Morgan Stanley reduced its price target for CTG Duty-Free (1880.HK) to HKD77, citing slower-than-expected duty-free sales growth on the island of Hainan during March and April.
"Hainan duty-free sales in March were slower than expected, while April data showed further deceleration in growth," a Morgan Stanley research report said. The bank maintained its Equalweight rating on the stock.
The investment bank lowered its earnings-per-share forecasts for 2026-2027 by 6-7% and cut revenue forecasts by 13% for each year. Based on the new target and the stock's recent price of HKD60.65, the bank's forecast implies a potential upside of approximately 27 percent.
The adjustment reflects concerns over the strength of Chinese consumer spending, a key driver for the global luxury and travel retail sectors. The report's bearish outlook contrasts with recent efforts by local authorities to stimulate demand. Hainan's government recently partnered with Trip.com to launch a $730,000 flight voucher program to attract international tourists, according to a press release.
The downgrade puts a spotlight on the near-term challenges for CTG Duty-Free, the world's largest travel retailer. While the Equalweight rating suggests Morgan Stanley does not advise selling the shares, the reduced forecasts signal a more cautious stance. Investors will be closely watching for May sales data from Hainan to gauge whether the recent slowdown persists or if promotional efforts are gaining traction.
This article is for informational purposes only and does not constitute investment advice.
