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Tax-Free Giant CDF Falls Despite Biggest USD2 Billion Hong Kong Listing Plan in 2022
Dou Shicong
DATE:  Aug 16 2022
/ SOURCE:  Yicai
Tax-Free Giant CDF Falls Despite Biggest USD2 Billion Hong Kong Listing Plan in 2022 Tax-Free Giant CDF Falls Despite Biggest USD2 Billion Hong Kong Listing Plan in 2022

(Yicai Global) Aug. 16 -- Shares of China Tourism Group Duty Free dropped despite its new ambitious plans as the world’s largest tax-free retailer is expected to launch Hong Kong's biggest listing this year.

CDF’s mainland-listed stock price [SHA: 601888] closed 2.4 percent down at CNY190.18 (USD28). The company's shares are more than 10 percent down this year.

The travel retailer intends to offer 102.8 million shares during the four-day global offering to gain HKD15.5 billion (USD2 billion) in net proceeds, the Beijing-based firm said in its prospectus yesterday. The equity is priced between HKD143.5 and HKD165.5 (from USD18.30 to USD21.10). The shares are expected to start trading on Aug. 25.

If a greenshoe option is fully exercised, proceeds from the secondary listing will increase to HKD17.9 billion, it added. After the share sale, state-owned China Tourism Group will hold a 50.6 percent stake in CDF, remaining the controlling shareholder.

CDF will invest almost half of the money in the domestic market, enlarging duty-free shopping malls in southern Hainan province’s Haikou and Sanya. More than a fifth will be spent on overseas expansion. Almost 14 percent will be used to improve supply chain efficiency, and the remainder will be earmarked for technical upgrades, marketing, and working capital replenishment.

The seller of luxury products will fully take advantage of the offshore duty-free policy to strengthen its existing retail network while exploring emerging channels, it said.

The company has retained a strong market share during the Covid-19 pandemic. CDF’s revenue ranked first among global travel retailers in the past two years. Its global market share reached 24.6 percent last year and its domestic equivalent was 86 percent, the prospectus said, citing data from Frost & Sullivan.

However, CDF has also been affected by the most recent Covid-19 outbreaks in China. In the first half of this year, the company's net profit slumped 27 percent to CNY3.9 billion (USD574.9 million) from a year ago, according to its earnings report. Its revenue fell 22 percent to CNY27.7 billion (USD4.1 billion).

Editor: Emmi Laine, Xiao Yi

 

 

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Keywords:   China Tourism Group Duty Free,Hong Kong,Secondary Listing