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<Research>HTSC:CTG DUTY-FREE (01880.HK) Plans to Acquire DFS HK/ MO, Partner with LVMH to Enhance Synergy; Rating Kept at Buy
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CTG DUTY-FREE (01880.HK) recently announced that its indirect wholly-owned subsidiary, China Duty Free International (CDFI), plans to acquire 100% equity of DFS Cotai Limitada and related assets of DFS Greater China held by DFS SG and DFS HK for no more than US$395 million in cash, Huatai Securities published a research report saying. Meanwhile, upon completion of the transaction, CDFI will issue no more than 7.33 million and 4.64 million H-shares to Delphine SAS, an indirect wholly-owned subsidiary of LVMH, and Shoppers Holdings HK, a trustee of the Miller Family respectively, at a subscription price of $77.21 per share, with a total consideration of up to $924 million. After the additional share offering, CTG's shareholding in CTG DUTY-FREE decreased to 50.01%. The broker believed that this acquisition holds larger strategic importance for CTG DUTY-FREE, including consolidating its market position and scale, facilitating further integration of quality travel retail networks, acquiring core benchmark store resources in Hong Kong and Macau, expanding local market share, and enhancing performance. The improvement in synergy effect, such as integrating DFS brand and membership systems, is expected to leverage its mature operational experience to improve efficiency and build a platform for Chinese goods to go global through the Hong Kong and Macau window. Considering that previous policy tailwinds are gradually translating into corporate profits, reducing the premium rate, Huatai Securities raised its target prices for CTG DUTY-FREE's A-/ H-shares to RMB115.75/ $104.36, corresponding to 2026 PE ratios of 46x/ 38x each, with ratings kept at Buy. AASTOCKS Financial News Website: www.aastocks.com |
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