Broker Name: CGS International
Date of Report: July 22, 2025

China Tourism Group Duty Free and Trip.com: Hong Kong Retail Trends, Technical Analysis, and Market Opportunities

Market Recap: A Volatile Start to the Week

Global equities entered a week marked by high corporate activity and geopolitical tension. In the U.S., the S&P 500 closed above 6,300 for the first time, albeit with marginal gains of just 0.1%. Market sentiment was cautious as investors weighed upcoming earnings, especially from tech giants such as Tesla and Alphabet, and monitored tariff risk with the potential for more unilateral tariff letters from the Trump administration before August 1. Treasuries saw gains, particularly in longer maturities, with the 30-year yield falling four basis points to 4.95%. The U.S. dollar weakened across developed market peers, while the yen strengthened following political developments in Japan.

Trip.com: Strong Summer Travel Outlook Despite Competitive Pressures

• Domestic travel market revenue and outbound travel revenue are expected to rise by mid-to-high single digit and mid-to-high teen year-on-year percentages, respectively, during the summer holidays (July 1 – August 31, 2025).
• Recent increases in OTA (online travel agency) subsidies by JD and Douyin are not anticipated to affect Trip.com’s market share due to the company’s robust positioning in the high-end hotel segment.
• For Q2 2025, Trip.com’s revenue is forecasted to increase by 14.5% year-on-year. However, non-GAAP net profit is projected to decline by 10.3% year-on-year, a result of aggressive overseas expansion strategies.
• The broker maintains an “Add” rating with an unchanged DCF-based target price of HK\$588.0, using a WACC of 10.1% and terminal growth of 3%.

China Tourism Group Duty Free Corp Ltd (1880): Signs of a Technical Bottom

Company Overview: China Tourism Group Duty Free Corp Ltd is a leader in duty free and tax goods sales, offering a product range that spans tobacco, wine and spirits, perfume, cosmetics, fashion and accessories, watches, jewelry, food, luggage, and more. The company is also active in the investment and development of tourism destination commercial complexes.

Technical Analysis Snapshot

Key Technical Observations:

• The stock price has broken out from a diamond bottom formation, indicating a potential strong reversal.
• Prices have established a higher low, suggesting bullish momentum.
• The Ichimoku Cloud signals a strong bullish trend.
• The MACD histogram is positive, and both the MACD and signal lines are rising steadily toward the zero line.
• The Stochastic Oscillator is rising, supporting upward momentum.
• The 23-period Rate of Change (ROC) remains positive.
• The Directional Movement Index indicates growing bullish strength.
• Volume trends are robust and healthy, underlining improved market participation.

Broker’s Recommendation and Ratings Framework

For China Tourism Group Duty Free, the technical setup implies a potential for significant upside with multiple target levels outlined. The broker’s ratings are as follows:

• Add: Expected total return exceeds 10% over the next 12 months.
• Hold: Expected total return between 0% and 10% over 12 months.
• Reduce: Expected total return below 0% over 12 months.

The total expected return combines price appreciation and forward net dividend yields, with 12-month price targets in view.

Sector and Country Ratings Methodology

• Overweight: Sector/country is recommended for above-market weighting versus benchmarks.
• Neutral: Sector/country is recommended for market-level weighting.
• Underweight: Sector/country is recommended for below-market weighting.

Rating Distribution Snapshot (as of June 30, 2025)

There are 561 companies under coverage for the quarter ended June 30, 2025.

Key Takeaways for Investors and Market Watchers

• China Tourism Group Duty Free Corp Ltd shows technical signals of bottoming out, with multiple upside targets and expanding volume, making it an attractive technical buy for investors focused on Hong Kong retail.
• Trip.com is poised for growth in both domestic and outbound travel during the summer season, with strong revenue prospects offset by profit pressure from overseas expansion. Its competitive edge in the high-end segment helps insulate it from increased OTA subsidies by rivals.
• Investors should monitor macro risks such as evolving U.S. tariffs and geopolitical developments which may influence sector volatility and earnings guidance.
• CGS International’s ratings framework and distribution show a positive bias, with the majority of covered stocks rated as “Add,” highlighting the broker’s bullish stance on select opportunities in the Hong Kong retail and travel sectors.

For a comprehensive view of Hong Kong retail equities, investors should consider both technical and fundamental signals, while staying alert to global macroeconomic and policy changes that could impact sector performance.