Issuer Summary: China Tourism Group Corporation Limited

Report date: 2026-05-20
Issuer: China Tourism Group Corporation Limited / 中国旅游集团有限公司
Ticker reference: CHITRA
Relevant bond reference: China Tourism Group onshore MTN and company bonds, Sunny Express Enterprises Corp. 2027 guaranteed notes, and other CTG-related offshore notes subject to issue-by-issue documentation review

1. Business Snapshot and Recent Developments

China Tourism Group Corporation Limited (“CTG”) is a Chinese central government-owned tourism and duty-free retail group. The starting point for analysing the issuer is to separate three issues. First, CTG is a central SOE wholly owned by Central SASAC, and both the company’s official profile and bond disclosures describe it as the only centrally administered enterprise whose core business is tourism. Second, the centre of profit and cash generation is its listed subsidiary China Tourism Group Duty Free Corporation Limited (“China Tourism Group Duty Free” or “CTG Duty Free”); the group’s overall credit quality is therefore highly exposed to the strengths and weaknesses of the duty-free and travel retail market. Third, for investors in CHITRA bonds, central SOE support expectations, a CTG parent guarantee, cash and earnings at the listed subsidiary, and the legal claims under individual bonds are not the same thing.

CTG is a broad tourism group covering duty-free and duty-paid travel retail, travel services, hotels, scenic areas, Hong Kong CTS-related businesses, property and investment, asset management, finance companies and related activities. Its official profile traces its origins to China Travel Service, founded in 1928, and states that, as of end-2024, the group had total assets of more than RMB200bn, approximately 43,000 employees, and a network across more than 30 countries and regions.

That said, the credit focus is clear. In 2024 segment revenue, CTG Duty-Free generated RMB56.47bn, or 65.33% of the group total. The next-largest segment, CTG Investment / property, generated RMB13.65bn, or 15.79% of revenue, but its 2024 gross margin was only 12.09%, and this fell to 3.54% in 1Q 2025. It is therefore not as strong an earnings source as duty-free retail. CTG’s credit quality is supported by central SOE support expectations, but its underlying earnings direction is strongly linked to Hainan offshore duty-free, airport and downtown duty-free, travel retail demand, and CTG Duty Free’s margins.

The largest recent change is that growth expectations for duty-free retail have weakened compared with the earlier period. CTG’s 2024 consolidated operating revenue was RMB86.44bn, down from RMB93.89bn in 2023. Profit before tax was RMB5.02bn and EBITDA was RMB10.28bn, below 2023 profit before tax of RMB6.83bn and EBITDA of RMB12.17bn. China Tourism Group Duty Free also reported 2025 full-year revenue of RMB53.69bn and profit attributable to shareholders of RMB3.64bn, down from 2024 revenue of RMB56.47bn and profit attributable to shareholders of RMB4.32bn. This indicates that the recovery in travel has not immediately translated into a return to high growth in duty-free retail.

However, it would also be too strong to read the recent earnings decline as rapid credit deterioration. CTG’s consolidated cash and cash-like assets remained high at RMB44.61bn at end-2024, RMB49.45bn at end-March 2025, and RMB44.16bn at end-June 2025. Operating cash flow for 1H 2025 was positive at RMB4.33bn, with investing cash outflow of RMB1.86bn and financing cash outflow of RMB3.11bn. At China Tourism Group Duty Free on a standalone basis, end-2025 cash and cash equivalents were RMB33.74bn, total liabilities were RMB13.86bn, and total assets were RMB74.89bn, indicating that the listed core subsidiary’s balance sheet remains conservative.

On ratings, S&P affirmed CTG’s long-term issuer rating at A- on 2025-05-16 and assigned a Negative outlook. S&P’s focus is whether improved government ties and free cash flow generation can reduce adjusted debt/EBITDA from 3.8x in 2024 to around 3.0x over the next 12 to 18 months. Lianhe Ratings maintained CTG’s domestic long-term issuer rating and major domestic bonds at AAA / Stable on 2025-06-26. As for Moody’s, public mirror information suggests a downgrade to Baa1/Stable during 2025, but the original report was not obtained for this report, so this is treated as a secondary warning flag rather than as a verified rating source.

The issuer structure can be organised as follows.

CTG’s current credit profile can be defined as that of a tourism-focused central SOE that retains strong market access because of support expectations, but where investors must continue to monitor the earnings recovery in duty-free retail, debt burden at the parent headquarters, and the guarantee scope of individual bonds.

2. Industry Position and Franchise Strength

CTG’s franchise should be assessed in two layers: its institutional position and its commercial position in duty-free retail. It is a rare central SOE vehicle with tourism as its core business, spanning domestic tourism, inbound and outbound travel, duty-free retail, hotels, scenic areas, travel document-related services, and tourism property through brands including Hong Kong CTS, CITS, CTS and CDF. This policy positioning supports stronger government support expectations than those of a purely cyclical retail company.

