Trip.com Group (TCOM) Conference Call Summary Company Overview - **Company**: Trip.com Group (TCOM) - **Market Cap**: $39.3 billion - **Enterprise Value**: $32.9 billion - **Current Share Price**: $61.77 - **12-Month Price Target**: $87.00 (Upside: 40.8%) [1] Key Industry Insights - **Investigation Impact**: TCOM's share price dropped approximately 20% following the announcement of an investigation by the State Administration for Market Regulations (SAMR) of the PRC under the Anti-Monopoly Law. Historical cases (e.g., Alibaba, Meituan) were referenced to assess potential impacts on stock performance [1][2]. - **Competitive Landscape**: The investigation may lead TCOM to adopt a more restrained competitive stance, particularly in the hospitality segment, which is more fragmented compared to the airline and railway sectors dominated by state-owned companies [2][28]. - **Booking Volume vs. Take Rate**: The anticipated impact of increased competition is expected to affect booking volumes more than take rates. TCOM and Tongcheng have maintained stable hotel take rates despite competitive pressures [2][32]. Financial Performance and Projections - **Revenue Forecasts**: - FY2025E: Rmb 62,056.3 million - FY2026E: Rmb 69,843.2 million - FY2027E: Rmb 77,269.2 million [6][19] - **Earnings Adjustments**: Core earnings estimates for FY26-27 were revised down by 5% to 8%, with a slower hotel GMV CAGR projected at 6% (previously 13%) [19]. - **EBIT Margin**: Expected to narrow to 28.9% in FY26E from 30.4% in FY24E [19]. Key Financial Metrics - **EBITDA**: - FY2025E: Rmb 18,927.3 million - FY2026E: Rmb 21,113.1 million - FY2027E: Rmb 23,062.7 million [6][19] - **EPS**: - FY2025E: Rmb 46.30 - FY2026E: Rmb 30.04 - FY2027E: Rmb 32.16 [6][19] Risks and Considerations - **AI Adoption**: TCOM faces potential risks from AI adoption compared to peers, as competitors like Alibaba have integrated AI solutions to enhance customer experiences [21]. - **Market Structure**: The hospitality segment's fragmented nature may lead to increased competition and potential loss of exclusivity agreements, impacting TCOM's hotel business [28][29]. - **Take Rate Sensitivity**: A 10% reduction in hotel GMV could lower FY26E earnings by 5%, while a 1% change in hotel take rate could impact earnings by 8% [19]. Revenue Breakdown - **Domestic Revenue**: Approximately Rmb 40 billion or 63% of total revenue in FY2025E, with significant contributions from domestic hotels (29%) and transportation (15%) [26]. - **EBIT Contribution**: Majority of EBIT derived from domestic and outbound travel businesses, with 41% from domestic hotels [26]. Conclusion - Despite the recent volatility due to regulatory scrutiny, TCOM is positioned to benefit from the long-term growth of Chinese travel demand. The current share price correction may present a buying opportunity for long-term investors [20].

Core Viewpoint - The State Administration for Market Regulation has initiated an investigation into Ctrip Group for suspected monopolistic behavior due to abuse of market dominance [3][14]. Group 1: Investigation Details - The investigation is based on prior checks and is conducted under the Anti-Monopoly Law of the People's Republic of China [3]. - Ctrip has been previously warned multiple times for practices such as unauthorized price changes and setting unreasonable trading conditions [10]. - In August 2025, the Guizhou Provincial Market Supervision Administration held a meeting with Ctrip and other travel platform companies to address price irregularities and potential issues like "choose one from two" practices [11]. - In September 2025, the Zhengzhou Market Supervision Administration conducted an administrative interview with Ctrip for unreasonable restrictions on transaction prices and practices [12]. - In December 2025, the Yunnan Provincial Tourism Homestay Industry Association initiated anti-monopoly protection efforts against online travel agencies, citing Ctrip's unfair trading conditions [13]. Group 2: Company Response - Ctrip has acknowledged the investigation and stated it will cooperate with regulatory authorities while ensuring normal business operations [15]. - The company emphasizes its commitment to providing quality services to users and partners [15].

