TRIP.COM GROUP LIMITED(09961.HK)：LOCAL FOCUS GLOBAL VISION-格隆汇

机构：申万宏源研究
研究员：贾梦迪

We are optimistic about the long-term structural growth of the online travel industry. As an industry leader, Trip.com Group enjoys first-mover and scale advantages. Its Ctrip and Qunar brands primarily target Chinese customers for domestic and outbound travel, while Trip.com and Skyscanner cater to international travellers. The company’s domestic travel business remains resilient, outbound travel is gradually recovering, and the pure overseas business is growing rapidly. We raise non-GAAP EPS forecasts from Rmb17.8 to Rmb21.8 in 24E, from Rmb20.8 to Rmb24.2 in 25E, and from Rmb23.0 to Rmb26.7 in 26E. We raise our target price from HK$406 to HK$517. With 24% upside, we maintain our BUY rating.
Resilient domestic travel business. As consumption is shifting from goods to experiential spending, we believe the inelasticity of travel demand is strengthening. Online travel benefits from increased online penetration and recovers faster than the overall travel market, with milder competition compared to pre-pandemic levels. Trip.com Group’s early establishment of the supply chain and service systems has built strong competitive barriers. The one-stop travel platform has improved marketing efficiency and promoted cross-selling rates of flights and hotels. Meanwhile, the company has expanded its user base through an omnichannel strategy, targeting mid-to-high-end users who are relatively less price-sensitive. Approximately 70% of its users are leisure travellers, whose travel frequency exceeds 2019 levels, and the per capita order value in 2023 has surpassed that of 2019.
Gradual recovery in the outbound travel business. Trip.com Group’s outbound travel revenue outpaced the industry by c.20ppts in 2023. The booking volume for flights and hotels in 1Q24 recovered to over 90% of the 2019 level, before fully recovering in 2Q24. Package tour revenue has recovered to 50% of the 2019 level, constrained by the destination markets’ reception capacities. Outbound travel is the most profitable segment for Trip.com Group, offering significant net profit growth potential.
Rapid growth in pure overseas business. The Trip.com brand accounted for 7% of the company’s revenue in 2023. We expect it to maintain a revenue growth of over 50% from 24E to 25E, with the revenue share rising to 20% in the next three to five years. Although Trip.com is in the expansion stage and still loss-making overall, it has achieved breakeven in markets such as Hong Kong (PRC), Japan, South Korea, and Singapore. We expect its net income to turn profitable in the Asia-Pacific market within the next two to three years. Inbound travel, with the order volume increasing 400% YoY, contributed 20% of Trip.com brand’s revenue in 1Q24 and will become a new growth driver in the future. The Skyscanner brand can help Trip.com reduce marketing expenses in Europe and the US.
Earnings forecasts and valuation. We anticipate a 15% YoY revenue growth in 24E, with a non-GAAP operating margin of 30% (flattish YoY). We remain optimistic about Trip.com Group’s leading position in China’s online travel industry and highlight its potential to gain market share internationally. We raise our target price from HK$406 to HK$517. With 24% upside, we maintain our BUY rating.
Risks. Lower-than-expected revenue growth; margin erosion due to intensified competition.