Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company has shown robust growth in its core business and is advancing its international and vertical expansion strategies [1] - The company's Q1 2024 revenue reached 3.87 billion RMB, a year-on-year increase of 49.5%, driven by market trends and strategic expansion plans [1][4] - The adjusted net profit for Q1 2024 was 560 million RMB, reflecting an 11% year-on-year increase, with a net profit margin of 14.4% [1][4] Revenue and Profitability - The company's Q1 2024 total transaction volume was 65.9 billion RMB, up 15.2% year-on-year [1] - The core online travel platform generated revenue of 3.2 billion RMB in Q1 2024, a 23.9% increase year-on-year, with a profit margin of 22.6% [4] - The vacation business achieved revenue of 660 million RMB in Q1 2024, with a profit margin of 6.6% [3] User Growth and Market Penetration - The average monthly paid user count reached 42.6 million, a 2.9% year-on-year increase, while the annual paid user count grew to 230 million, a 14.3% increase [1][5] - Over 70% of paid users are from non-first-tier cities in China, indicating a strong penetration into lower-tier markets [5] Future Projections - Revenue forecasts for 2024-2026 are adjusted to 17.7 billion, 20.7 billion, and 23.3 billion RMB respectively, with net profits projected at 2 billion, 2.5 billion, and 2.9 billion RMB [5][6] - The target market capitalization for 2024 is set at 50.1 billion RMB, with a target price of 24 HKD per share [5]

Key Points Industry and Company 1. **Industry**: Chinese domestic travel market 2. **Company**: Tongcheng Travel 3. **Focus**: Expansion strategy, user growth, and financial performance Core Views and Arguments 1. **Market Growth**: The Chinese travel industry is experiencing a strong recovery and sustained growth, driven by diverse consumer preferences and robust demand [doc id='1']. 2. **Business Expansion**: The company is consolidating its domestic market position and expanding globally, exploring new business opportunities, and diversifying its product and service offerings [doc id='1']. 3. **Transportation Growth**: Transportation volume and revenue reached new highs, with domestic traffic growing by approximately 30% year-on-year in Q1 2024 [doc id='2']. 4. **International Expansion**: International ticket sales grew by over 260%, driven by demand for travel to Southeast Asia, Japan, and South Korea [doc id='2']. 5. **Hotel Business**: The hotel business, including both hotel management and travel, is a key component of the company's vertical expansion strategy [doc id='2']. 6. **User Growth**: The company has diversified its traffic sources, expanding its user base and achieving significant growth in its independent app [doc id='4']. 7. **Black Whale Membership**: The Black Whale membership program has seen rapid growth, with over 55 million members as of March 31, 2024 [doc id='5']. 8. **Financial Performance**: The company achieved a 29.6% increase in gross profit and a 22.6% profit margin in Q1 2024, driven by strong growth in its core OTA business and new travel business [doc id='6']. 9. **OTA Business**: The OTA business achieved a 7.24 billion yuan operating profit and a 22.6% profit margin in Q1 2024, lower than the previous year due to increased investment in international business [doc id='7']. 10. **International Business**: The company is focusing on expanding its international business, particularly in destinations such as Thailand, South Korea, Malaysia, Singapore, and Japan [doc id='11']. Other Important Points 1. **Cross-selling**: The company achieved a 11% cross-selling rate in Q1 2024, with domestic room nights growing by approximately 10% year-on-year [doc id='2']. 2. **Hotel Management Business**: The company has a portfolio of hotel brands ranging from low to high stars, and the hotel management business is expanding rapidly, with over 1,600 hotels in operation and over 800 more in the pipeline [doc id='2']. 3. **Travel Business**: The travel business, operated through offline travel agency stores, includes packaged tour products developed in-house and requires deep cooperation with TSPs [doc id='3']. 4. **User Acquisition and Engagement**: The company is focusing on diversifying its user acquisition channels, optimizing its app, and investing in brand advertising to strengthen its brand image [doc id='13']. 5. **Capital Allocation**: The company plans to allocate capital to support its organic growth strategy, including technology development, new product and service launches, market expansion, and internal efficiency improvements [doc id='14']. Conclusion Tongcheng Travel is experiencing strong growth in the Chinese travel industry, driven by a robust recovery and sustained demand. The company is expanding its business both domestically and internationally, diversifying its product and service offerings, and focusing on user growth and engagement. The company's financial performance is strong, with significant growth in its core OTA business and new travel business.

