Investment Rating - The report maintains a "Buy" rating for the company, Trip.com Group (9961 HK), with a target price raised to HKD 605.00, indicating a potential upside of 26.5% from the current price of HKD 478.20 [1][5][12]. Core Insights - The company's hotel business has performed better than expected, and the transportation segment is returning to normal growth, leading to an upward revision of revenue forecasts for 2024 and 2025 by 4% and 6% respectively. Trip.com is expected to continue contributing to revenue growth, with manageable investments and losses [1][2]. - The company reported a revenue of RMB 15.9 billion for Q3 2024, a year-on-year increase of 16%, surpassing market expectations. The growth was driven by accommodation (+22%), transportation (+5%), vacation (+17%), and business travel (+11%) segments [2][6]. - Adjusted net profit for Q3 2024 reached RMB 6 billion, a 22% increase year-on-year, exceeding expectations due to optimized cross-selling and effective cost control [2][6]. Financial Forecasts - Total revenue projections for 2024E have been updated to RMB 52.93 billion, reflecting an 18.8% growth rate, while 2025E revenue is forecasted at RMB 60.6 billion, a 14.5% growth rate [4][17]. - The adjusted operating profit for 2024E is expected to be RMB 16.08 billion, with an operating profit margin of 30.4% [4][17]. - The adjusted net profit for 2024E is projected at RMB 17.84 billion, with a net profit margin of 33.7% [4][17]. Performance Metrics - The company has shown a strong recovery in its hotel and transportation segments, with the average daily rate (ADR) pressure easing and outbound travel bookings recovering to 120% of 2019 levels [2][6]. - Marketing expenses have increased by 23% year-on-year, but remain stable as a percentage of revenue at 21% [2][6]. - The company’s gross profit margin is projected to be 81.5% for 2024E, slightly down from 81.7% in the previous forecast [4][17].

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] Group 2 - Michael leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates on stock picks, and a weekly webinar for live advice [3] - The Deep Value Returns community is described as active, vibrant, and supportive, providing accessible chat options for both new and experienced investors [3]

Financial Data and Key Metrics - The hotel occupancy rate in China has surpassed last year's levels, improving from lower than 2023 levels in Q3, partly due to easier comps and more travelers choosing off-peak seasons [1] - Outbound flight and hotel bookings maintained strong year-over-year growth momentum, exceeding 120% of the same period in 2019, with mid- to high double-digit growth in flight and hotel bookings [1] - Trip.com's air and hotel reservations grew robustly by 60-70% year-over-year in Q3, with the APEC region accounting for over 70% of total bookings and showing the fastest growth [3] - Hotel-related revenue accounted for more than 40% of Trip.com's total revenue in Q3, with cross-selling from transportation to hotels continuing to rise [3] - The Trip.com brand contributed around 9% of the group's total revenue, up from 77% in the same period last year [3][4] Business Line Performance - The Trip.com brand's mobile app remained the top channel, contributing 65-70% of global orders and over 70% in the APAC region [3][4] - The company continues to invest in the Trip.com brand, particularly in the international market and the APAC region [4] Market Performance - The China travel market followed normal seasonality post-National Day holiday, with strengthened year-over-year momentum [1] - Outbound flight capacity reached around 80% of the 2019 level in Q3 and exceeded 80% in Q4, with expectations for further improvement in the coming year [2] Strategy and Industry Competition - The company anticipates normalized growth for its China-related business, with continued emphasis on inbound and outbound cross-border travel [1] - Asia is a critical market, representing 50% of GDP growth and 50% of travel industry growth, with a focus on providing a one-stop shopping platform and excellent customer service [4] - The company is investing heavily in technology and AI to improve user experience, coding efficiency, customer service, and content generation [5] Management Commentary on Operating Environment and Future Outlook - The company expects a normalized growth pattern for its China-related business and continued strong growth momentum for the Trip.com brand [1] - Management believes that the expansion and diversification of travel suppliers will significantly contribute to the overall growth of the travel industry [2] - A healthy economic environment is expected to benefit all industries, including travel [3] Other Important Information - The company has achieved efficient operational efficiencies across all expense lines, including cost, product development, and sales marketing expenses, with marketing expenses as a percentage of gross bookings being less than 1% [7][8] - The company anticipates an expanded capital return program for 2025, potentially including dividends and buybacks, subject to board approval [7] Q&A Summary Question: Recent performance post-National Day holiday and 2025 outlook [1] - Post-National Day holiday, the China travel market followed normal seasonality with strengthened year-over-year momentum, and the company expects normalized growth for its China-related business with continued emphasis on cross-border travel Question: Hotel price changes, China hotel inventory growth, and 2025 outlook [2] - Hotel prices are still below last year's levels, and the number of hotels in China listed on the platform was 6-7% higher compared to last year, with expectations for long-term growth from the expansion and diversification of travel suppliers Question: Outbound flight capacity changes and recovery timeline [2] - Outbound flight capacity reached around 80% of the 2019 level in Q3 and exceeded 80% in Q4, with expectations for further improvement in the coming year Question: Changes in traveler overspending and impact of stimulus measures [3] - A healthy economic environment is expected to benefit all industries, including travel Question: Operational and financial performance for Q3 [3] - Trip.com's air and hotel reservations grew robustly by 60-70% year-over-year, with the APEC region accounting for over 70% of total bookings and showing the fastest growth Question: Strategy in Asia and market share growth [4] - Asia is a critical market, and the company focuses on providing a one-stop shopping platform, excellent customer service, and leveraging its volume to drive good products to customers Question: AI initiatives and operating highlights [5] - The company invests heavily in AI to improve user experience, coding efficiency, customer service, and content generation, with AI expected to enhance operational efficiency and user engagement Question: Financial impact of AI in the short-term and long-term [6] - The financial impact of AI investments has been minimal so far, but operational improvements from AI are expected to eventually reflect in financial performance Question: Capital usage and operating leverage [7] - The company anticipates an expanded capital return program for 2025, potentially including dividends and buybacks, and aims to enhance marketing efficiencies across all markets Question: Marketing expenses and operational efficiencies [8] - Marketing expenses as a percentage of gross bookings were less than 1%, benefiting from high customer loyalty and strong cross-selling, with expectations for increased marketing expenses in Q4 due to seasonality

