CDF Submitted a Listing Application to the HKEx for the Second Time
- Chaileedo Press
- Jul 3, 2022
- 3 min read
CDF submitted a listing application to the Hong Kong Stock Exchange for the second time, with CICC and UBS as joint sponsors. According to the prospectus, in 2021, CDF accounted for 24.6% of market share of the global travel retail industry , ranking first in the world.
On June 30, China Standard Time ( this article is China Standard Time), China Tourism Group CDF (hereinafter referred to as "CDF"), China's duty-free giant, submitted a listing application to the Hong Kong Stock Exchange for the second time. The listing had been completed in A-shares, but the listing in Hong Kong this time meant that CDF would become a member of AH-shares. In addition, China International Capital Corporation and UBS Group acted as joint sponsors.
CHAILEEDO learned that CDF passed the listing hearing as early as November 22, 2021, but then CDF A-shares issued an announcement saying that due to factors such as the Covid-19 pandemic, the global economy had been greatly impacted, and the capital market continued to subdue, and the company decided to suspend the process of this H-share issuance and listing, and the follow-up arrangements would be determined according to market conditions.
According to the prospectus, CDF was established in 1984 and has grown into the world's largest travel retail operator. According to Frost & Sullivan, in terms of sales revenue, CDF's global ranking has continued to improve over the past 10 years, from 19th in 2010 to 12th in 2015, and fourth in 2019, and finally ranked global first in 2020 and 2021. In 2021, CDF accounted for 24.6% of the market share of the global travel retail industry.
At present, CDF operates a total of 193 stores, 184 of which are located in 100 cities in 28 provinces, municipalities and autonomous regions in China, and 9 overseas duty-free stores. According to the latest statistics, from 2019 to 2021, CDF's airport duty-free shops have served more than 2.2 billion passengers.
In terms of financial data, in 2019, 2020 and 2021, CDF’s revenue was US$7.168 billion, US$7.853 billion and US$10.104 billion respectively; net profit was US$817 million, US$1.061 billion and US$1.857 billion respectively. From 2019 to 2021, CDF's revenue grew at a CAGR of 18.7%, while its net profit grew at a CAGR of 50.8%.
In terms of channels, CDF has established the only duty-free logistics and distribution system in China covering the whole country and has established direct procurement channels for more than 430 suppliers and more than 1,200 brands worldwide. Until March 31, 2022, CDF has more than 1,200 cooperative brands and more than 316,000 SKUs, covering fragrances, fashion products and accessories, etc. The cooperative brands include L'Oreal Paris, Lancome, Estee Lauder, Sulwhasoo, Dior, Shiseido, etc.
With the upgrading of consumption in China, the demand for high-end cosmetics among Chinese outbound tourists has grown rapidly in recent years, driving the rapid growth of the sales revenue of the global duty-free fragrance category. According to the prospectus, in 2021, CDF China reached a sales revenue of US$3,446.28 million in tax-free fragrance products, becoming its largest source of revenue in 2021. As for the global tourism retail market of fragrance products, CDF has a market share of about 18.0%, ranking first among all duty-free operators in China.
According to the prospectus, the funds raised by CDF will be used to consolidate Chinese channels and expand international channels, including investing in 8 airport duty-free shops, 20 other port duty-free shops and 20 taxed tourism retail projects, and opening 6 international duty-free shops in cities, as well as 11 domestic duty-free shops in cities, 6 cruise duty-free shops, and to renovate and expand Haikou/Sanya International Duty Free City. At the same time, CDF also plans to selectively acquire 2-3 international travel retail operators to improve the efficiency of the supply chain and improve the membership system.
According to the analysis by Western Securities, a Chinese securities management institution, CDF’s strategic intention is still relatively obvious, that is, in the future, international layout, extensional mergers and acquisitions, and industrial chain extension will be important directions for the company’s strategic layout. If the subsequent issuance becomes successful, it will significantly increase the company's capital scale. The company hopes to make positive progress in the development of overseas channels in the future, including investment and M&A opportunities for tax-free operators and upstream brand owners.
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