The group’s greatest commercial strength is its position in the duty-free market through China Tourism Group Duty Free. China Tourism Group Duty Free is a representative listed company in China’s duty-free and travel retail market, with operations in Hainan, airports, borders, ports, downtown duty-free channels and overseas locations. S&P states that CTG had around an 84% market share by Hainan sales in 2024 and that Hainan accounted for around 80% of duty-free sales. This is an extremely strong market position, and the combination of brand, supplier relationships, duty-free licences, store network, membership base and operating experience creates entry barriers.

However, this strength is also a concentration risk. Hainan offshore duty-free is a policy-supported channel for repatriating consumption, but it is affected by passenger flows, ticket size, consumer sentiment, daigou regulation, product price competitiveness, exchange rates, the recovery of overseas travel, and competition in airport and downtown channels. The high expectations of 2021 to 2023 were materially revised by the 2024 and 2025 results. China Tourism Group Duty Free’s 2025 revenue was RMB53.69bn, down by around 4.9% from 2024, while profit attributable to shareholders was RMB3.64bn, down by around 15.7%. Gross margin improved to 31.76% from 30.72% in 2024, but net margin declined to 6.79%. The company has not been able to offset weak revenue fully through gross margin improvement alone.

CTG’s non-duty-free franchise offers some credit support, but it is not as strong as the duty-free business. Travel services, hotels, scenic areas and Hong Kong CTS-related operations have brands and policy-related networks, but their profit scale is smaller and they are more exposed to the economic cycle, travel demand, labour costs and property market conditions. In 2024, China Travel Service (Holdings) Hong Kong Ltd. had total assets of RMB101.79bn and revenue of RMB15.24bn, but recorded a net loss of RMB1.37bn. This shows that large asset scale and large profit contribution to debt repayment are different things.

The tourism property and investment business requires careful credit treatment. CTG Investment / property generated RMB13.65bn of revenue in 2024, representing 15.79% of group revenue, but its gross margin was 12.09%. In 1Q 2025, it generated RMB4.07bn of revenue, or 16.74% of the total, but gross margin fell to 3.54%. In a correcting Chinese property market, inventory, development funding, sales velocity, impairment, and capital recovery periods can become credit burdens. CTG’s property business differs from a pure residential developer because it is linked to tourism, scenic areas and hotels, but the low margin and capital tie-up should not be overlooked.

Overall, CTG’s business base is “strong but concentrated.” Its central SOE status and leading duty-free market franchise are major credit-supportive factors, but the decline in duty-free retail profitability, dependence on Hainan, low profitability in property-related activities, and losses in Hong Kong CTS-related businesses define the ceiling on standalone credit quality.

3. Segment Assessment

In assessing CTG’s segments, revenue mix and earnings quality need to be separated. The 2024 and 1Q 2025 segment tables confirm that duty-free retail is the centre of revenue and gross profit, while property and investment have weak profitability relative to scale. Travel, hotels, scenic areas and asset management have brand and network value, but their profit scale is not sufficient to support group debt on a standalone basis.

CTG Duty-Free is the core of group credit quality. In 2024, it accounted for roughly two-thirds of group revenue, and its gross margin was in the 32% range, higher than most other segments. In 1Q 2025, its revenue share rose to 68.90% and its gross margin was 32.81%. This indicates that the duty-free business has continued to support group earnings even in a weaker demand environment. At the same time, the rising share does not mean diversification has improved; it also reflects that the earnings bases of other segments are not as strong as duty-free.

China Tourism Group Duty Free’s 2025 annual report shows the current position of this segment. In 2025, revenue was RMB53.69bn, gross profit was RMB17.05bn, profit attributable to shareholders was RMB3.64bn, and cash and cash equivalents were RMB33.74bn. Total liabilities were RMB13.86bn and equity attributable to parent-company shareholders was RMB55.40bn, indicating a conservative financial structure close to a net cash position at the listed subsidiary level. Even though the duty-free business has weakened, the company’s balance sheet has not immediately become highly leveraged.

For the parent group’s credit, however, China Tourism Group Duty Free’s cash cannot simply be treated as CTG parent cash. CTG owns 50.30% of China Tourism Group Duty Free and benefits through dividends, intra-group funding and equity value, but China Tourism Group Duty Free has minority shareholders and its own governance and funding needs as a listed company. In 2024, the CTG parent headquarters received RMB1.72bn of dividends from China Tourism Group Duty Free. This supports the parent’s interest payments and debt repayment, but the full RMB33.74bn of China Tourism Group Duty Free cash does not flow directly to parent-company creditors.

