Morgan Stanley issued a report saying that Hong Kong is no longer the preferred area for tourism because of the reduction of tourism consumption among mainland Chinese tourists
In addition, the gap between Chinese luxury goods and foreign prices has narrowed and product selection has become more competitive. The convenience of purchasing luxury goods in the Mainland will bring structural challenges to the tourism and luxury goods market in Hong Kong.
The bank pointed out that Wharf Property (1997), Champion REIT (2778) and Hysan Development (0014) have more retail outlets. It is believed that 40% to 60% of their tenant retail sales are from mainland visitors. The income from renting shares will fall by 10% to 20%, so the target price of the three will be lowered.
Revenue from materials by 10% to 20%
Morgan Stanley believes that the Hong Kong luxury goods market, which has relied heavily on mainland tourists in the past, will be challenged. According to the bank’s analysis, Jiufang’s Times Square, Harbour City, Guanjun’s Langham Place and Hysan’s shopping mall portfolio accounted for 22%, 21%, 19% and 18% of the rental income in the first half of the year, respectively. If the turnover of the merchants drops by 30% and the rent remains the same, it will exceed the comfort level (see photo), which means that the owner needs to reduce the rent by 4% to 35% to return to the comfort level, which will drag the income of Jiuzhi, Guanjun and Hysan. They fell 20%, 10% and 10% respectively.
The bank lowered the target price of Jiuzhi from 48 yuan to 40 yuan; Hysan’s target price was lowered from 37 yuan to 33 yuan; Guanjun was lowered from 5.7 yuan to 5 yuan. Jiuzhi, Hysan and Champion fell 0.67%, up 0.16% and did not rise and fall yesterday, closing at 44.25 yuan, 30.85 yuan and 5.04 yuan.
Jiuzhi fell 0.7% yesterday and Hysan rose 0.2%
The bank pointed out that China’s outbound tourism market is becoming more and more mature. It is expected that the outbound travel of long-distance destinations will continue to grow in the future. It is expected that the proportion of tourism in Greater China will drop from about 50% in 2018 to 33% in 2025. In addition, in the past, most of the travel destinations of mainland tourists were shopping, but now they are paying more attention to the travel experience, so the expenditure on luxury goods will fall.
In addition, Morgan Stanley compared 23 products in China and overseas duty-free prices. The average price in China sold is 5% higher than that in Hong Kong and Japan, 10% higher than in South Korea and Singapore, but Europe is still 20% cheaper than China. 30%. The bank pointed out that factors such as narrowing of spreads and increased product supply will affect mainland consumers’ decision-making channels. At present, China is becoming more competitive with Hong Kong, Japan and South Korea.
It refers to the narrowing of the luxury price difference between China and Hong Kong. It is more competitive than before. At the same time, China’s offline and online purchase of luxury goods channels has improved and shopping is more convenient. I believe Hong Kong’s tourism industry and high-end shopping malls will face structural challenges. The bank explained that between 2014 and 2018, the demand for expansion of luxury brands outside the first-tier cities was weak, but this year it has accelerated the development of store networks in second-tier cities.