Investment Rating - The report maintains an "Accumulate" rating for the company [1][4]. Core Insights - The company's Q1 2024 performance met expectations, with increased investment in international business impacting core OTA profit margins. The company continues to benefit from the rising travel demand in domestic and lower-tier markets [4]. - The adjusted net profit for 2024, 2025, and 2026 is projected at 2.715 billion, 3.291 billion, and 4.002 billion RMB respectively. The target market capitalization is raised to 54.3 billion RMB, corresponding to 59.1 billion HKD, with a target price adjustment to 25.97 HKD [4]. - Q1 2024 revenue reached 3.866 billion RMB, a 49.5% increase year-on-year, with adjusted EBITDA of 820 million RMB, up 12% [4]. Financial Summary - The company reported a revenue of 5,933 million RMB in 2020, which is expected to grow to 17,097 million RMB in 2024, reflecting a year-on-year growth of 43.72% [5]. - The adjusted net profit is projected to increase from 926 million RMB in 2020 to 2,715 million RMB in 2024, showing a significant recovery from previous years [5]. - The adjusted EBITDA margin is expected to stabilize around 18.10% in 2024, indicating a healthy operational performance [5].

Investment Rating - The investment rating for the company is "Buy" [12] - The rating is maintained as "Increase" [12] Core Views - In Q1 2024, the company's OTA business revenue maintained good growth, with total revenue reaching 3.87 billion yuan, a year-on-year increase of 49.5% [4] - The adjusted net profit for Q1 2024 was 560 million yuan, reflecting a year-on-year growth of 10.9% [4] - The OTA platform revenue was 3.21 billion yuan, up 23.9% year-on-year, indicating ongoing penetration in the domestic lower-tier markets [4] - The company's profitability declined year-on-year, primarily due to its gradual entry into the overseas investment cycle since the second half of last year [4] - The international business is expanding rapidly, with international ticket volume increasing by over 260% year-on-year and international hotel night volume growing by over 150% [4][5] Financial Performance Summary - For Q1 2024, the company achieved a revenue of 3.87 billion yuan, with a net profit of 400 million yuan [4] - The company's traffic and accommodation business revenues were 1.74 billion yuan and 960 million yuan, respectively, representing year-on-year growth of 25.6% and 15.6% [4] - The company’s other income segments, including advertising and hotel management, grew by 36% to 500 million yuan in Q1 2024 [4] - The number of registered users from non-first-tier cities accounted for approximately 87% of total registered users by the end of Q1 2024 [5] User Monetization and Engagement - The number of annual paying users increased by 14.3% to 229 million in Q1 2024 [5] - The average revenue per user (ARPU) improved, with users making an average of 8 purchases per year, significantly higher than 5 purchases in the same period of 2019 [5] - The company's app daily active users reached 2 million, with a year-on-year increase of 100% [5] Future Outlook - The company is expected to benefit from the online penetration in lower-tier markets and the recovery of outbound tourism trends [4][6] - Despite the current flat pricing in the hotel industry, the performance of mid-to-low star hotels shows resilience, contributing to revenue growth [6] - The company is actively expanding its international market presence and increasing domestic app marketing investments, which may impact profit margins throughout the year [6]

