Tourists shop at the Sanya international duty-free shopping complex, Sanya, south China's Hainan province, on October 2, 2020. (PHOTO / VCG)

HONG KONG – State owned China Tourism Group Duty Free Corp, which operates the Sanya International Duty-Free Complex in the popular domestic tourist destination, Hainan province, began taking orders for its H share issue Monday in its initial public offering which aims to raise HK$16.65 billion (US$2.12 billion), if priced at the upper end.

China Tourism Group Duty Free Corp cautions that the coronavirus disease pandemic has forced travelers worried about their health to alter their habits and spend less time in terminals and avoid visiting different locations inside terminals and that this may have a long-term adverse effect on its business, financial conditions and results of operations

CTG Duty Free Corp also operates seven duty-free stores in Hong Kong, Macau and Cambodia. The company claims to be the largest travel retail operator in the world. It mostly sells perfume and cosmetics, fashion and accessories such as watches, jewelry, clothing and accessories, tobacco and liquor, and food and miscellaneous goods.

The company cautions that the coronavirus disease pandemic has forced travelers worried about their health to alter their habits and spend less time in terminals and avoid visiting different locations inside terminals and that this may have a long-term adverse effect on its business, financial conditions and results of operations.

As a result of the viral pandemic, revenue from port duty-free stores tumbled by 11.83 billion yuan, or 37.2 percent, from 31.83 billion yuan in 2019 to 20 billion yuan in 2020.  Revenue in 2020 fell by 2.98 billion yuan, or 14.9 percent, from 20 billion yuan to 17 billion yuan in 2021.

READ MORE: China Tourism eyes HK's largest IPO in 14 months

A board lot of 100 shares will cost a retail investor HK$16,716.80. For those willing to punt more, 6,000 shares will cost them HK$1.003 million.

The Hong Kong offer is 5.13 million shares, or about 5 percent of the total offer shares under the global offering, while the international offer is 97.62 million shares.

The Hong Kong offer is 5.13 million shares, or about 5 percent of the total offer shares under the global offering, while the international offer is 97.62 million shares

The offer closes on Thursday, August 18 and final pricing will be made known on Wednesday, August 24. The maximum price will be HK$165.50 per share. Trading in the shares begin on Thursday, August 25.

CTG Duty Free Corp has reported net profit of 3.42 billion yuan and 2.93 billion yuan, respectively for the three months ended March 31, 2021 and 2022.  Revenue was 18.13 billion yuan and 16.78 billion yuan, in the respective periods.

Operating profit for the second quarter of 2022 was lower from the year before, the company said. The rate of revenue decline, gross profit and operating profit was more severe compared with that of the first quarter of 2022 because of store closures, disruptions to logistics and operations in Shanghai, discounts as promotions, and a drop in overall consumption. The Sanya International Duty-Free Complex suspended operations for 10 days in April, 2022 to the coronavirus disease outbreak.

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For the years ended December 31, 2019, 2020 and 2021 the company y reported net profit of 5.47 bilion yuan, 7.10 billion yuan, and 12.44 billion yuan, respectively.