CTG Investment / property is large in scale but limited as credit enhancement. It was the second-largest segment in 2024, with a revenue share of 15.79%, and its share was 16.74% in 1Q 2025. However, its gross margin was very low at 12.09% in 2024 and 3.54% in 1Q 2025. As the Chinese property market continues to correct, selling prices, inventory valuation, cash collection, development costs, and land- and tax-related payments can pressure earnings and cash flow. Tourism property may have strategic value when integrated with hotels, scenic areas and resorts, but from a bond investor’s perspective it should be viewed more as capital tie-up and downside risk than as a near-term repayment source.

A review of major subsidiaries makes the weakness of non-duty-free operations clearer. In 2024, China Tourism Group Duty Free recorded revenue of RMB56.47bn, net profit of RMB4.86bn and operating cash flow of RMB7.94bn. By contrast, China Travel Service (Holdings) Hong Kong Ltd. generated revenue of RMB15.24bn but recorded a net loss of RMB1.37bn. CTG Investment generated revenue of RMB6.12bn and a net loss of RMB0.01bn, implying weak profitability relative to assets of RMB24.00bn. CTG Hotels was profitable, but net profit was only RMB0.11bn. Group business diversification exists in revenue line items, but profit diversification remains heavily dependent on China Tourism Group Duty Free.

This structure has two implications for CTG’s credit quality. One is that if the duty-free business recovers, group-wide earnings and market perception can improve relatively quickly. The other is that if the duty-free business remains weaker for longer than expected, other businesses may not be able to fill the gap sufficiently, making the parent’s debt burden and dividend dependence more visible. Monitoring CTG therefore requires more than simply asking whether tourist numbers have increased. It requires tracking China Tourism Group Duty Free’s revenue, gross margin, inventory, store investment, Hainan market share, profitability of airport and downtown duty-free channels, and dividend capacity to the parent.

4. Financial Profile and Analysis

CTG’s financial profile is manageable for a central SOE, but includes heavy leverage if viewed as a pure retail company. At end-2024, consolidated total assets were RMB201.62bn, total liabilities were approximately RMB121.56bn, total equity was RMB80.06bn, and the asset-liability ratio was 60.29%. Total debt was RMB75.90bn, up from RMB72.65bn in 2023. Cash and cash-like assets were RMB44.61bn, covering short-term debt of RMB29.00bn by 1.54x. This level of cash is strong, but total debt/EBITDA rose to 7.38x in 2024 from 5.97x in 2023.

The 1H 2025 parent disclosure indicates that there had been no rapid deterioration from end-2024, while also showing that the earnings recovery remained sluggish. At end-June 2025, consolidated total assets were RMB200.23bn, total liabilities were RMB119.52bn, total equity was RMB80.70bn, and the asset-liability ratio was around 59.69%. Operating revenue for 1H 2025 was RMB41.99bn, down from RMB43.84bn in the prior-year period. Profit before tax was RMB3.01bn and net profit was RMB2.07bn, below profit before tax of RMB3.86bn and net profit of RMB2.79bn in the prior-year period. Operating cash flow was positive at RMB4.33bn, above RMB3.40bn in the prior-year period, which is supportive.

Interest-bearing debt in 1H 2025 was RMB72.95bn on a disclosure basis including interest. Of this amount, corporate credit bonds were RMB26.58bn, bank borrowings were RMB41.30bn, non-bank financial institution borrowings were RMB4.66bn, and other interest-bearing debt was RMB0.41bn. Corporate credit bonds included domestic company bonds, MTN and short-term commercial paper, while offshore bonds outstanding were RMB11.45bn. The disclosure did not indicate any material overdue debt or major litigation at the reporting-period end.

Key metrics are set out below.

Note: 2021-2023 figures use historical financials from the 2025 first-tranche MTN offering memorandum, 2024 figures use the 2024 company bond annual report and Lianhe’s 2025 follow-up rating report, 1Q 2025 figures use unaudited quarterly data in Lianhe’s follow-up rating report, and 1H 2025 figures use unaudited interim financials from the 2025 company bond interim report. Total debt is based on Lianhe’s short-term and long-term debt aggregation for 2023 to 1Q 2025, and on the company bond interim report’s “interest-bearing debt including interest” aggregation for 1H 2025; the series is therefore not strictly on the same definition. Cash and cash-like assets also follow the definitions used in the relevant materials, and details of restricted cash have not been confirmed.

The table shows that CTG’s credit quality is supported by balance-sheet cash and government linkage, while earnings and leverage are meaningfully affected by the duty-free market. In 2023, operating revenue and operating cash flow recovered sharply as travel resumed. In 2024, revenue and EBITDA declined while total debt increased, causing Lianhe-based total debt/EBITDA to rise into the 7x range. S&P’s adjusted debt/EBITDA was 3.8x in 2024, lower than Lianhe’s disclosed metric, but S&P itself identifies deleveraging progress from 2025 onward as the focus of the Negative outlook. Even with definitional differences, the direction is the same: if EBITDA remains weak while debt increases, rating headroom narrows.

