappointing compared to market expectations.
2. The profit level holds steady, better than expected.
In H1 2022, the company's gross profit margin improved 5.5pct from H2 2021, increasing to 34%. The converted gross profit margin for Q2 2022 is also approximately 34%, unchanged from the previous quarter. Although sales and passenger traffic in Q2 decreased significantly, CDFG maintained its gross profit margin and is one of the standout performers this quarter.
In addition, removing the lease contract, CDFG's non-GAAP net profit in Q2 2022 is between RMB 600-700 million, corresponding to a net profit margin slightly higher than 6%, similar to the level in Q4 2021. Consideration the impact of the pandemic is higher than Q4 last year, the resilience of the net profit margin is better than expected.
3. Passenger flow is recovering, and sales are beginning to rebound.
As the impact of the pandemic fades, Hainan's passenger traffic has begun to rebound. In June, the throughput of Sanya and Haikou airports has recovered to 63% of the same period last year. CDFG's sales also rebounded significantly in June, with a YoY growth of 13%. As of July 25, the number of inbound passengers to Sanya and Haikou airports has recovered to 91% and 66% of last year, respectively, further demonstrating the recovery.
Dolphin Analyst's view: Overall, CDFG's performance in Q2 under the severe impact of the pandemic has been more resilient than expectations. As the impact of the pandemic fades, passenger traffic and sales in the second half of the year will undoubtedly rebound. However, the aforementioned progress has been largely digested by the market. Dolphin Analyst believes that the key drivers of CDFG's performance and stock price in the future are: 1. the strength of the rebound in passenger traffic in the second half of the year and beyond, whether it will recover or grow; 2. With licensing barriers loosening and CDFG and competitors having new malls in Hainan under operation, whether CDFG's market share and corresponding gross margin can be stabilized or improved; and 3. As seen above, CDFG's sales growth rate has always been higher than the growth rate of passenger traffic, indicating that the conversion rate or customer unit price is improving. Therefore, whether CDFG can continue to introduce high-quality branded goods to promote the customer unit price is crucial. <正文完>
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