Core Insights - Morgan Stanley's report on Chinese tech stocks presents an optimistic outlook for AI development by 2026, driven by both supply and demand factors [1] - The overseas expansion of internet companies is highlighted as a crucial strategy to address macroeconomic, competitive, regulatory, and geopolitical risks [1] Company Preferences - The report lists preferred stocks with an "overweight" rating, including Tencent, Alibaba, Pinduoduo, Tencent Music, NetEase, BOSS Zhipin, Manbang, Meituan, Trip.com, Tongcheng Travel, TAL Education, and Beike [1]

Group 1: Tourism Industry - The tourism market is expected to grow by over 10% in 2025, driven by the continuous release of leisure travel demand and the rise of experiential consumption [1] - Domestic tourism revenue and visitor numbers are projected to increase by 12% and 18% year-on-year in Q1-Q3 2025, respectively [1] - Recommended stocks in the tourism industry include China Duty Free Group, Jin Jiang Hotels, ShouLai Hotels, Tongcheng Travel, and Trip.com Group [1] Group 2: Restaurant Industry - Offline consumption is gradually recovering, with domestic restaurant revenue reaching 519.9 billion and 605.7 billion yuan in October and November 2025, showing year-on-year growth of 4.99% and 4.40% [2] - The recovery of leading restaurant companies is faster than the industry average, with a focus on stocks like Green Tea Group and Haidilao [2] Group 3: Tea Beverage Industry - Since Q4 2025, same-store sales for leading tea brands like Gu Ming and Hu Shang A Yi have continued to grow at a high rate of 15-20%, aided by delivery subsidies and brand expansion into coffee and breakfast categories [3] - Despite a slight decrease in delivery subsidies, leading brands are accelerating their expansion, highlighting the advantages of top brands [3] Group 4: Online Travel Agency (OTA) Industry - The recovery of travel demand is ongoing, with OTA performance improving due to increased domestic leisure travel demand, hotel supply growth, and rising online penetration [4] - The performance of OTAs is expected to remain stable with long-term growth potential, particularly with the high growth in outbound travel [4] - Recommended stocks in the OTA sector include Trip.com Group and Tongcheng Travel [4] Group 5: Hotel Industry - In Q4 2025, hotel room supply is expected to grow by 6-8% year-on-year, with RevPAR remaining stable compared to 2024, benefiting from increased holiday traffic and low base effects [5] - Leading hotel companies are expected to have significant earnings elasticity in a cyclical environment, with recommendations for Jin Jiang Hotels and ShouLai Hotels [5]

Group 1 - The central government emphasizes the importance of balancing development and regulation in the platform economy, aiming to enhance the governance system and regulatory standards [1] - The State Administration for Market Regulation has initiated an investigation into Ctrip Group for alleged monopolistic behavior, marking a significant step in promoting fair competition in the digital market [1][2] - The investigation reflects the government's strong stance against monopolistic practices and its commitment to creating a fair competitive environment for various business entities [2] Group 2 - The online travel and accommodation industry is a crucial sector within the platform economy, facing issues such as forced exclusive partnerships and price manipulation, which have raised public concern [3] - The platform economy ecosystem consists of platform enterprises, operators, and consumers, with the need for platforms to consider the interests of all stakeholders to ensure sustainable development [3] - The investigation serves as a response to long-standing concerns and aims to foster a win-win ecosystem that promotes healthy development in the platform economy [3] Group 3 - The revised Anti-Monopoly Law in 2022 includes "encouraging innovation" as a legislative goal, aiming to shift large platform enterprises from a focus on scale to one on technological innovation and service optimization [4] - Effective antitrust enforcement is crucial for breaking down monopolistic barriers and preventing companies from stifling innovation through their advantages [4] - The investigation seeks to uncover potential monopolistic behaviors in the online travel industry, aiming to create a more diverse and inclusive innovation ecosystem [4]

Investment Rating - The report maintains a positive investment rating for the industry, highlighting a favorable outlook for the tourism and leisure sectors due to government policies aimed at boosting domestic consumption and service spending [1][35]. Core Insights - The report emphasizes the recovery of domestic tourism, with expected growth rates of 12% in revenue and 18% in visitor numbers for Q1-Q3 2025, driven by sustained leisure travel demand and the rise of experiential consumption [1][35]. - The overall tourism market is projected to grow by over 10% for the year, supported by government initiatives such as promoting spring and autumn travel and issuing cultural tourism consumption vouchers [1][35]. - Key companies recommended for investment include China Duty Free Group, Jin Jiang Hotels, Shouqi Group, Tongcheng Travel, and Ctrip Group, alongside high-growth tea beverage stocks like Gu Ming and low-valuation restaurant growth stocks like Green Tea Group [1][35]. Summary by Sections 1. Restaurant Sector - Offline consumption is gradually recovering, with Q4 restaurant revenue showing steady growth, achieving 519.9 billion and 605.7 billion yuan in October and November 2025, respectively, with year-on-year growth of 4.99% and 4.40% [7][10]. - Leading restaurant companies are recovering faster than the industry average, with significant revenue increases noted for major players [10][14]. 2. Tea Beverage Sector - The tea beverage sector has seen a surge in same-store sales growth due to delivery subsidies, with leading brands like Gu Ming and Hu Shang A Yi maintaining high growth rates of 15-20% [7][10][14]. - The number of new store openings has doubled compared to 2024, indicating aggressive expansion strategies among top brands [16]. 3. OTA (Online Travel Agency) - The recovery of outbound travel demand is evident, with strong performance in Southeast Asia routes and a notable increase in visitor numbers to Japan and South Korea [20][24]. - The report highlights the long-term profit potential of leading OTA companies like Ctrip and Tongcheng Travel, driven by the ongoing recovery in leisure travel demand and improved commission rates [24][25]. 4. Hotel Sector - The hotel industry is expected to see a stable RevPAR (Revenue per Available Room) in Q4, with a year-on-year growth of 6-8% in room supply [29][30]. - Major hotel chains like Shouqi and Jin Jiang are projected to maintain or improve their performance, benefiting from cost reductions and increased guest traffic during holiday periods [29][30][31]. 5. Investment Recommendations - The report suggests focusing on the travel sector, particularly companies involved in OTA, hotels, and scenic spots, as they are likely to benefit from favorable government policies [1][35]. - Additionally, it recommends investing in high-growth tea beverage stocks and undervalued restaurant growth stocks, indicating a diversified approach to capitalizing on the recovery in consumer spending [1][35].

