Research Update: China National Travel Service Group, Hong Kong Subsidiary Outlooks Revised To Negative; 'A-' Ratings Affirmed

China National Travel Service Group Corp. Ltd. (CNTS) will remain the market leader in China's fast-growing and profitable duty-free retail segment despite the COVID-19 pandemic. We anticipate a rebound in China's domestic tourist traffic from the second quarter of 2020 and in international tourist traffic from the third quarter. We therefore expect CNTS's debt leverage to recover to less than 3x in 2021, after a spike to 4.0x-4.5x in 2020. We continue to view China Travel Service (Holdings) Hong Kong Ltd. (CTS HK) as a core subsidiary of CNTS. The ratings and outlook on CTS HK will therefore move in line with those on CNTS. On April 27, 2020, S&P Global Ratings revised its rating outlooks on CNTS and CTS

...- China National Travel Service Group Corp. Ltd. (CNTS) will remain the market leader in China's fast-growing and profitable duty-free retail segment despite the COVID-19 pandemic. - We anticipate a rebound in China's domestic tourist traffic from the second quarter of 2020 and in international tourist traffic from the third quarter. We therefore expect CNTS's debt leverage to recover to less than 3x in 2021, after a spike to 4.0x-4.5x in 2020. - We continue to view China Travel Service (Holdings) Hong Kong Ltd. (CTS HK) as a core subsidiary of CNTS. The ratings and outlook on CTS HK will therefore move in line with those on CNTS. - On April 27, 2020, S&P Global Ratings revised its rating outlooks on CNTS and CTS HK to negative from stable. We affirmed our 'A-' long-term issuer credit rating on the companies and the 'A-' long-term issue rating on CTS HK's guaranteed senior unsecured notes. - The negative outlook on CNTS for the next 12 months reflects the significant impact of COVID-19...

Research Update