Group 1: Earnings Performance - Trip.com reported quarterly earnings of $1.25 per share, exceeding the Zacks Consensus Estimate of $0.91 per share, and up from $1 per share a year ago, representing an earnings surprise of 37.36% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - Trip.com posted revenues of $2.26 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.93%, compared to year-ago revenues of $1.88 billion [2] Group 2: Stock Performance - Trip.com shares have increased approximately 65.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 23.1% [4] - The current consensus EPS estimate for the upcoming quarter is $0.57 on revenues of $1.71 billion, and for the current fiscal year, it is $3.36 on revenues of $7.35 billion [8] Group 3: Industry Outlook - The Leisure and Recreation Services industry, to which Trip.com belongs, is currently ranked in the top 8% of over 250 Zacks industries, indicating a favorable outlook [9] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [6]

Financial Performance - In Q3 2024, Trip.com Group reported a net revenue of RMB 15.9 billion (USD 2.3 billion), representing a 16% year-over-year increase, driven by strong travel demand[8]. - The company's net profit for Q3 2024 was RMB 6.8 billion (USD 970 million), compared to RMB 4.6 billion in the same period of 2023, marking a significant increase[11]. - Adjusted EBITDA for Q3 2024 was RMB 5.7 billion (USD 880 million), up from RMB 4.6 billion in Q3 2023[11]. - The revenue from accommodation bookings was RMB 6.8 billion (USD 969 million), a 22% increase year-over-year, while transportation ticketing revenue was RMB 5.7 billion (USD 850 million), up 5% year-over-year[8]. - Total revenue for the three months ended September 30, 2023, was RMB 13,751 million, a decrease of 5.5% compared to RMB 14,556 million for the same period in 2022[26]. - Net income attributable to Trip.com Group Limited for the three months ended September 30, 2023, was RMB 4,615 million, representing a 20.5% increase from RMB 3,833 million in the same period of the previous year[31]. - The gross profit for the three months ended September 30, 2023, was RMB 11,273 million, with a gross margin of approximately 82%[26]. - Adjusted EBITDA for the three months ended September 30, 2023, was RMB 4,622 million, with an adjusted EBITDA margin of 34%[39]. - The company reported a basic earnings per share of RMB 7.05 for the three months ended September 30, 2023, compared to RMB 5.84 for the same period in 2022, reflecting a year-over-year increase of 20.7%[32]. - The company expects total revenue for the three months ending June 30, 2024, to be approximately RMB 12,788 million, indicating a projected growth of 6.5% compared to the same period in 2023[26]. Operational Highlights - Hotel and flight bookings on the international OTA platform grew by over 60% year-over-year, with outbound hotel and flight bookings fully recovering to 120% of pre-pandemic levels[5][6]. - Research and development expenses for Q3 2024 were RMB 3.6 billion (USD 519 million), a 2% increase year-over-year, reflecting rising costs associated with R&D personnel[9]. - Sales and marketing expenses rose to RMB 3.4 billion (USD 482 million), a 23% increase year-over-year, due to higher costs related to sales and marketing activities[9]. - Research and development expenses for the three months ended September 30, 2023, were RMB 3,577 million, an increase of 19.5% from RMB 2,993 million in the same period of the previous year[26]. - The company reported a significant increase in user data, with a total of 5,589 million in accommodation bookings for the three months ended September 30, 2023[26]. - Trip.com Group Limited is focusing on market expansion and new product development to enhance its competitive position in the travel industry[26]. Financial Position - As of September 30, 2024, the company had cash and cash equivalents totaling RMB 86.9 billion (USD 12.4 billion)[12]. - Ctrip Group reported a total asset increase from RMB 219,137 million as of December 31, 2023, to RMB 244,300 million by September 30, 2024, representing an increase of approximately 11.5%[22]. - The company's cash and cash equivalents decreased from RMB 43,983 million to RMB 41,982 million, a decline of about 4.5%[22]. - Total liabilities rose from RMB 96,131 million to RMB 104,173 million, indicating an increase of approximately 8.5%[24]. - Shareholders' equity increased from RMB 122,184 million to RMB 138,410 million, reflecting a growth of around 13.3%[24]. Strategic Outlook - The company expressed optimism about the continued growth of the travel industry, driven by consumer confidence and a surge in travel enthusiasm[7]. - Trip.com Group is committed to leveraging AI technology as a core driver for shaping the future of the global travel industry[7]. - Ctrip Group's mission is to provide a comprehensive travel platform for both Chinese tourists and international travelers, emphasizing high-quality travel experiences[20]. - The company operates under several brands, including Ctrip, Qunar, Trip.com, and Skyscanner, aiming to inspire travel exploration and support users throughout their journeys[20]. - Ctrip Group's reliance on partnerships with suppliers and competitors poses risks, particularly in managing growth rates and strategic investments[19]. - The company has faced challenges related to economic fluctuations and regulatory dynamics affecting its operations in various jurisdictions[19]. - Ctrip Group's financial data includes non-GAAP measures to provide a clearer picture of its operational performance, although these measures may not align with other companies' non-GAAP data[19].