Operating cash flow has recovered, except for the negative figure in 2022. It was RMB18.65bn in 2023, RMB9.71bn in 2024, and positive at RMB4.33bn in 1H 2025. By contrast, investing cash flow has shown continued outflows, with funds directed toward hotels, scenic areas, property, stores, acquisitions and financial investments. When earnings decline, delays in investment recovery can put pressure on credit metrics.

The parent headquarters’ finances require closer attention than the consolidated figures. At end-2024, parent headquarters total assets were RMB65.13bn, total equity was RMB14.69bn, total debt was RMB40.08bn, and the debt capitalisation ratio was 73.19%. Parent headquarters revenue was only RMB0.004bn, effectively negligible, while net profit of RMB1.93bn mainly depended on investment income and distributions from subsidiaries. In 2024, the headquarters received RMB1.72bn of dividends from China Tourism Group Duty Free and RMB1.05bn from CTG Asset; cash receipts from dividends, interest and similar items were RMB1.72bn, while dividend and interest payments were RMB1.14bn. The structure is clearly that of a holding-company parent carrying debt and depending on subsidiary dividends and asset value.

The same structure was evident in 1H 2025. At end-June 2025, parent headquarters total assets were RMB65.61bn, total liabilities were RMB50.24bn, and total equity was RMB15.37bn. Cash was RMB2.36bn, long-term equity investments were RMB37.55bn, other receivables were RMB12.82bn, and long-term receivables were RMB12.47bn. The headquarters had short-term borrowings of RMB7.60bn, non-current liabilities due within one year of RMB7.05bn, other current liabilities of RMB6.06bn, long-term borrowings of RMB14.34bn, and bonds payable of RMB8.00bn. In 1H 2025, parent headquarters operating revenue was effectively zero, net loss was RMB0.06bn, and operating cash flow was negative at RMB0.14bn.

This headquarters structure is important for CHITRA investors. When the CTG parent is the guarantor or issuer, the legal claim is against the parent. The parent is a central SOE and has listed subsidiary stakes, intra-group funding, bank and bond market access, and government support expectations. However, the headquarters itself does not generate strong operating cash flow. Therefore, subsidiary dividend capacity, the liquidity of listed equity value, unpledged shares, bank credit lines, onshore market refinancing, and the relationship with SASAC are the practical supports for parent debt repayment.

China Tourism Group Duty Free’s financial profile is the most important positive factor for the group. At end-2025, it had total assets of RMB74.89bn, total liabilities of RMB13.86bn, cash and cash equivalents of RMB33.74bn, revenue of RMB53.69bn, and profit attributable to shareholders of RMB3.64bn. Revenue and profit declined from 2024, but the listed subsidiary’s balance sheet is low-leverage and it remains the highest-quality asset and earnings source within the group.

The overall financial assessment is that CTG is strong with support incorporated, but its standalone direction is under pressure. Cash and market access are sufficient, and near-term payment default risk is low. However, declining duty-free earnings, the deterioration in 2024 debt/EBITDA, high debt and dividend dependence at the parent headquarters, and low profitability in property-related operations constrain credit improvement. Clear financial improvement would require a profit recovery at China Tourism Group Duty Free, restraint in investment burden, lower parent headquarters debt, and reduced losses in non-duty-free businesses.

5. Structural Considerations for Bondholders

Analysis of CHITRA bond structures requires distinguishing central SOE status, CTG parent guarantees, SPV issuance, the absence of a PRC government guarantee, and access to subsidiary cash flows. CTG is a central SOE wholly owned by Central SASAC, and government support expectations are central to the credit view. However, bonds issued by CTG or related SPVs are not direct obligations of the Chinese government. Government ownership and government guarantees are legally distinct, and investors must review the issuer, guarantor, ranking, covenants, events of default, governing law, foreign-currency remittance, and NDRC and SAFE registrations in the prospectus for each bond.

The Sunny Express Enterprises Corp. USD guaranteed notes due 2027 are a representative example of this structure. The notes were issued by Sunny Express Enterprises Corp., a BVI company, with CTG as guarantor. They are U.S.$700mn 2.95% notes due 2027-03-01. The issuer’s obligations are described as direct, unconditional, unsubordinated and unsecured obligations, and the CTG guarantee is also described as a direct, unconditional, unsubordinated and unsecured guarantee. Because there is a guarantee, investors are looking at CTG parent credit rather than only SPV credit. However, the offering circular explicitly states that the PRC government is not an obligor and that noteholders have no claim against the PRC government.

This guarantee structure is stronger than a pure keepwell. If CTG provides an unconditional and irrevocable guarantee, the credit profile is closer to the parent than to a standalone SPV bond. However, because it is not a Chinese government guarantee, investors need to review foreign-currency funding, onshore-to-offshore remittance, SAFE registration, and ranking, acceleration and cross-default linkages with other debt in a stress scenario.

