China Tourism Group Duty Free Corp. has fixed the share price of its upcoming secondary listing in Hong Kong at a 27 percent discount on the closing price of its mainland-traded stock yesterday, as the Chinese retailer of duty-free merchandise gears up for what could be Hong Kong’s biggest share offering this year.
CTG Duty Free will issue 102.8 million new shares on Hong Kong’s main board at HKD158 (USD20) each when it goes public on Aug. 25, the world’s largest retailer for travelers said yesterday. This could bring in a windfall of HKD16.2 billion (USD2 billion), nearly 20 percent more than that of electric car battery materials supplier Tianqi Lithium earlier this year.
Today, CTG Duty Free’s stock in Shanghai [SHA:601888] closed down 0.33 percent at CNY188 (USD27.60) apiece, giving it a market capitalization of CNY367 billion (USD54 billion).
Nine cornerstone investors have agreed to subscribe to HKD6.2 billion (USD795 million) worth of new shares in Hong Kong, the firm said. China's state mixed-ownership reform fund is leading participants with HKD1.2 billion, followed by South Korean cosmetics giant Amorepacific Corp. with HKD785 million (USD100 million) and Shanghai Airport Authority's investment arm with HKD777 million.
The funds will be used to expand CTG Duty Free’s chain of duty-free shops both at home and abroad as well as for other purposes, said the Beijing-based company, which accounts for 86 percent of China’s duty-free market. It will continue to make the most of the island getaway of Hainan’s offshore duty-free policies and strengthen its competitive advantages among branded suppliers.
Duty-free sales accounted for 63.4 percent of CTG Duty Free’s revenue last year, according to its 2021 financial report. Perfumes made up 34.1 percent of its sales, fashion 26 percent, cigarettes 2.7 percent and liquors and foods 0.6 percent.
But a string of Covid-19 outbreaks in the first six months greatly dampened tourism, hammering earnings. Net profit plunged 26.5 percent in the first half from the same period last year to CNY3.9 billion (USD578.5 million) while revenue tumbled 22.2 percent to CNY27.7 billion (USD4.1 billion).
