Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [2] Core Views - The report highlights that Ctrip Group has achieved a doubling stock performance in 2024, with a 95% increase in Hong Kong stocks, driven by sustained travel demand and improved operational efficiency compared to pre-pandemic levels [4][5] - The resilience of domestic travel demand is supported by government policies aimed at boosting cultural and tourism consumption, with a notable increase in domestic travel participants and revenue growth [4][10] - The company's hotel business is expected to stabilize in pricing, with a projected recovery in hotel room rates in 2025, supported by increased online penetration and demand [4][25] - Ctrip's outbound tourism segment is anticipated to contribute significantly to growth, with international flight capacity recovering and a projected 17% increase in international flights in 2025 [4][50] Summary by Sections Company Overview - Ctrip Group has positioned itself as a leading player in the online travel agency (OTA) sector, benefiting from a strong recovery in domestic and outbound travel markets [3][4] Financial Performance - In the first three quarters of 2024, Ctrip's revenue grew by 19%, and Non-GAAP net profit increased by 44% compared to the previous year [4][5] - The company has maintained a stable commission rate for hotels, with expectations for room rates to stabilize in 2025 [25][34] Market Trends - The report notes a shift in consumer behavior towards experiential travel, with domestic tourism showing a double-digit growth in participants [10][17] - Ctrip's online penetration in the hotel sector is expected to improve, with a current online booking rate of approximately 40% for hotels compared to over 70% in the US [4][26] Future Outlook - The report anticipates that Ctrip's international business will continue to expand, with a focus on enhancing its market share in outbound travel as international flight capacities recover [44][50] - Government policies aimed at boosting service consumption and tourism are expected to provide a favorable environment for Ctrip's growth in 2025 [10][12]

Core Insights - Trip.com has consistently surpassed earnings estimates, with an average beat of 36.25% over the last two quarters [1][2] - The latest earnings report showed earnings of $1.25 per share against an estimate of $0.91, resulting in a surprise of 37.36% [2] - The previous quarter also saw a significant surprise, with actual earnings of $1 per share compared to an estimate of $0.74, yielding a surprise of 35.14% [2] Earnings Estimates - There has been a favorable change in earnings estimates for Trip.com, indicated by a positive Earnings ESP (Expected Surprise Prediction) [3][6] - The current Earnings ESP for Trip.com is +0.97%, suggesting analysts are optimistic about the company's earnings prospects [6] - The combination of a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy) indicates a high likelihood of another earnings beat [6] Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [4] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [5] - A negative Earnings ESP does not necessarily indicate an earnings miss but reduces the predictive power of the metric [6]

Investment Rating - The report assigns a "Buy" rating to Trip.com Group with a target price of HKD 597.7, representing a 7.60% upside from the current price of HKD 555.5 [4][13] Core Views - Trip.com Group's 3Q24 performance exceeded expectations, driven by strong growth in domestic and outbound travel demand [2] - The company's international OTA platform Trip.com saw hotel and flight bookings grow over 60% YoY, with outbound travel recovering to 120% of 2019 levels [2] - Trip.com Group is well-positioned to benefit from the recovery of outbound travel, supported by increasing flight capacity and visa facilitation [10] - The company's domestic travel business is expected to grow further due to the resilience of travel demand and increasing online penetration [3] - Trip.com's international business is in a rapid growth phase, with significant potential for expansion and synergies between domestic and international operations [13] Business Performance - In 3Q24, Trip.com Group achieved total revenue of RMB 15.9 billion, up 15.5% YoY, with adjusted EBITDA of RMB 5.7 billion, up 23.9% YoY, and Non-GAAP net profit of RMB 6.0 billion, up 21.8% YoY [2] - Segment revenue breakdown: Accommodation booking revenue grew 21.7% YoY to RMB 6.8 billion, transportation ticketing revenue increased 5.3% YoY to RMB 5.7 billion, package tour revenue rose 17.3% YoY to RMB 1.6 billion, and corporate travel management revenue grew 11.0% YoY to RMB 0.7 billion [2] - Trip.com's international OTA platform contributed approximately 9% of total revenue, with Asia-Pacific market revenue growing over 70% YoY [11] Industry Trends - Domestic travel in China has shown strong recovery, with 2023 domestic trips reaching 4.9 billion, recovering to 81.4% of 2019 levels, and total spending recovering to 85.7% of 2019 levels [3] - Online travel booking users in China reached 500 million by December 2023, accounting for 46.6% of total internet users, indicating significant growth potential for online travel platforms [3] - Outbound travel is expected to reach 130 million trips in 2024, recovering to 84% of 2019 levels, driven by increasing flight capacity and visa facilitation [10] Financial Projections - Revenue is projected to grow to RMB 55.3 billion in FY24E and RMB 62.9 billion in FY25E, with Non-GAAP net profit expected to reach RMB 17.1 billion in FY24E and RMB 18.9 billion in FY25E [7][13] - EPS is forecasted to be RMB 25.02 in FY24E and RMB 27.79 in FY25E, with P/E ratios of 20.6x and 18.6x respectively [7][13] - The company's ROE is expected to improve to 11.31% in FY24E and 11.23% in FY25E, reflecting strong profitability and efficient capital utilization [16]