Domestic bonds involve somewhat different structural considerations. The 2025 interim report shows that CTG has issued short-term commercial paper, MTN and company bonds, with maturities in 2026 scheduled for 21中旅01, 21中旅02, 21中国旅游MTN001, 25中国旅游CP001 and others. Domestic bonds are mainly structured as direct claims on CTG as the onshore parent issuer, and their key considerations are refinancing capacity in the domestic banking, interbank and exchange bond markets, domestic AAA rating, SASAC ownership and relationships with financial institutions. Domestic bondholders also do not have a government guarantee, but central SOE support expectations and refinancing access in the domestic market are quite strong.

Structural subordination is also relevant. The CTG parent is a holding company, while most operating cash flow is generated at China Tourism Group Duty Free and other subsidiaries. Parent creditors do not have direct claims on the operating assets of the listed subsidiary. If subsidiaries have bank borrowings, trade payables, leases, taxes and working-capital needs, subsidiary-level creditors access cash flow first. Cash reaches the parent through dividends, repayment of intra-group loans, asset sales, pledges or sales of listed shares, and the scope of cash pooling arrangements. This is always a monitoring point for parent-guaranteed bonds.

That said, CTG’s structural subordination does not need to be read as harshly as that of a private holding company. This is because CTG has central SOE bank relationships, onshore market access, government support expectations, and the equity value of its listed subsidiary stake. At end-2024, the market value of China Tourism Group Duty Free shares held by the CTG headquarters was stated at RMB62.65bn, and the shares were not pledged. This equity value supports financial flexibility, but it should not be assumed that it could be fully monetised immediately in a stress scenario.

The likelihood of support as a government-related issuer is high, but not absolute. Wholly central government ownership, the status as the only centrally administered tourism-focused enterprise, and the policy importance of the duty-free market are supportive. However, tourism and duty-free are not as immediately essential as energy, power, telecommunications or the financial system, and if business deterioration is driven by commercial demand, the government may not cover all losses.

The conclusion on CHITRA’s structural profile is therefore that bonds with explicit parent guarantees are strong, but they are not government-guaranteed. Investors should review guarantee scope, cross-default, negative pledge, change of control, NDRC/SAFE, governing law, jurisdiction and foreign-currency remittance on an issue-by-issue basis, and should not generalise the terms of the Sunny Express 2027 notes to all CHITRA bonds.

6. Capital Structure, Liquidity and Funding

CTG’s liquidity is supported by its cash balance, domestic bank relationships, onshore bond market access, listed subsidiary stake, and credit support as a central SOE. At end-2024, consolidated cash and cash-like assets were RMB44.61bn, covering short-term debt of RMB29.00bn by 1.54x. At end-March 2025, the group maintained cash and cash-like assets of RMB49.45bn, short-term debt of RMB32.13bn, and cash/short-term debt coverage of 1.54x. At end-June 2025, monetary funds were RMB44.16bn, accounting for around 22% of total assets. Near-term repayment and refinancing risk is low given this cash cushion and bank and market access.

According to the 2025 interim report, of RMB72.95bn of interest-bearing debt, RMB28.71bn was due within one year and RMB44.25bn was due after more than one year. By debt type, bank borrowings were the largest category at RMB41.30bn, followed by corporate credit bonds at RMB26.58bn and borrowings from non-bank financial institutions at RMB4.66bn. Offshore bonds outstanding were RMB11.45bn, and principal on offshore bonds due within one year was disclosed as zero. This indicates that, as of 1H 2025, there was no major near-term concentration of offshore bond maturities.

However, there are several domestic bond maturities in 2026. The 2025 interim report listed 25中国旅游CP001 as maturing in February 2026, 21中旅01 in August 2026, 21中旅02 in September 2026, and 21中国旅游MTN001 in October 2026. As of this report date, 2026-05-20, the maturity of 25中国旅游CP001 had already arrived, but public searches did not confirm a redemption completion or refinancing announcement; therefore, the redemption or refinancing status of this short-term commercial paper is treated as an unverified item. Maturities from August onward appear to be within a normally refinanceable range for a central SOE, but given weakness in the duty-free business and persistently high parent headquarters debt, refinancing costs, bank lines, the short-term debt ratio, and bond market investor demand need to be checked.

Funding access is strong. Domestic AAA status, central SOE bank relationships, and domestic short-term commercial paper and MTN issuance in 2025 demonstrate stronger refinancing capacity than a normal private tourism company. However, S&P focuses on deleveraging, and the strength of access alone should not be used to ignore worsening leverage.

That said, liquidity quality has layers. Consolidated cash is distributed across the group, including China Tourism Group Duty Free and finance subsidiaries, while parent headquarters cash was only RMB2.00bn at end-2024 and RMB2.36bn at end-June 2025. As a holding company, the parent headquarters depends on subsidiary dividends, investment income, intra-group funds, listed equity value, and bank and bond market funding. Thick consolidated cash is important, but for stress liquidity on parent-guaranteed bonds, headquarters cash, dividend constraints, cash pooling and foreign-currency remittance need to be viewed separately.

