By Clarence Leong


Shares of China Tourism Group Duty Free Corp. and Hainan Meilan International Airport Co. fell sharply in Monday morning trade, after a Covid-19 flare-up in the seaside resort city of Sanya led to a fresh lockdown.

China Tourism Group's Shanghai-listed stock fell as much as 7.5% to CNY184.00, while Hainan Meilan International Airport lost up to 8.4% to HK$19.00.

Sanya, located in China's southern island province of Hainan, asked duty-free malls to shut on Friday. The city imposed lockdown measures and halted public transport on Saturday to contain the latest Covid-19 outbreak. Sanya reported more than 400 new Covid-19 cases for Sunday, taking total infections since the start of the month to about 1,200.

Those currently in Sanya have been asked not to leave the island and to undergo PCR tests, officials said over the weekend.

"If anything bad happens in Hainan, duty-free revenue will be hurt significantly," Daiwa Capital Markets analyst Frank Yip said. "It'll be a negative for China Tourism Group, not just for revenue but also for earnings."

The Chinese duty-free shop operator's business in Sanya brought in 35.51 billion yuan ($5.25 billion) operating revenue in 2021, around half of its total revenue. Sanya also accounted for CNY4.17 billion, or around 40%, of the company's overall net profit last year.

While recovery of China's domestic tourism still hinges on the government's zero-Covid policy, more targeted measures can lessen the extent of disruptions, he said.

Hainan Meilan International Airport said in a filing in late July that it expects to record CNY15 million to CNY30 million net loss for the first half, due to the impact from the pandemic. The company operates the airport in Haikou, the capital of Hainan province.


Write to Clarence Leong at clarence.leong@wsj.com


(END) Dow Jones Newswires

08-08-22 0132ET