Goldman Sachs: Lowering target price for China Duty Free AH shares, lowering earnings per share forecast.

Goldman Sachs released a research report stating that China International Travel Service Corporation (CITS) achieved a 21% increase in net profit to 2.35 billion yuan in the first quarter under a low base last year, reaching 44% of the bank's full-year forecast. This progress is slightly lower than the historical seasonal level of more than 50% for the same period between 2023 and 2025. During the period, EBIT increased by 9% to 2.7 billion yuan year-on-year, implying a year-on-year expansion of 1.2 percentage points in profit margin to 15.9%, mainly due to a 7% year-on-year decline in sales and administrative expenses, and an increase in gross profit margin from 33% in the first quarter of last year to 33.6%. This is mainly attributed to the appreciation of the Chinese Yuan against the US Dollar and Euro, which is beneficial for the performance of imported products. Taking into account the decline in airport duty-free shop sales and the impact of completing the allotment of shares to LVMH, the bank has downgraded its earnings per share forecast for 2026 to 2028 by 5% to 6%, reducing the A-share target price from 77 yuan to 73 yuan and the H-share target price from 67 Hong Kong dollars to 64 Hong Kong dollars, with a "neutral" rating.