China Tourism Group Duty Free’s low leverage and cash are the most valuable liquidity buffer for CTG. However, China Tourism Group Duty Free is a listed company and has its own funding needs for store networks, supply chains, acquisitions and other purposes. The parent cannot draw cash up without limit whenever it needs to.

Information on foreign-currency liquidity is insufficient. The Sunny Express 2027 notes are USD bonds, and performance under the guarantee involves access to foreign-currency funds and cross-border remittance. The 2025 interim report confirms offshore bonds outstanding and zero offshore bond maturities within one year, but this report has not confirmed details of foreign-currency cash, hedging, foreign-currency revenue, guarantee registration or remittance procedures. Offshore bond investors should therefore separately check not only onshore RMB liquidity, but also offshore issuer cash, guarantee registration status and the foreign-currency bond maturity ladder.

The liquidity conclusion is that the near term is adequate, the structure is holding-company-like, and the direction depends on deleveraging. Cash/short-term debt of around 1.5x, domestic market access, central SOE status and the listed equity value of China Tourism Group Duty Free are strong positives. Constraints include heavy parent headquarters debt, leverage deterioration when EBITDA declines, low profitability in non-duty-free businesses, and incomplete confirmation of offshore bond structures.

7. Rating Agency View

The rating agencies broadly agree that CTG is close to the upper investment-grade range with support incorporated, but that its business and financial direction is under downward pressure. In May 2025, S&P affirmed CTG’s long-term issuer rating at A- and assigned a Negative outlook. S&P’s key issue is whether CTG can deleverage during 2025-2026. S&P expects improved government relations and free cash flow generation to reduce adjusted debt/EBITDA from 3.8x in 2024 to around 3.0x over the next 12 to 18 months. However, if the weak consumption environment persists and asset disposals or deleveraging fall short of expectations, the downside risk reflected in the Negative outlook remains.

In June 2025, Lianhe Ratings maintained CTG’s domestic long-term issuer rating and 21中国旅游MTN001, 21中旅01 and 21中旅02 at AAA / Stable. Lianhe cites CTG’s central SOE status, its position as the only centrally administered enterprise with tourism as its core business, its strong market position in duty-free, cash and cash-like assets, and unused bank credit lines as supports. At the same time, it highlights declining revenue and profit, the loss at China Travel Service (Holdings) Hong Kong Ltd., low operating profit in tourism property, the increase in group debt burden, and heavy parent headquarters debt as challenges. Domestic AAA indicates strong market access, but the domestic rating scale and international rating scale should not be directly compared.

As for Moody’s, public mirrors and market articles suggest a downgrade during 2025 and Baa1/Stable, but the original report was not obtained, so this is used only as a secondary warning flag.

The difference between the rating agency view and this report’s credit view is that this report places somewhat greater emphasis on the parent headquarters structure and issue-specific bond structures. Ratings incorporate support expectations and group consolidation. Bond investors, however, must separately verify which legal entity they have a claim against, whether there is a guarantee, whether it is not a government guarantee, whether foreign-currency remittance is needed, and whether repayment depends on subsidiary dividends. CTG’s rating level is high, but the relative value of CHITRA bonds depends not only on rating, but also on guarantee scope, tenor, currency, liquidity, covenants, and spread comparison with same-country central SOEs, policy banks and other GREs.

8. Credit Positioning

Among Chinese central SOEs, CTG has somewhat higher business risk; among general consumer, travel retail and tourism companies, it has very strong credit quality with support incorporated. It is not as immediately essential to national infrastructure as energy, telecommunications, power, railways or policy banks, but its unique position as a tourism-focused central SOE, the policy role of the duty-free market, Hainan and consumption repatriation policies, and the Hong Kong-mainland tourism network support expectations of government support.

Compared with private retail, hotel and travel companies, CTG’s central SOE bank and bond market access, the listed subsidiary’s low leverage, and government support expectations make it less likely that the same business deterioration would translate into near-term liquidity risk. By contrast, compared with policy banks and more essential central SOEs, a greater business and structural risk premium is needed for the demand sensitivity of duty-free retail, low profitability in property-related activities, and the parent headquarters’ dividend dependence.

This report has not obtained live prices, OAS, Z-spreads, CDS or same-tenor curves, so it does not conclude whether relative value is cheap or rich. Comparisons would need to align the tenor with USD guaranteed bonds of other Chinese GREs, policy banks, highly supported central SOEs, consumer and travel retail issuers, and different points on the CHITRA curve. The credit level is mid- to upper-investment-grade with support incorporated, but the direction is stable to slightly weaker; monitoring deleveraging and the duty-free recovery is more important than upside.