Investment Rating - The report maintains a "Buy" rating for Tongcheng Travel (0780.HK) [2][3] Core Views - Tongcheng Travel's Q1 2024 financial performance shows significant growth, with revenue reaching 3.866 billion RMB, a year-on-year increase of 49.5%. Gross profit was 2.514 billion RMB, up 29.57%, while operating profit slightly decreased by 2.23% to 455 million RMB. The net profit for the period was 400 million RMB, reflecting a 5.6% increase year-on-year [2] - The company continues to see steady growth in paid users and service interactions, with a total of 229 million paid users, a 14.3% increase year-on-year, and cumulative service interactions reaching 1.827 billion, up 57.4% [2] - The report highlights the company's focus on non-first-tier cities as a key growth area, with over 87% of registered users residing in these areas. The company effectively utilizes traffic strategies and operational capabilities to tap into the mass market [2] Financial Performance Summary - For Q1 2024, the core online travel platform generated revenue of 964 million RMB, a 15.63% increase year-on-year. Transportation ticketing revenue was 1.737 billion RMB, up 25.59%, while other business revenue increased by 36.02% to 502 million RMB. Additionally, the newly added vacation business generated 663 million RMB in revenue [2] - The report notes a significant increase in sales costs and marketing expenses, with sales costs rising by 109.44% and marketing costs increasing by 41.60% year-on-year, primarily due to higher costs associated with vacation services and increased employee benefits [2] - The projected net profit for the company for 2024-2026 is estimated at 2.062 billion RMB, 2.723 billion RMB, and 3.369 billion RMB, respectively, with corresponding PE ratios of 19x, 14x, and 12x [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 23.3 [3][2] Core Insights - The company's Q1 performance slightly exceeded expectations, with total revenue of HKD 3.87 billion, a year-on-year increase of 49%, driven by a 24% increase in core OTA business revenue [1][2] - The vacation business contributed an additional HKD 660 million in revenue, accounting for 17% of total revenue [1] - Adjusted net profit for Q1 was HKD 560 million, up 11% year-on-year, with a profit margin of 14.4% [1][2] - The core OTA operating profit was HKD 720 million, with an operating profit margin of 22.6%, reflecting a year-on-year decline of 3.7 percentage points [1] Summary by Sections Q1 Performance - Total revenue reached HKD 3.87 billion, exceeding market expectations by 4% [1] - Core OTA business revenue grew by 24%, with transportation ticketing and accommodation booking services increasing by 26% and 16% respectively [1] - The vacation business's operating profit was HKD 44 million, with a profit margin of 6.6% [1] Core OTA Business Growth - Overall GMV increased by 15% year-on-year to HKD 65.9 billion, driven by growth in transportation ticketing and accommodation bookings [1] - Domestic hotel night volume increased by approximately 10%, while domestic flight bookings rose by about 30% [1] - International business saw hotel night volume and flight bookings increase by over 150% and 260% respectively [1] Vacation Business Potential - The vacation business is expected to recover to 70% of 2019 levels for domestic travel and 30% for outbound travel [1] - The long-term operating profit margin for the vacation business is projected to be in the low single digits, impacting overall profit margins [1] User Value and Channel Development - The average annual spending per user increased to HKD 1,091, a 48% year-on-year increase [2] - The number of black whale members exceeded 55 million, with their spending being 2.5 times that of regular users [2] Financial Forecasts - Revenue for Q2 is expected to grow by 50% year-on-year, with core OTA revenue growth projected at 24% [2] - The adjusted net profit forecast for the year remains unchanged at HKD 2.7 billion, corresponding to a profit margin of 14.9% [2]

浦银国际研究 公司研究 | 互联网行业 同程旅行（780.HK）：核心业务稳健 赵丹 浦 增长，利润率受并表影响下滑 首席互联网分析师 银 dan_zhao@spdbi.com 国 (852) 2808 6436  收入好于预期，利润率下滑：公司一季度收入人民币38.7 亿元，同 际 比增长 50%，高于市场预期3%；调整后净利润为5.0 亿元，低于市 杨子超，CFA 场预期 6%，调整后净利率为14.4%，去年同期为19.5%，主要受度 互联网分析师 假业务并表影响。 charles_yang@spdbi.com (852) 2808 6409 核心 OTA 增速或先低后高，利润率受度假并表拖累：一季度交易额  为人民币 659 亿元，同比增长15.2%，主要由ARPPU增长推动，同比 2024年5月22日 增 12%，平均月付费用户同比略增 2.9%至 4,260 万。核心 OTA 收入 评级 公 32.1 亿元，同比增长24%。住宿预订服务收入为 9.6 亿元，同比增长 司 16%，国内酒店间夜量同比增长 10%，交叉销售率持续提升至 11%。 目标价（港元） 24 研 ...