Core Viewpoint - Trip.com Group Limited (TCOM) has shown significant stock performance, gaining 32.5% over the past six months, outperforming its industry and the S&P 500 Index [1] Group 1: Company Performance - The Zacks Consensus Estimate for TCOM's 2025 earnings per share (EPS) has increased from $3.77 to $3.98, indicating a year-over-year growth of 7.3% [3] - The earnings estimates for the first quarter of 2025 have also risen to 88 cents from 87 cents, reflecting a 6% growth from the previous year [3] - TCOM has consistently surpassed earnings expectations in the last four quarters, with an average surprise of 42.8% [3] Group 2: Market Demand and Growth Initiatives - TCOM is benefiting from robust travel demand, both domestically and internationally, as easing macro conditions have led to increased consumer optimism and travel sentiments [5] - The domestic travel market in China is particularly strong, with a focus on lesser-known destinations contributing to local tourism growth [6] - The company is investing in growth initiatives to enhance its product offerings, including a diversified portfolio of travel and hotel booking packages [7] Group 3: Technological Advancements - TCOM is integrating artificial intelligence (AI) into its services to improve customer experience and meet personalized demands [8] - The international OTA platform has become the most downloaded OTA app in several APAC markets, with air ticket and hotel bookings growing over 60% year-over-year [8] Group 4: Valuation and Financial Metrics - TCOM is currently trading at a discount compared to industry peers based on a forward 12-month price-to-earnings (P/E) ratio, indicating it remains an attractive investment option [10] - The company's trailing 12-month return on equity (ROE) stands at 12%, significantly higher than the industry's 1.2%, showcasing its efficiency in utilizing shareholders' funds [12]

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Brokerage Recommendations and ABR - Trip com currently has an average brokerage recommendation ABR of 1 13 on a scale of 1 to 5 Strong Buy to Strong Sell calculated based on the actual recommendations made by 19 brokerage firms An ABR of 1 13 approximates between Strong Buy and Buy [2] - Of the 19 recommendations that derive the current ABR 17 are Strong Buy and one is Buy Strong Buy and Buy respectively account for 89 5 and 5 3 of all recommendations [2] - Brokerage recommendations often have a strong positive bias due to the vested interest of brokerage firms in the stocks they cover For every Strong Sell recommendation brokerage firms assign five Strong Buy recommendations [5] Zacks Rank and Earnings Estimate Revisions - The Zacks Rank is a quantitative model designed to harness the power of earnings estimate revisions and is displayed in whole numbers 1 to 5 unlike the ABR which is displayed in decimals [8] - Earnings estimate revisions are at the core of the Zacks Rank and empirical research shows a strong correlation between trends in earnings estimate revisions and near term stock price movements [10] - The Zacks Rank is always timely in predicting future stock prices as it quickly reflects the revisions made by brokerage analysts to their earnings estimates [11] Trip com s Earnings Prospects - The Zacks Consensus Estimate for Trip com s current year earnings has increased 12 3 over the past month to 3 71 indicating growing optimism among analysts about the company s earnings prospects [12] - The recent change in the consensus estimate along with three other factors related to earnings estimates has resulted in a Zacks Rank 1 Strong Buy for Trip com [13] - The Buy equivalent ABR for Trip com may serve as a useful guide for investors considering the company s strong earnings estimate revisions and Zacks Rank [13]

