Integration will land China National Travel plans to acquire 51% equity of Haifang Company

Integration will land China National Travel plans to acquire 51% equity of Haifang Company
On the evening of May 7, China National Travel Service (601888) announced that its wholly-owned Sun Zhonghong Hainan Company planned to acquire Hainan Provincial Duty Free Co., Ltd. (hereinafter referred to as “Haiwai Company”), a controlling shareholder of China Tourism Group, in cash51% equity, the transaction price is 20.6.5 billion.After the completion of this transaction, Haiwai Company will consolidate the scope of consolidated statements of the company.China National Travel Service stated that the move was to further promote the development of the company’s tax-free business, improve the company’s competitiveness, solve the problem of horizontal competition between the company and its controlling shareholder, China Tourism Group, and reduce related party transactions.China Tourism Group is the company’s controlling shareholder. According to the “Shanghai Stock Exchange Stock Listing Rules” and other relevant regulations, this transaction constitutes a related party transaction of the company.According to the company, the transaction is fully in line with the company’s strategic positioning of focusing on the main business of tax exemption, which is conducive to further enhancing the company’s sustainable profitability, giving full play to the company’s procurement scale advantages, and enhancing the scale effect.It is conducive to further improving the company’s gross profit margin, and further expanding the company’s offshore tax-free business scale, and enhancing the company’s market share and industry influence in the tax-free market.Beginning in 2019, China International Travel Service began to focus on tax-free business, transferring 100% equity of its wholly-owned subsidiary, China Travel Service Headquarters, to the controlling East China Travel Group.At present, the duty-free business channels of China International Travel Service mainly include airport duty-free shops, city duty-free shops, island duty-free shops, overseas duty-free shops and online duty-free shops, and the island duty-free shops business is mainly in Hainan.The 2019 annual report shows that Sanya International Duty Free City has initially achieved 104 operating income.$ 6.5 billion, an annual increase of 30.65%, including 101 sales of duty-free goods.$ 7.4 billion, an annual increase of 30.93%.In October 2018, China National Travel Group’s controlling shareholder, China Tourism Group, and Hainan State-owned Assets Supervision and Administration Commission acquired 51% of Haiwai’s equity in the form of equity exchange. China Tourism Group promised to start the process of injecting 51% of Haiwai’s equity into China International Travel as soon as possible.The Air Force and Hainan Province have companies with tax-exempt licenses that are only a part of China Exempt Company and Hai Exempt Company, a wholly-owned subsidiary of China National Travel Service.Some people believe that the marriage with Haiwai will strengthen China National Travel ‘s position in Hainan’s tax-free market, and China National Travel’s China Free will become the sole operator of Hainan’s offshore islands tax-free.Hai Dui Company mainly operates Haikou Meilan Airport Duty Free Shop, while Zhong Dui Company mainly operates Sanya International Duty Free City located in Haitang Bay, Sanya City.In July 2019, China National Travel announced that it was planning to invest 128.The 6-million-dollar Haikou International Duty Free City project is constructed with tax-free as the core, covering a multi-element compound tourism retail complex with tax retail, cultural entertainment, business office, catering and accommodation.Hope to further tap the potential of Haikou’s duty-free market and rebuild a Sanya International Duty Free City.Sauna, Ye Wang Zhang Zeyan editor Sun Yong proofreading Li Shihui