Group 1: Internet Company Revenue and Profit - JD.com leads the revenue chart with 956.8 billion, followed by Alibaba at 731.9 billion and Tencent at 557.4 billion [1] - Alibaba's net profit stands at 76.5 billion, significantly higher than JD.com's 22.3 billion, while Tencent shows a strong profit of 166.6 billion [1] - The profit margin for Tencent is notably high at 30.63%, compared to Alibaba's 10.45% and JD.com's 2.33% [1] Group 2: Market Trends and Insights - The data indicates a competitive landscape among major internet companies, with varying revenue and profit margins suggesting different business strategies and operational efficiencies [1] - The significant profit margins of Tencent may indicate a focus on high-margin services, while JD.com and Alibaba are still scaling their operations [1] Group 3: Financial Performance Overview - The overall financial performance of the top internet companies reflects a diverse range of growth strategies, with some companies prioritizing revenue growth while others focus on profitability [1] - The financial results for the third quarter of 2025 highlight the ongoing evolution of the internet sector in China, with implications for future investment opportunities [1]

A股 Market Updates - On January 15, multiple A-share companies released their performance forecasts for 2025, with many expecting significant profit increases. SAIC Motor Corporation anticipates a net profit growth of up to 558%, while companies like Shengnuo Biological and Zhenghai Magnetic Materials expect increases exceeding 200% [2] - Jiamei Packaging announced that its stock has triggered redemption clauses due to its closing price being above 130% of the conversion price for 15 out of the last 30 trading days [2] - ST Chengchang and Zhizhi New Materials announced their resumption of trading after completing investigations into recent abnormal stock price fluctuations [2] - ST Aowei reported that its stock closed at 0.99 CNY per share, warning that if it remains below 1 CNY for 20 consecutive trading days, it may face delisting from the Shenzhen Stock Exchange [2] Logistics and E-commerce - SF Holding and Jitu Express announced a strategic mutual shareholding agreement, involving an investment transaction amounting to nearly 8.3 billion HKD [3] - Ctrip is under investigation by the State Administration for Market Regulation, leading to a significant drop in its stock price, with a 6.49% decline on the day of the announcement and a further 20% drop the following day, resulting in a market value loss exceeding 100 billion CNY [3] Financial Data - In 2025, the total number of new A-share accounts reached 27.44 million, a 10% increase year-on-year, marking a three-year high, with total A-share investors exceeding 250 million [4] - The People's Bank of China reported that by the end of 2025, the social financing scale reached 442.12 trillion CNY, growing by 8.3% year-on-year, while the RMB loan balance was 271.91 trillion CNY, up 6.4% [5] - The China Securities Regulatory Commission approved an adjustment to the margin ratio for financing, increasing the minimum margin requirement from 80% to 100%, effective January 19, 2026 [5] Gold Reserves - As of the end of November 2025, non-U.S. countries' official gold reserves exceeded 900 million troy ounces, valued at approximately 3.82 trillion USD [6] Infrastructure and Technology - The State Grid Corporation announced that its fixed asset investment is expected to reach 4 trillion CNY during the 14th Five-Year Plan, a 40% increase from the previous plan [7] - Alibaba's Qianwen App has integrated with various Alibaba ecosystem services, launching over 400 AI functionalities to enhance user experience in daily tasks [7] - Shanghai's new action plan aims to implement L4 autonomous driving technology in various scenarios by 2027, targeting over 6 million passenger trips and 800,000 TEU in freight transport [7] Housing Policy - A joint announcement from the Ministry of Finance, State Taxation Administration, and Ministry of Housing and Urban-Rural Development extended personal income tax policies supporting housing purchases from January 1, 2026, to December 31, 2027 [8] Trade Performance - China's total foreign trade in 2025 reached 45.47 trillion CNY, a 3.8% increase, setting a historical record and maintaining its position as the world's largest goods trading nation [8]

