...May 8, 2023 This report does not constitute a rating action. HONG KONG (S&P Global Ratings) May 8, 2023--A travel rebound will help China Tourism Group Corp. Ltd. (CTG) to increase cash flow this year. Much of the momentum is thanks to the revitalization of its main retail segment of duty-free stores. The recovery should help CTG's leverage drop below our downgrade trigger of 3x for the rating (A-/Stable/--). We estimate the ratio of debt to EBITDA will decrease to 2.8x for 2023, after jumping above the downgrade trigger to 4x in 2022, when profitability and cash flow weakened amid the pandemic lockdowns. In our view, the strong rebound in travel and absence of travel restrictions will underpin healthy revenue growth of 39% for 2023. Revenue increased 27% for the first quarter of 2023 as airport traffic recovered to 85% of the 2019 level. We forecast that the revenue of CTG's duty-free stores will increase 28% for 2023, after a drop of 20% in a difficult 2022. Sales will likely revive at...
