(Yicai) Aug. 25 -- Shares of China Tourism Group Duty Free sank after profit at the country’s biggest duty-free retailer dipped in the first six months from a year earlier because the cost of renting airport outlet space soared.

CTG Duty Free [SHA: 601888] closed down 4 percent at CNY107.50 (USD14.70) a share today. The benchmark Shanghai Composite Index came off 0.6 percent. The stock has halved in value since the end of last year.

Net profit fell 1.8 percent to CNY3.9 billion (USD535.2 million) in the six months ended June 30, the Beijing-based company said in a semi-annual earnings report released yesterday. Revenue jumped 30 percent to CNY35.9 billion (USD4.9 billion).

As outbound tourism bounced back, sales at CTG Duty Free’s brick-and-mortar stores picked up, but airport shop rents led to a 126 percent jump in its cost of sales to CNY4.3 billion (USD590 million).

The recovery of international travel is still quite slow, and airport outlets in limbo for three years, still need time to recover as do their supply chains, it said.

The tax-free shopping giant also faces growing competition as it becomes easier for both Chinese and foreign firms to apply for a duty-free license in the country. CTG Duty Free will continue to expand its footprint in airports at home and overseas and focus on its business in big Chinese cities, the getaway island of Hainan province, and online channels, the report said.

First-half net cash flow was CNY8.6 billion (USD1.2 billion), versus minus CNY3.4 billion in the same period last year. The company gave no details about customer numbers nor shop performance.

Editor: Kim Taylor