Core Insights - The travel market is heating up as the winter vacation and the 2026 Spring Festival holiday approach, with students starting to travel early for the holiday season [1][3] Group 1: Travel Trends - The first wave of travelers includes university students taking advantage of the winter break, leading to a noticeable increase in flight bookings, particularly among the 18-22 age group, which saw a nearly 30% week-on-week increase [3] - Data from Qunar indicates that flight bookings for the period from January 12 to January 19 have significantly increased, with a 20% rise in travelers flying out as the winter break begins [3][7] - The trend of early travel for the Spring Festival is evident, with many families and students opting for trips during the winter break, leading to a surge in bookings for family-oriented travel products [3][4] Group 2: Booking Statistics - Hotel bookings for popular cities during the Spring Festival have increased by 70% year-on-year, with family travel making up over 30% of the bookings [4][7] - The demand for vacation rentals has surged, with bookings for standalone villas increasing by 77% year-on-year, indicating a preference for larger accommodations [5] - The average length of stay for vacation rentals has exceeded 12 days, with a 35% increase in bookings for stays of 7 days or more, reflecting a trend towards longer, more planned vacations [6] Group 3: Family Travel Dynamics - Families are becoming the core demographic for travel during the Spring Festival, with over half of domestic travel bookings on Ctrip being for family trips [11] - The age group of 30-50 years is the primary market for travel, accounting for 45% of flight bookings, while children and teenagers represent 23% of ticket purchases [11][12] - The popularity of theme parks and cultural venues is rising, with ticket bookings for attractions like Shanghai Disneyland and Beijing Universal Resort seeing significant increases [12][13] Group 4: International Travel - The outbound travel market is experiencing notable growth, particularly to Southeast Asia, with a 45% increase in long-haul travel bookings [10][14] - The number of inbound tourists during the Spring Festival has doubled compared to last year, with significant interest from countries like Malaysia, South Korea, and Japan [14]

Core Viewpoint - The market capitalization of Google (Alphabet) is approximately $4 trillion, while the combined market capitalization of China's top internet companies is only about $1.8 trillion, indicating a significant disparity in valuation and market perception [25][28][30]. Market Capitalization Comparison - As of the end of 2025 or early 2026, the estimated market capitalizations of major companies are as follows: - Google (Alphabet): ~$40,000 million - Tencent: ~$5,917 million - Alibaba: ~$3,333 million - Xiaomi: ~$1,987 million - Pinduoduo: ~$1,486 million - Meituan: ~$975 million - NetEase: ~$852 million - JD: ~$471 million - Trip.com: ~$383 million - Kuaishou: ~$345 million - Tencent Music: ~$302 million - The total market capitalization of the top 10 Chinese internet companies is estimated to be around $17,000–20,000 million, which is more than 2.2 times less than that of Google [28][3][25]. Competitive Landscape - The primary issue in the Chinese internet sector is not a lack of effort but rather a misdirection in competitive strategies, focusing excessively on user acquisition, subsidies, and speed, leading to a dangerous cycle of competition [30][5]. - This competitive model, which relies on free services to gain scale and eliminate competitors, is damaging long-term sustainability in the industry [31][32]. Impact on Entrepreneurship - The current environment is systematically clearing out entrepreneurs, reducing their roles to mere tools for larger platforms, and stifling genuine innovation [34][37]. - The lack of reasonable pricing, stable profits, and long-term investment in research and development is leading to fewer companies being profitable and surviving [35][36]. Employment Challenges - The concentration of the industry into a few dominant platforms is contributing to job losses, with monopolistic structures eliminating positions rather than technological advancements like AI [39][10]. - As industry profits shrink, salaries are also compressed, leading to fewer job opportunities for young people [11][39]. Comparison with Google - Google’s strength lies not in the number of applications but in its focus on foundational capabilities, allowing ecosystem partners to thrive and generating productivity-based revenue rather than merely capturing attention [40][41]. - The competitive landscape in China, characterized by internal strife, hinders the emergence of globally competitive companies [41][42]. Future Outlook - If the current competitive practices continue, the industry may end up with a few platforms and many dependent entities, leading to a degraded ecosystem rather than a mature industry [42][45]. - A healthy internet ecosystem should support entrepreneurship and job creation, rather than relying solely on free services as a competitive tool [44][51].