1880.HK 601888.SHG
CTG Duty Free is a leader in China’s duty-free market with roughly 200 shops.

The Latest: U.S. banking giant JPMorgan purchased about 126,000 Hong Kong-listed shares of China Tourism Group (CTG) Duty Free Corp. Ltd. (1880.HK; 601888.SH) on April 10, raising its stake in the duty-free store operator from 7.89% to 8%, according to a new Hong Kong Stock Exchange filing.

Looking Up: Such an increase by a major institutional buyer is usually a favorable sign, implying the investor is positive on the company’s prospects and believes the stock may have some upside.

Take Note: The average price per share for JPMorgan’s increased stake was HK$72.94. The stock last closed at HK$66.95 on Tuesday, meaning JPMorgan has already lost 8.2% on the investment.

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. The company’s earnings returned to an upward trajectory last year with the end of China’s strict pandemic restrictions. But frequent changes in its management in recent years, coupled with the sudden death of Chairman Li Gang last October, less than nine months after assuming the position, may cause some market concerns and weigh on the company’s shares.

Market Reaction: CTG Duty Free’s Hong Kong shares dropped on Tuesday, closing down 1.6% to HK$66.95 at the midday break. The stock now trades near the lower end of its 52-week range.

Translation by A. Au

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