9. Key Credit Strengths and Constraints

CTG’s credit strengths and constraints can be organised as follows.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is a delayed recovery in Hainan offshore duty-free and travel retail, leading to further declines in China Tourism Group Duty Free’s earnings and cash flow. If lower ticket size, tighter daigou regulation, price competition, consumption outflows from the recovery in overseas travel, deterioration in brand sourcing terms, and delayed recovery on store investment occur together, China Tourism Group Duty Free’s dividend capacity and listed equity value would decline. This would spill over to the parent headquarters’ interest payment and refinancing capacity and delay the deleveraging assumed by S&P.

The second scenario is prolonged losses in property and Hong Kong CTS-related businesses. CTG Investment / property shows low gross margins, and China Travel Service (Holdings) Hong Kong Ltd. was loss-making in 2024. If these businesses continue to consume capital and require impairment or additional funding, cash generated by China Tourism Group Duty Free may be absorbed within the group, making it harder to reduce parent debt. Tourism-related assets may have policy and brand value, but assets with slow cash recovery weaken credit metrics.

The third scenario is increased refinancing pressure at the parent headquarters. As of 1H 2025, the headquarters had RMB50.24bn of liabilities and negative operating cash flow. If investor demand in the onshore bond market weakens, bank borrowing terms deteriorate, and subsidiary dividends decline while domestic bond maturities continue, liquidity at the parent headquarters could worsen earlier than consolidated liquidity. This does not appear likely at present, but headquarters cash management should be a key focus for CHITRA guaranteed bonds.

The fourth scenario is deterioration in the government support assessment or sovereign context. CTG’s support-incorporated credit quality depends on its central SOE status and the Chinese government’s capacity and willingness to provide support. Downward pressure on China’s sovereign rating, more selective central SOE support policy, a decline in the policy importance of tourism and duty-free, or a weaker assessment of the relationship with SASAC could affect ratings even without a change in standalone financials. This is particularly important for international ratings and offshore bonds.

The fifth scenario is an event related to specific bond structures. If problems arise with SAFE registration or NDRC filing, delays occur in foreign-currency remittance for guarantee performance, a technical breach occurs under debt with broad cross-default provisions, a change of control or non-registration event occurs, or the guarantee scope of a specific bond proves narrower than investors assumed, pricing dispersion may widen even within the same CTG credit.

The metrics to monitor are as follows.

Conversely, for the credit view to improve, China Tourism Group Duty Free’s revenue and earnings would need to stabilise in 2026, Hainan, airport and downtown duty-free would need to recover, CTG consolidated EBITDA would need to improve, parent headquarters debt would need to decline, and losses in non-duty-free businesses would need to narrow. If S&P returns the Negative outlook to Stable, or if adjusted debt/EBITDA is confirmed to be moving toward the 3.0x area, downward pressure on support-incorporated credit quality would ease materially.

11. Credit View and Monitoring Focus

CTG’s current credit quality is in the mid- to upper-investment-grade range with support incorporated, but its standalone business and financial direction is slightly weaker. The credit direction is not rapid deterioration, but rather cautious stability to slight weakness while awaiting a recovery in duty-free retail and progress on deleveraging. Cash, domestic market access, central SOE support expectations and China Tourism Group Duty Free’s low leverage make a near-term sharp credit deterioration unlikely, but as S&P’s Negative outlook indicates, rating headroom will narrow if the earnings recovery is delayed.

The most important point in assessing CTG is to avoid both overvaluing its central SOE status and over-reading business weakness as a purely standalone credit problem. Central SOE status, its unique position as a tourism-focused centrally administered enterprise, domestic AAA rating, and bank and bond market access are clear supports. China Tourism Group Duty Free’s market position and low leverage also provide substantial support to group credit. At the same time, the absence of a government guarantee, the parent headquarters’ high debt as a holding company, declining profits in the duty-free business, and weakness in property and Hong Kong CTS-related operations define the ceiling on credit quality.

For CHITRA bonds, where a parent guarantee is clear on senior unsecured debt, it is reasonable to reference CTG’s support-incorporated credit quality. However, treating the bonds like government-guaranteed bonds or policy bank debt would understate business risk and the parent headquarters structure. In particular, for offshore SPV issuance such as the Sunny Express 2027 notes, investors need to confirm whether there is a CTG guarantee, whether the guarantee is unconditional and irrevocable, PRC government non-recourse language, SAFE registration, NDRC filing, foreign-currency remittance, cross-default and change of control. Not all CHITRA bonds should be treated as carrying the same risk.

There are four main monitoring priorities. First, China Tourism Group Duty Free’s revenue, gross margin, profit attributable to shareholders and dividends from 2026 onward. Second, CTG consolidated and parent headquarters debt, EBITDA, cash and short-term debt coverage. Third, loss reduction and capital consumption in property and Hong Kong CTS-related businesses. Fourth, rating actions from S&P, Moody’s and Lianhe, as well as issue-specific bond events related to guarantees, registration and remittance.

