Outburst! The chairman died of illness, and what will happen to China
On October 15, China Tourism Group China Exempt Co., Ltd. (hereinafter referred to as "China Exempt") released an obituary that Li Gang, the company's chairman and legal representative, passed away due to illness. However, China faces more than just internal worries. From the latest release of the first three quarters of the financial report, although the net profit of revenue has doubled, it is difficult to hide the situation of low stock prices and lack of investment confidence. At the moment, the successor to the chairman of China Exempt has not been announced, but what is left to the new manager is how to face the diversion of the overseas duty-free market and further increase investor confidence.
(Image source: Oriental Fortune screenshot)
He has been in office for less than nine months
On October 15, China Exempt issued an obituary on the death of the chairman, and Li Gang, chairman and legal representative of China Exempt, passed away due to illness on October 14, 2023.
The announcement said that Li Gang did not hold shares in the company. After Li Gang's death, the number of directors of the company was not lower than the minimum number of directors stipulated in the Company Law. The company's directors, supervisors, senior management and all employees will continue to be committed to promoting the sustainable and healthy development of the company. In response to the death of the chairman, China Exempt said in an interview with a reporter from Beijing Business Daily that the company's normal business activities will not be affected, and further information should be subject to the official announcement of the listed company.
For Li Gang's death, the industry also deeply regrets. It is reported that Li Gang has been in office for less than 9 months. In February this year, China Exempt issued an announcement that Peng Hui applied to resign as chairman and director of the company's fourth board of directors due to retirement, and also resigned from the company's fourth board of directors strategy committee and nomination committee. The company elected Li Gang as the chairman of the fourth board of directors, the chairman of the strategy committee of the board of directors and a member of the nomination committee of the board of directors. Li Gang, who succeeded Peng Hui, was the deputy general manager of China Tourism Group, and before the name change in China, Li Gang served as chairman of China International Travel Service Co., Ltd. (hereinafter referred to as "China International Travel Service", "the former name of China China National Exemption") from March 2017 to August 2019.
During Li Gang's tenure, China Exempt ushered in the adjustment of the membership system, and the new membership rights and interests were officially implemented on June 8. At the same time, according to past media reports, Li Gang and Peng Hui are key figures in promoting the transformation and implementation of CTS to duty-free business. Among them, China International Travel Service's acquisition of Sunrise Duty Free, the layout of duty-free business at major airports, and the establishment of a joint venture with Lagardère, a well-known French travel retailer, to invest in the tobacco and alcohol operation of Hong Kong International Airport, were all decisions made by Li Gang during his tenure as chairman of China International Travel Service.
(Image source: Oriental Fortune screenshot)
Behind the slight increase in performance
The chairman passed away, and the new commander was undecided. For China, which is in the period of performance recovery, it has undoubtedly increased the difficulty.
Not long ago, China Exempt released the announcement of the first three quarters of 2023. From the financial report, China Exempt achieved a total operating income of 50.837 billion yuan, a year-on-year increase of 29.14%; The net profit attributable to shareholders of the listed company was 5.199 billion yuan, a year-on-year increase of 12.33%. Among them, the operating income in the third quarter was 14.979 billion yuan, a year-on-year increase of 27.87%, and the net profit attributable to shareholders of the listed company was 1.333 billion yuan, a year-on-year increase of 93.19%. Although the net profit of revenue in the first three quarters increased double, compared with the growth rate of the tourism market liberalized after the epidemic, its performance is also difficult to say that the growth rate is significant.
At the same time, the performance also affects its capital market investment confidence. As of October 15, the share price of China Exempt A shares was only 97.18 yuan per share, with a total market value of 201.1 billion yuan, while in February this year, the share price of China Exempt exceeded 200 yuan per share, with a market value of more than 400 billion yuan.
According to Wang Xingbin, a senior tourism expert, the resumption of outbound tourism has given tourists more channels to purchase duty-free goods, which will inevitably divert the domestic duty-free market on outlying islands, and the number of inbound tourists has not yet recovered, and the number of duty-free goods purchased by tourists on outlying islands will be affected to a certain extent.
Zhou Ting, president of the VIP Research Institute and a luxury expert, pointed out that in the past three years, the luxury market has grown rapidly in China, mainly due to the consumption of high-end Chinese consumers. After structural changes in the past three years, China's consumer market has become two types of consumers, one is mass consumers and the other is high-end consumers. Although high-end consumers continue to spend, due to various reasons, the growth rate of consumption is also slowing down, and now it has begun to enter a period of steady growth. Mass consumers, on the other hand, have seriously reduced their spending power in the luxury sector, or even do not consume.
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Outlying islands are under pressure to be tax-free
For the next development of China, one cannot help but ask: who will be the next successor? Where does the future hold?
In response to an interview with a reporter from Beijing Business Daily, China Exempt said that at present, the company's relevant positions are vacant, and the company's board of directors will be selected in strict accordance with relevant regulations and decision-making process requirements.
Although China has not disclosed a new chairman candidate, there are many problems facing the new chairman in the future.
As more and more players enter the duty-free market, China's share of duty-free Hainan Islands is also at risk of being squeezed. In the first half of this year, Wangfujing International Duty-free Port was officially opened in Wanning, Hainan, which also increased the number of duty-free players on outlying islands.
Wang Xingbin also pointed out that if the domestic duty-free group does not take the domestic duty-free goods as the main sales content, it has no advantage in terms of price and variety to compete with the international duty-free group, so the duty-free goods produced in China will need a certain degree of competitiveness in the future.
Although the pressure is accumulating, China Exempt is still struggling to expand. It is understood that in early September, the second phase of CDF Sanya Phoenix Airport duty-free shop was officially opened. For the next development, China Exempt also said that the company's current operation is stable and improving, the gross profit margin is improving against the trend, and major projects such as Haitang Bay Phase I and No. 2 are steadily advancing.
China Exempt will still face challenges in the future, and how to further boost its own performance is a test left to the new chairman. As the leader of China's duty-free goods enterprises, the current situation faced by China Duty Free also reflects the situation of the entire domestic duty-free market to a certain extent, and China's duty-free market still has a long way to go.
Beijing Business Daily reporter Wu Qiyun