Macquarie slightly lowered its target price in China, from HK$116 to HK$115, 25 times the projected price-earnings ratio for this year. The bank also lowered its net profit forecast for this year to 2026 by 0.8% to 1% to reflect the company's initial results for the first quarter of this year. According to the bank, China's revenue for the first quarter of this year fell 9% year-on-year, but it is far superior to the 20% to 30% year-on-year drop in sales in the Hainan offshore duty-free shop business, reflecting a significant improvement in the airport duty-free business. The net interest rate in Shanghai improved from balance of payments in the first half of last year to 2.6% in the second half of last year. It is believed that the renewal of airport leasing contracts this year, completion of inventory removal, price adjustments, and product improvements will lead to a strong recovery in business.
The bank also said that the company's gross margin for the first quarter of this year rose 0.7 percentage points to 32.7% on a quarterly basis. The channel survey showed that Hainan cosmetics inventory decreased by one-third compared to last year, in line with the positive outlook for the Asian travel retail business in the second half of this year. As more luxury brands open stores in Haikou International Duty Free Mall, management has a positive view of the center's growth potential.