The practical conclusion as of this report is to treat CHITRA as a tourism and duty-free GRE credit with high repayment likelihood due to central SOE support, but where the business trend is still awaiting improvement. Near-term default risk is low, but in spread valuation, investors should demand a business and structural risk premium compared with more essential Chinese central SOEs or policy banks. Any investment decision requires separate review of the target bond’s tenor, guarantor, terms, liquidity, and relative comparison with the same-tenor Chinese GRE curve.

12. Short Summary & Conclusion

China Tourism Group is a Chinese tourism and duty-free retail central SOE wholly owned by Central SASAC, and its credit quality is supported by China Tourism Group Duty Free’s strong position in the duty-free market and by access to domestic capital markets. However, since 2024, the slowdown in duty-free retail earnings, the debt burden at the parent headquarters, and weakness in property and Hong Kong CTS-related businesses have become more visible, leaving the credit direction stable to slightly weaker. For CHITRA bonds, CTG parent guarantees and government support expectations are strong, but they are not Chinese government guarantees; therefore, issuer, guarantor, SAFE/NDRC, foreign-currency remittance and issue-specific terms need to be checked for each bond.

13. Sources

Key primary sources:

• China Tourism Group official profile / About Us, accessed 2026-05-20, https://www.ctg.cn/en/about?tab=1.
• China Tourism Group Corporation Limited, 公司债券年度报告（2024年）, SSE bond disclosure, published 2025-04-30, https://static.sse.com.cn/disclosure/bond/announcement/company/c/new/2025-04-30/188677_20250430_79JB.pdf.
• China Tourism Group Corporation Limited, 公司债券中期报告（2025年）, SSE bond disclosure, published 2025-08-29, https://static.sse.com.cn/disclosure/bond/announcement/company/c/new/2025-08-29/188677_20250829_NEFE.pdf.
• China Tourism Group Duty Free Corporation Limited, 2025 Annual Report, HKEX disclosure, published 2026-04-15, https://www.hkexnews.hk/listedco/listconews/sehk/2026/0415/2026041500422.pdf.
• Sunny Express Enterprises Corp., U.S.$700,000,000 2.95% Guaranteed Notes due 2027 Offering Circular, HKEX disclosure, dated 2022-02-22 and posted 2022-03-02, https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0302/2022030200385.pdf.
• China Tourism Group Corporation Limited, 2025年度第一期中期票据募集说明书, ChinaMoney / NAFMII disclosure, https://www.chinamoney.org.cn/dqs/cm-s-notice-query/fileDownLoad.do?contentId=3059651&mode=save&priority=0.

Rating agency materials:

• S&P Global Ratings, China Tourism Group 'A-' Rating Affirmed; Outlook Negative, 2025-05-16, https://www.spglobal.com/ratings/pt/regulatory/article/-/view/type/HTML/id/3370983.
• Lianhe Ratings / United Ratings, 中国旅游集团有限公司2025年跟踪评级报告, SSE bond disclosure, published 2025-06-26, https://static.sse.com.cn/disclosure/bond/announcement/company/c/new/2025-06-26/188677_20250626_ATAU.pdf.

Supplementary materials used:

• Public market articles and search results indicating Moody's rating action in 2025. Moody's original report was not obtained, so this is treated only as a secondary rating-action flag and not as a confirmed rating-source basis.
• Internal structured data extract: issuer_summary/issuers/china_tourism_group/data/china_tourism_group_credit_data_20260520.json.
• Internal writing plan: issuer_summary/issuers/china_tourism_group/working/china_tourism_group_20260520_writing_plan.md.

14. Unverified / Pending

• CTG parent FY2025 audited annual report or 2025 company bond annual report was not obtained. The latest parent regular financial statement used in this report is the 2025 interim company bond report, while China Tourism Group Duty Free's FY2025 annual report is available.
• Detailed 2025-2026 group debt maturity table, foreign-currency cash, restricted cash, committed credit-line terms, hedging profile and offshore liquidity were not obtained.
• 25中国旅游CP001 matured before this report date based on the 2025 interim report's maturity schedule. Its redemption or refinancing status as of 2026-05-20 was not confirmed from public search results.
• 2023 segment-level revenue and margin details were not incorporated in the segment table. The segment assessment relies on 2024 and 2025Q1 segment data and longer-period consolidated financials.
• Full Moody's original report and any 2026 issuer-specific rating action after the searched materials were not obtained.
• Offering circulars for all CHITRA offshore notes, perpetual securities and onshore bonds were not reviewed. Sunny Express 2027 notes are used as the verified bond-structure example, not as a universal template for all CHITRA debt.
• Live bond prices, yields, OAS, Z-spread, CDS and peer spread curves were not available in this workspace; therefore this report does not conclude that any CHITRA bond is cheap or rich.