Investment Rating - The report maintains a "BUY" rating for Tongcheng Travel with a target price of HK$26.1, implying a 23.1% upside from the current price of HK$21.20 [4][2]. Core Insights - Tongcheng Travel ("TC") reported a strong performance in 1Q24, with revenue increasing by 50% year-over-year (YoY) and adjusted net profit rising by 11% YoY, both exceeding consensus estimates [2][3]. - The company is expected to continue gaining market share in 2Q24, driven by robust travel demand during holidays and recovery in international business [2][3]. - For 2Q24, total revenue is forecasted to grow by 49% YoY, with core OTA revenue projected to increase by 23.5% YoY [2][3]. Financial Performance - In 1Q24, TC's revenue reached RMB 3,866 million, reflecting a 50% YoY growth and a 23% quarter-over-quarter increase [12][2]. - Adjusted net profit for 1Q24 was RMB 559 million, up 11% YoY, with a net profit margin of 14.4% [12][2]. - The company expects adjusted net profit to rise to RMB 621 million in 2Q24, indicating a slight improvement in net profit margin to 14.6% [2][3]. Revenue Breakdown - In 1Q24, revenue from transportation increased by 26% YoY, hotel revenue grew by 16% YoY, and other revenue surged by 36% YoY, driven by advertising and hotel management [2][3]. - International business is anticipated to contribute 3%-4% of total revenue in 2Q24, with international air ticketing volume and hotel room nights increasing significantly [2][3]. Future Outlook - The report projects continued strong momentum for TC, with expectations of robust growth in both domestic and international segments [2][3]. - The full-year financial forecasts for FY24-26 remain unchanged, with a DCF-based target price of HK$26.1, reflecting a P/E ratio of 21x for FY24E [2][3].

交银国际研究 公司更新 互联网 收盘价 目标价 潜在涨幅 2024年5月22日 港元21.20 港元25.00↑ +17.9% 同程旅行 (780 HK) 1 季度利润符合预期；预计下半年增速较上半年更高  2024年1季度业绩：收入39亿元（人民币，下同），同比增49.5%，超过 个股评级 我们/彭博市场预期5%/3%。其中，核心OTA业务收入增24%（交通/住宿 买入 +26%/16%），度假业务收入 6.6 亿元。调整后净利润 5.6 亿元，同比增 11%，高于我们/彭博市场预期2%/4%，对应净利率14%，较去年同期的 19%下降，因并表的度假业务利润率较低。调整后营销费用同比增41%， 1年股价表现 主要由于市场恢复下营销活动增加，占收比35%，环比稳定。 780 HK 50% MSCI中国指数 40%  1季度业绩亮点：1）GMV 同比增15%，APU增14%至2.29亿。2）交通： 30% 內地机票票量同比增 30%，海外业务扩张战略下国际机票票量大幅增 20% 10% 260%+。3）住宿：内地酒店间夜量同比增10%，得益于持续拓展多元化住 0% -10% 宿场景及交叉销售率提升。海外间夜 ...

