Key Takeaways
Bank of America Securities cut its price target for China Duty Free Group by 10% to RMB 85, citing signs of peaking growth after the company’s first-quarter revenue missed the bank's expectations.
BofA believes duty-free sales growth may have peaked in the first quarter, with limited room for a re-rating on the stock, the bank said in a research report.
The firm maintained its Neutral rating on the A-shares of the company. The new price target is based on a 35x price-to-earnings multiple on BofA's revised 2026 earnings forecast, which was cut by 10% to reflect the first-quarter results.
The downgrade reflects concerns that even with a 21% rise in first-quarter core net profit to RMB 2.3 billion, the underlying sales momentum is slowing. While Hainan sales grew 28% to RMB 12.6 billion, this implied declines in airport and online sales during the quarter, BofAS noted.
For investors, the Neutral rating suggests the stock offers a balanced risk/reward profile at current levels with limited upside catalysts. The focus now shifts to whether the company can find new growth drivers to offset the perceived slowdown in core duty-free demand.
This article is for informational purposes only and does not constitute investment advice.