Core Viewpoint - Trip.com Group Limited (TCOM) has shown exceptional year-to-date performance, significantly outperforming the leisure and recreation services industry and the broader consumer discretionary sector [1][2]. Stock Performance - TCOM stock has increased by 81.2% year-to-date, compared to the industry growth of 22.6% and the S&P 500's 26.7% [1]. - As of the latest close, TCOM stock was priced at $65.25, below its 52-week high of $69.67 and above its 52-week low of $32.42 [2]. - TCOM has outperformed competitors such as Carnival Corporation (CCL), Norwegian Cruise Line Holdings (NCLH), and Live Nation Entertainment (LYV), which saw gains of 40.3%, 41.5%, and 47.1% respectively [2]. Technical Indicators - TCOM stock is trading above its 50-day moving average of $62.66 and its 200-day moving average of $51.23, indicating strong market sentiment [7]. Market Factors - The travel market is showing resilience, with a recovery in consumer confidence and increased demand for diverse travel experiences [8]. - Domestic and cross-border travel in China has seen significant growth, with travel bookings during the National Day holiday exceeding pre-pandemic levels [8]. - Outbound travel is also on the rise, with international flight market activity reaching about 80% of pre-pandemic levels and outbound hotel and air ticket bookings increasing to 120% of 2019 levels [10]. Consumer Trends - There is a notable shift in consumer preferences towards family travel, food, culture, and seasonal experiences, particularly among younger travelers [9]. - Travel bookings from lower-tier cities have surged, with increases of 100% and 300% from Tier 4 and Tier 5 cities respectively during the National Day holiday [12]. Technological Investments - TCOM is investing heavily in technology and AI to enhance user experience and operational efficiency, with AI reducing coding time for engineers by 15-30% [13][14]. - The company aims to improve customer service and content generation accuracy through AI integration [14]. Strategic Initiatives - TCOM is focused on innovation and collaboration with partners to enhance product offerings and customer loyalty [15]. - The company supports domestic hotels in increasing visibility and demand from international markets, with international bookings rising over 60% year-over-year [16]. Earnings Estimates - The Zacks Consensus Estimate for TCOM's 2024 earnings has increased, indicating a growth of 35.4% year-over-year, with 2025 estimates also trending upward [18]. - TCOM has consistently beaten earnings estimates, with an average surprise of 42.8% over the last four quarters [18]. Valuation - TCOM is currently valued at a premium compared to the industry average, with a forward 12-month price-to-sales ratio of 5.05X, higher than the industry's 2.40X [19]. Investment Outlook - TCOM is well-positioned for continued success due to a resilient travel market, strong outbound travel growth, and technological advancements [20]. - The company presents an attractive investment opportunity in the booming travel and tourism sector, currently holding a Zacks Rank 1 (Strong Buy) [21].