Core Insights - Trip.com Group Limited reported strong financial results for Q3 2024, with net revenue increasing by 16% year-over-year to RMB15.9 billion (US$2.3 billion) [2][3] - The company experienced robust growth in international businesses, with outbound hotel and air reservations reaching approximately 120% of pre-COVID levels from 2019 [2][3] - The travel industry is expected to continue its growth trajectory, driven by increasing consumer confidence and advancements in AI technology [2] Financial Performance - Net income for Q3 2024 was RMB6.8 billion (US$970 million), up from RMB4.6 billion in Q3 2023 [3] - Adjusted EBITDA for the quarter was RMB5.7 billion (US$808 million), an increase from RMB4.6 billion in the same period last year [3] - Accommodation reservation revenue rose by 22% year-over-year to RMB6.8 billion (US$969 million), while transportation ticketing revenue increased by 5% to RMB5.7 billion (US$805 million) [3] Revenue Breakdown - Packaged-tour revenue grew by 17% year-over-year to RMB1.6 billion (US$222 million) [3] - Corporate travel revenue increased by 11% to RMB656 million (US$93 million) [3] - The cost of revenue for Q3 2024 was RMB2.8 billion (US$399 million), reflecting a 13% increase from the previous year [3] Operational Highlights - The company noted a significant increase in accommodation reservations, with a 32% rise from the previous quarter [3] - Sales and marketing expenses rose by 23% year-over-year to RMB3.4 billion (US$482 million), driven by promotional activities [3] - As of September 30, 2024, the company had cash and cash equivalents totaling RMB86.9 billion (US$12.4 billion) [3]

International Travel Recovery - International outbound hotel and air reservations rebounded to approximately 120% of the pre-COVID level for the same period in 2019[1] - Air ticket and hotel reservations on the Company's international OTA brand increased by over 60% year-over-year[1] Financial Performance - Net revenue for the third quarter of 2024 grew by 16% year-over-year to RMB15.9 billion (US$2.3 billion)[2] - Net income for the third quarter of 2024 was RMB6.8 billion (US$970 million), a 48% increase from the same period in 2023[1] - Adjusted EBITDA for the third quarter of 2024 was RMB5.7 billion (US$808 million), a 24% increase from the same period in 2023[1] - Total revenue for Q3 2024 reached RMB 15,900 million (USD 2,265 million), a 24.3% increase compared to Q3 2023[10] - Net income attributable to Trip.com Group Limited for Q3 2024 was RMB 6,765 million (USD 962 million), a 46.6% increase year-over-year[11] - Adjusted EBITDA for Q3 2024 was RMB 5,680 million (USD 808 million), with an Adjusted EBITDA margin of 36%[12] - Non-GAAP net income attributable to Trip.com Group Limited for Q3 2024 was RMB 5,963 million (USD 847 million)[13] - Non-GAAP diluted income per ADS for Q3 2024 was RMB 8.75 (USD 1.25), a 49.8% increase year-over-year[13] Revenue Breakdown - Accommodation reservation revenue for the third quarter of 2024 increased by 22% year-over-year to RMB6.8 billion (US$969 million)[2] - Transportation ticketing revenue for the third quarter of 2024 increased by 5% year-over-year to RMB5.7 billion (US$805 million)[2] - Packaged-tour revenue for the third quarter of 2024 increased by 17% year-over-year to RMB1.6 billion (US$222 million)[2] - Corporate travel revenue for the third quarter of 2024 increased by 11% year-over-year to RMB656 million (US$93 million)[2] - Accommodation reservation revenue grew 21.7% year-over-year to RMB 6,802 million (USD 969 million) in Q3 2024[10] - Transportation ticketing revenue increased 5.3% year-over-year to RMB 5,650 million (USD 805 million) in Q3 2024[10] - Packaged-tour revenue surged 17.3% year-over-year to RMB 1,558 million (USD 222 million) in Q3 2024[10] Cash and Investments - As of September 30, 2024, the balance of cash and cash equivalents, restricted cash, short-term investment, and held to maturity time deposit and financial products was RMB86.9 billion (US$12.4 billion)[3] Operating Expenses - Operating expenses for Q3 2024 totaled RMB 8,067 million (USD 1,150 million), a 9.5% increase compared to Q3 2023[11] - Share-based compensation for Q3 2024 was RMB 459 million (USD 65 million), a 31.9% decrease compared to Q2 2024[13]

