CTG Duty Free senior management celebrates the offer. In the photo, from left to right, Yu Hui, accountant general; Wang Xuan, permanent deputy general manager; Peng Hui, Chairman of the Board and Executive Director; Chen Guoqiang (Charles Chen), executive director and general manager and chairman of CDFG; and Chang Zhujun, deputy general manager, secretary of the board of directors and joint secretary of the company

Source: CTG excluding taxes; Click on the image to enlarge

HONG KONG, CHINA. China Tourism Group Duty Free Corporation Limited, parent company of China Duty Free Group (CDFG), today disclosed full details of its global offering and H-share listing on the Hong Kong Stock Exchange.

China Tourism Group Duty Free Corp (CTG Duty Free) was established in 1984. In 2020, CDFG became the world’s top travel retailer by sales, according to Moodie Davitt Report’s benchmark annual ranking of top travel retailers. .

CTG Duty Free said it had a 24.6% market share of global travel retail in 2021, citing a recent Frost & Sullivan report. “The company has developed the travel retail business in China with duty free as its main strength and is looking to expand its global presence,” the group said.

Here are the main details of the offer:

  • CTG Duty Free plans to offer a total of 102,761,900 H-Shares (subject to the Over-allotment Option) in the Global Offering, including 97,623,700 H-Shares (subject to adjustment and Over-Allotment Option) will be offered as part of the International Offer, and 5,138,200 H Shares (subject to adjustment) will be offered as part of the Public Offer in Hong Kong. The Offer Price will not be more than HK$165.50 per H Share and it is currently expected that it will not be less than HK$143.50 per H Share.
  • The Hong Kong public offering began on Monday August 15 and is expected to close at 12:00 p.m. (11:30 a.m. to complete electronic applications under the White Form eIPO service) on Thursday August 18. Trading in H-Shares on the main board of the Hong Kong Stock Exchange is scheduled to commence on Thursday, August 25, 2022. H-Shares will trade in board lots of 100 H-Shares each.
  • Assuming that the Offer Price is HK$154.50 per Share (being the midpoint of the Offer Price range between HK$143.50 and HK$165.50 per H-Share), the Company estimates that it will receive net proceeds of approximately HK$15,538.0 million [circa US$1.99 billion at today’s exchange rate -Ed] of the Global Offering after deduction of underwriting commissions and other fees to be paid. The Company intends to use the net proceeds of the Global Offering as follows:

➢ Approximately 48.8%, or HK$7,579.2 million, will be used to strengthen its domestic circuits, including, (i) approximately 3.0%, or HK$465.8 million, will be used to invest in duty-free shops at major airports; (ii) approximately 0.7% or HK$116.5 million will be used to invest in other port duty free shops; (iii) approximately 3.7%, or HK$582.3 million, will be used to invest in duty-paid travel retail projects; and (iv) approximately 41.3%, or HK$6,414.6 million, will be used to invest in offshore stores and downtown duty-free shops;

➢ Approximately 22.5%, or HK$3,493.7 million, will be used to expand overseas channels, of which, (i) approximately 8.2%, or HK$1,281.0 million, will be used to open downtown stores overseas; (ii) approximately 4.5% or HK$698.7 million will be used to expand its overseas port stores; (iii) approximately 2.2%, or HK$349.4 million, will be used to expand its stores on more cruise ships; and (iv) approximately 7.5% or HK$1,164.6 million [US$148.6 million at current exchange rates -Ed]will be used to selectively pursue acquisitions of overseas travel retail operators;

➢ approximately 13.5%, or HK$2,096.2 million, will be used to improve supply chain efficiency, of which (i) approximately 6.7%, or HK$1,048.1 million Hong Kong dollars, will be used to invest in the development of its logistics centers; (ii) approximately 1.5% or HK$232.9 million will be used to upgrade its existing supply chain; and (iii) approximately 5.2%, or HK$815.2 million, will be used to consolidate its upstream supply systems;

➢ approximately 1.5% or HK$232.9 million will be used to upgrade the information technology system;

➢ approximately 3.7% or HK$582.3 million will be used for marketing and further improving its customer loyalty program, of which, (i) approximately 2.2% or 349.4 million HK dollars, will be used for marketing, and (ii) approximately 1.5%, or HK$232.9 million, will be used to grow its membership system by attracting new customers to join its customer loyalty program and to enhance the benefits of membership for its existing members;

and ➢ approximately 10.0% or HK$1,553.8 million will be used for working capital and other general corporate purposes.

CTG Duty-Free confirmed earlier reports that it had secured nine high-profile investors:

  • Chinese State-owned Enterprise Mixed Ownership Reform Fund Co., Ltd
  • Amore Pacific Group
  • COSCO Shipping (Hong Kong) Co., Limited
  • Rongshi International Holding Company Limited
  • Shanghai Airport Investment Company Limited
  • Luzhou Laojiao Co., Ltd.
  • China Structural Reform Fund Corporation Limited
  • Hainan Free Trade Port Construction Investment Fund Co., Ltd
  • Oaktree Funds

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China International Capital Corporation Hong Kong Securities Limited and UBS Securities Hong Kong Limited are the joint sponsors. China International Capital Corporation Hong Kong Securities Limited and UBS AG Hong Kong Branch are the Joint Global Coordinators and Joint Bookrunners.

CCB International Capital Limited, CLSA Limited and Haitong International Securities Company Limited are other Joint Global Coordinators and Joint Bookrunners.

ABCI Capital Limited, BOCI Asia Limited, BOCOM International Securities Limited, CMB International Capital Limited, China Securities (International) Corporate Finance Company Limited, DBS Asia Capital Limited, Guotai Junan Securities (Hong Kong) Limited and ICBC International Capital Limited are the other Tenants of books.

In June, The Moodie Davitt Report launched a new quarterly electronic magazine titled The Moodie Davitt China Travel Retail Report. The cover article is dedicated to China Tourism Group and CDFG. Click on the image to read the bilingual title. The next edition will appear in October. Please email [email protected] for a free first year subscription.