China Duty Free Group (CDFG) parent company, China Tourism Group Duty Free Corporation Limited (CTG) is seeking up to HK$17 million/$2.17 billion (based on the offer price of HK$165.50 per H share) in its second public listing with the Hong Kong Stock Exchange after officially launching on Friday.

 

Reporting $10bn in sales from its duty free and duty paid operations combined in 2021, the leading travel retailer’s network consists of 193 stores in total; 184 of which are located in China.

 

As reported, the company is already listed on the Shanghai Stock Exchange and planned to list in Hong Kong last year, with expectations that it could raise in the region of $5bn at the time. However, this was postponed due to widely reported market volatility.

 

In what is being touted as the largest offering of the year for Hong Kong, CTG is initially offering 5,138,200 shares, representing approximately 5% of the total number that will be available under the Global Offering.

 

Books are open from Friday until the 18 August, when shares are expected to be priced, according to Bloomberg analysts.

 

 

Recent developments

Reporting on ‘recent developments’ in an online prospectus document, CTG outlined its response to the arrival of the Omicron Covid variant in early 2022, which resulted in ‘control measures’ being implemented.

 

“The COVID-19 pandemic situation in China in March, April and May 2022 was more severe as compared to 2021 and 2020 due to clusters in multiple regions simultaneously. As a result, increased pandemic control measures, including strengthened travel restrictions, were introduced.

 

“Our business and operations faced disruptions and our total revenue decreased by RMB7,875.2 million, or 22.2%, from RMB35,526.0 million for the six months ended June 30, 2021 to RMB27,650.8 million for the six months ended June 30, 2022.

 

“Our […] sales decreased by RMB3,632.3 million, or 16.5%, from RMB22,065.3 million for the six months ended June 30, 2021 to RMB18,433.0 million for the six months ended June 30, 2022.

 

“Our gross profit decreased by RMB4,242.9 million, or 31.5%, from RMB13,460.7 million for the six months ended June 30, 2021 to gross profit of RMB9,217.8 million for the six months ended June 30, 2022.”

 

CTG has entered into agreements with nine cornerstone investors who have agreed, subject to certain conditions, to “subscribe for such number of Offer Shares (rounded down to the nearest whole board lot of 100 H Shares), which may be purchased for an aggregate amount of approximately HK$6,238 million at the Offer Price,” said CTG.

 

Those investors are: AMOREPACIFIC Group; China State-Owned Enterprise Mixed Ownership Reform Fund Co. Ltd; China Structural Reform Fund Corporation Limited; COSCO Shipping (Hong Kong) Co., Limited; Hainan Free Trade Port Construction Investment Fund Co., Ltd; Luzhou Laojiao Co., Ltd; The Oaktree Funds; Rongshi International Holding Company Limited and Shanghai Airport Investment Corporation Limited.