Company Performance - Trip.com shares closed at $66.68, reflecting a +1.83% change from the previous trading day's closing, outperforming the S&P 500's daily gain of 0.1% [1] - Over the past month, Trip.com shares gained 0.69%, lagging behind the Consumer Discretionary sector's gain of 5.33% and the S&P 500's gain of 4.37% [1] Upcoming Earnings - Trip.com is set to announce its earnings on November 18, 2024, with an expected EPS of $0.91, down 9% from the prior-year quarter [2] - The consensus estimate predicts revenue of $2.2 billion, indicating a 16.65% increase compared to the same quarter of the previous year [2] Full Year Projections - For the full year, earnings are projected at $3.36 per share and revenue at $7.35 billion, reflecting changes of +22.63% and +18.09% respectively from the preceding year [3] - Recent changes to analyst estimates for Trip.com may indicate a changing business landscape, with positive revisions suggesting optimism about the company's outlook [3] Valuation Metrics - Trip.com is currently trading with a Forward P/E ratio of 19.49, which is a discount compared to the industry average Forward P/E of 21.72 [6] - The Leisure and Recreation Services industry, part of the Consumer Discretionary sector, holds a Zacks Industry Rank of 66, placing it in the top 27% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown that 1 ranked stocks yield an average annual return of +25% since 1988 [5] - Trip.com currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining unchanged over the last 30 days [5]

Group 1 - Trip.com (TCOM) closed at $68.42, reflecting a +1.75% change from the previous trading day's closing, outperforming the S&P 500's gain of 1.23% [1] - Over the past month, Trip.com shares have decreased by 1.62%, while the Consumer Discretionary sector gained 1.35% and the S&P 500 lost 0.54% [1] Group 2 - The upcoming earnings report for Trip.com is expected to show an EPS of $0.91, indicating a 9% decline compared to the same quarter last year, with projected revenue of $2.2 billion, reflecting a 16.65% increase [2] - For the full year, earnings are projected at $3.36 per share and revenue at $7.35 billion, representing increases of +22.63% and +18.09% respectively from the previous year [3] Group 3 - Recent changes to analyst estimates for Trip.com are being monitored, as upward revisions indicate analysts' positive outlook on the company's operations and profit generation [4] - The Zacks Rank system, which incorporates estimate changes, currently rates Trip.com at 3 (Hold), with the consensus EPS projection remaining unchanged over the past 30 days [6] Group 4 - Trip.com is currently trading at a Forward P/E ratio of 20.01, which is in line with the industry average [7] - The Leisure and Recreation Services industry, part of the Consumer Discretionary sector, holds a Zacks Industry Rank of 61, placing it in the top 25% of over 250 industries [7] Group 5 - The Zacks Industry Rank is based on the average Zacks Rank of individual stocks, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Core Insights - Trip.com Group Limited will announce its financial results for the three months ended September 30, 2024, on November 18, 2024, U.S. Time [1] - A conference call will be hosted by the management team at 7:00 PM U.S. Eastern Time on the same day, with a live webcast available [2] - The company operates a comprehensive travel platform and is recognized as a leading provider of travel services globally [4] Company Overview - Trip.com Group Limited is a leading global one-stop travel platform, offering a wide range of travel products and services [4] - The company was founded in 1999 and is listed on Nasdaq since 2003 and HKEX since 2021 [4] - It operates under various brands, including Ctrip, Qunar, Trip.com, and Skyscanner, with a mission to pursue the perfect trip for a better world [4]