Financial Performance - Revenue increased by 49.5% year-on-year to RMB 3,866.3 million for the three months ended March 31, 2024, compared to RMB 2,586.1 million in the same period of 2023[4] - Adjusted EBITDA rose by 12.0% year-on-year to RMB 820.2 million, with an adjusted EBITDA margin decreasing to 21.2% from 28.3%[4] - Adjusted net profit increased by 10.9% year-on-year to RMB 558.5 million, with an adjusted net profit margin decreasing to 14.4% from 19.5%[4] - Total revenue increased by 49.5% from RMB 2,586.1 million in Q1 2023 to RMB 3,866.3 million in Q1 2024[30] - Revenue from the core online travel platform rose by 23.9% to RMB 3,203.3 million, driven by increased demand for accommodation and transportation services[32] - Accommodation booking service revenue grew by 15.6% to RMB 964.7 million, while transportation ticketing service revenue increased by 25.6% to RMB 1,736.5 million[30] - The company reported a net profit of RMB 400.3 million for the three months ended March 31, 2024, compared to RMB 378.9 million for the same period in 2023[53] - Total comprehensive income for the period was RMB 399,626,000, up from RMB 365,701,000, reflecting a growth of 9.3% year-over-year[55] User Growth and Engagement - Average monthly paying users grew by 2.9% year-on-year to 42.6 million, while annual paying users increased by 14.3% to 229.3 million[4] - Total service users for the twelve months ended March 31, 2024, reached 1,826.7 million, a 57.4% increase year-on-year[4] - The company continues to expand its user base, with approximately 87% of registered users residing in non-first-tier cities in China[15] Business Development and Strategy - The company is implementing effective strategies to accelerate business development and expand market share in the growing Chinese travel market[14] - Future strategies include expanding the international footprint, enhancing hotel management and vacation business, and seeking investment opportunities aligned with strategic goals[27] - The company is focused on integrating Tongcheng Travel Group, which has approximately 500 travel agency outlets nationwide, to enhance its vertical expansion strategy[22] Revenue Streams - In Q1 2024, transportation ticketing service revenue increased by 25.6% year-on-year to RMB 1,736.5 million, driven by a surge in ticket volume and enhanced value-added products[19] - Domestic flight sales grew by 30% year-on-year, while international flight sales experienced over 260% growth, attributed to effective international expansion strategies[19] - Accommodation business revenue rose by 15.6% year-on-year to RMB 964.7 million, with domestic hotel room nights sold increasing by 10%[21] - International hotel room nights sold increased by over 150% year-on-year, supported by increased market investment and enhanced user interaction[21] - Other business revenue grew by 36.0% year-on-year to RMB 502.2 million, driven by strong performance in advertising, the Black Whale membership program, and hotel management[21] Cost and Expenses - Sales cost surged by 109.4% from RMB 645.3 million to RMB 1,351.5 million, with the sales cost as a percentage of revenue rising from 24.9% to 34.8%[35] - Service development expenses increased by 18.4% to RMB 486.8 million, with the proportion of these expenses to revenue decreasing from 15.2% to 11.9%[36] - Sales and marketing expenses rose by 41.6% to RMB 1,368.2 million, with the proportion of these expenses to revenue decreasing from 37.0% to 35.0%[37] - Administrative expenses increased by 38.0% to RMB 265.3 million, maintaining a proportion of 5.1% of revenue[38] Cash Flow and Assets - Cash and cash equivalents at the end of the period increased to RMB 7,780,784,000, compared to RMB 5,192,398,000 at the end of December 2023, representing a 50.0% increase[60] - The net cash generated from operating activities was RMB 484,472,000, down from RMB 874,187,000, indicating a decline of 44.7% year-over-year[60] - Non-current assets totaled RMB 17,108,523,000 as of March 31, 2024, compared to RMB 16,816,963,000 at the end of December 2023, showing a growth of 1.7%[57] - The total assets of the company reached RMB 33,673,317,000, an increase from RMB 31,716,609,000, reflecting a growth of 6.2%[58] - The company reported a significant increase in cash flow from investing activities, with a net cash inflow of RMB 1,235,615,000 compared to an outflow of RMB 190,922,000 in the previous year[60] Corporate Governance and Leadership - The board of directors consists of executive directors and independent non-executive directors, including the CEO Ma Heping[67] - The company is led by co-chairmen Wu Zhixiang and Liang Jianzhang, indicating a strong leadership structure[67] - The company is focused on strategic decision-making and governance through its board composition[67] - The presence of independent directors highlights the company's commitment to corporate governance and accountability[67] - The executive team includes experienced members, which may enhance operational efficiency and strategic execution[67] - The leadership structure may facilitate effective communication and decision-making processes[67] - The board's composition reflects a balance of executive and independent oversight, which is crucial for stakeholder confidence[67] - The announcement indicates ongoing corporate governance practices that align with market expectations[67]