FAST NEWS: BlackRock cuts CTG Duty Free’s H shares

The Latest: Asset management company BlackRock Inc. disclosed it sold about 1.64 million Hong Kong-listed shares of China Tourism Group (CTG) Duty Free Corp. Ltd. (1880.HK; 601888.SH) on Jun. 13, reducing its stake in the duty-free store operator from 6.26% to 4.84%, according to a new Hong Kong Stock Exchange filing.

Looking Up: The sale dropped BlackRock’s CTG Duty Free stake below the 5% threshold that requires future disclosure of any changes in its holdings, meaning it won’t need to report any further sales.

Take Note: Such stake reductions by a major investor are generally considered a negative signal, possibly showing a lack of optimism on the company’s prospects.

Digging Deeper: CTG Duty Free is a leader in China’s duty-free market with roughly 200 shops, and has benefited from the relaxation of duty-free shopping limits on the southern vacation island of Hainan in 2020. The company was first listed in Shanghai in 2009. It raised HK$18.4 billion ($2.34 billion) through a second listing in Hong Kong last August, in the city’s biggest IPO of the year. Although the company’s revenue and earnings returned to an upward trajectory last year, its frequent management changes in recent years, coupled with a 9.5% drop in revenue and only a 0.3% rise in profit in the first quarter of this year, have raised concerns about a slowdown in its growth.

Market Reaction: CTG Duty Free’s Hong Kong shares dropped on Wednesday, closing down 1.7% to HK$53.4 at the midday break, hitting a 52-week low.

Translation by A. Au

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