20240522-招银国际-Looking_beyond_release_of_pent-up_demand_to_globalization_8页

Trip.com Group (TCOM US) Equity Research Summary

• Core Focus: Analysis emphasizes beyond pent-up demand to TCOM's globalization potential in Asia's underpenetrated online travel market.

• 1Q24 Results:

  • Net revenue: RMB11.9 billion, up 29.4% YoY.
  • Non-GAAP operating income: RMB3.8 billion, better than forecasts (RMB3.2B from CMBI, RMB3.1B from Bloomberg consensus).
  • Driven by strong performance in accommodation and Other segments, aided by scale effects and disciplined marketing spend.

• Analyst Recommendation:

  • BUY.
  • Target price raised to US$65.8 (was US$49.0), representing 24/20x 2024/25E non-GAAP PE.
  • DCF-based valuation accounts for better-than-expected earnings growth and margin improvements.

• Growth Outlook:

  • Domestic bookings showed double-digit YoY growth in QTD (2Q24), outpacing overall industry recovery.
  • International business grew 80% YoY (1Q24), contributing ~10% of group revenue.
  • Targets ~20% revenue from pure international business within 3-5 years, with better operating profit margins due to higher average order value and take rates.

• Financial Highlights:

  • Revenue projections (FY24E-FY26E): CNY52.8B, CNY59.5B, CNY65.8B (YoY growth: 18.5%, 12.6%, 10.6%).
  • Non-GAAP OPM: 31.6% in 1Q24, projected to 30.0% in 2024E.
  • Key drivers: Improved gross profit margin (79.2ppt beat) from scale effects; controlled S&M spend (2.9ppt beat).

• Valuation:

  • P/E ratio (non-GAAP): 20.8x (FY24E), down from 26.6x (FY23A).
  • Market cap: US$36.7B, with strong share performance (+59.8% in 6 months).

• Risks:

  • Slower-than-expected outbound travel recovery.
  • Potential margin compression if growth slows.