Investment Rating and Target Price - The report initiates coverage on Trip.com Group (9961 HK) with a "Buy" rating and a target price of HKD 582.2 [1] - The target price is based on an 18x PE multiple for 2025, reflecting a discount to the peer average of 21.9x due to recent valuation increases in US peers [6] Core Investment Thesis - Trip.com is a global leader in the OTA (Online Travel Agency) industry, with a strong position in China's high-end travel market and rapid global expansion [1] - The company benefits from increasing online penetration in domestic travel and structural growth in outbound travel, with its international platform Trip.com in a rapid growth phase [1] - Domestic market stability, rising profitability from outbound travel, and operational efficiency improvements are expected to drive sustained profit growth [1] Market Outlook and Industry Trends - Domestic tourism in China has recovered to 92% of 2019 levels in terms of trips and 100% in terms of revenue as of Q3 2024, with outbound and inbound travel expected to reach 80% of 2019 levels by 2024 [2] - China's tourism online penetration rate was 37% in 2022, significantly lower than the global average of 66%, indicating room for OTA platforms to outperform the broader tourism market [2] - Outbound travel is expected to benefit from international flight capacity recovery and policy support, with structural growth driven by expanding travel radius and increasing penetration in lower-tier cities [2] Accommodation Business - Trip.com has a strong foothold in China's high-star hotel market, with a stable supply chain and high user stickiness in high-tier cities [3] - The company's accommodation business is expected to maintain high growth from 2024-2026, driven by further online penetration in domestic hotels and rapid growth in overseas hotel bookings [3] - Trip.com's ADR (Average Daily Rate) and Take Rate are expected to remain stable, supporting revenue growth [3] Transportation Business - Transportation services, a key traffic driver for Trip.com, accounted for 56% of China's online air ticket booking market in 2019 [4] - Domestic transportation growth is expected to align with industry trends, while outbound travel demand is expected to drive higher-margin international ticket sales [4] - The business model relies on cross-selling to higher-margin accommodation and travel services, with over 30% of transportation users converting to other services as of H1 2024 [80] Financial Performance and Valuation - Revenue is forecasted to grow at a CAGR of 17% from 2024-2026, reaching RMB 72.5 billion in 2026, with adjusted net profit growing at a CAGR of 22% to RMB 23.6 billion [6] - The company's adjusted net profit margin improved significantly to 29.4% in 2023, up from 7.0% in 2022, driven by strong revenue recovery and cost control [45] - Trip.com's EV/EBITDA multiple is expected to decline from 11.3x in 2024 to 7.3x in 2026, reflecting improving profitability and cash flow [8] International Expansion - Trip.com's international platform, Trip.com, is in a rapid growth phase, with international OTA platform revenue growing 60% YoY in Q3 2024 [34] - The company aims to increase the contribution of international business to 40-50% of total revenue, leveraging its strong position in the Asia-Pacific region and growing outbound demand from China [72] Competitive Positioning - Trip.com maintains a strong competitive position in China's high-end travel market, with a differentiated brand image compared to competitors like Meituan and Tongcheng, which focus on lower-tier markets [21] - The company's high ADR (Average Daily Rate) in the accommodation segment, averaging RMB 331, is significantly higher than competitors, supporting its leading position in GMV (Gross Merchandise Value) [68]

Investment Rating - The report maintains a "Buy" rating for both the US-listed (TCOM) and Hong Kong-listed (09961 HK) shares of Trip com Group [5] Core Views - Trip com Group reported strong 3Q24 results with net revenue of RMB 15 9 billion (+16% YoY +32% QoQ) and non-GAAP net profit of RMB 6 billion (+22% YoY) [2] - The company's gross margin improved by 0 3 percentage points YoY to 82 4% in 3Q24 [2] - Outbound travel recovery led the industry with overseas hotel and flight bookings reaching 120% of pre-pandemic levels in 2019 [3] - International OTA platform hotel and flight bookings grew over 60% YoY with APAC bookings up more than 70% [3] Business Segment Performance - Accommodation revenue grew 22% YoY to RMB 6 8 billion in 3Q24 [2] - Transportation revenue increased 5% YoY to RMB 5 7 billion in 3Q24 [2] - Package tour revenue rose 17% YoY to RMB 1 6 billion in 3Q24 [2] - Corporate travel revenue grew 11% YoY to RMB 656 million in 3Q24 [2] Financial Projections - Non-GAAP net profit is forecasted to grow 32% 21% and 16% in 2024 2025 and 2026 respectively reaching RMB 24 2 billion by 2026 [3] - Revenue is expected to grow at a CAGR of 15 7% from 2024 to 2026 reaching RMB 69 6 billion in 2026 [4] - The company plans to enhance shareholder returns in 2025 potentially combining share buybacks with dividends [3] Valuation - The report assigns a 16X PE multiple for 2025 valuing the US-listed shares at $67 44/ADS and HK-listed shares at HK$524 87/share [3] Key Financial Metrics - ROE is projected to improve from 11 4% in 2024 to 12 0% in 2025-2026 [10] - Net margin is expected to remain stable at around 31 5% from 2024 to 2026 [10] - The company's cash position is forecasted to grow from RMB 43 4 billion in 2024 to RMB 76 5 billion in 2026 [8]