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 article discusses the ongoing investigation into Ctrip Group for alleged monopolistic practices, including raising commission rates and imposing unfair trading conditions on small businesses in the tourism sector [2][5][11]. Group 1: Allegations Against Ctrip - Ctrip has been accused of abusing its market dominance, with complaints from members of the Yunnan Province Tourism Homestay Industry Association about rising commission rates from 8%-10% to 12%-18% [2][5]. - The association reported that some homestays face total costs, including hidden promotional fees, reaching nearly 40%, leading to a dilemma of either cooperating with Ctrip and incurring losses or not cooperating and having no customers [2][5]. - Legal experts suggest that if Ctrip is found guilty, it may have to change its entire profit model, which could significantly impact its operations [3][11]. Group 2: Impact on Small Businesses - Small businesses, such as homestays, heavily rely on Ctrip for customer orders, with some reporting that over 90% of their bookings come from the platform [4][5]. - Business owners have described the pressure to comply with Ctrip's demands, including paying for advertising and participating in promotional schemes to maintain visibility on the platform [4][7]. - The hidden costs associated with Ctrip's services can lead to a situation where businesses are left with minimal profit margins, as evidenced by specific examples where platforms take significant cuts from the total booking fees [8][9]. Group 3: Market Position and Financials - Ctrip holds a dominant market share in the domestic tourism sector, with a reported 56% of the total transaction volume in 2024 [6]. - The company's operational profit for Q3 2025 was reported at 5.574 billion yuan, with a profit margin of 30%, although some profits were attributed to the disposal of certain investments [6][10]. - Ctrip's financial dealings extend beyond its platform, as it also collects substantial commissions from hotel groups, indicating a broader influence in the tourism industry [6][10]. Group 4: Regulatory and Legal Considerations - The investigation into Ctrip is based on the Anti-Monopoly Law, which could lead to penalties including fines and the requirement to cease illegal practices [10][11]. - Experts highlight that the focus should not only be on potential fines but also on how Ctrip may need to alter its business practices to comply with legal standards [10][11]. - The allegations against Ctrip include unfair pricing practices and imposing unreasonable trading conditions on small merchants, which could lead to significant changes in the online travel agency landscape [11].

Core Viewpoint - The recent investigation into Ctrip for alleged monopolistic practices serves as a warning to all platform enterprises, highlighting the ongoing tightening of regulations in China's platform economy [2][3]. Group 1: Regulatory Actions and Investigations - As of December 17, 2025, China has handled 35 cases of monopoly agreements and 25 cases of abuse of market dominance, with total fines amounting to 2.93 billion yuan [4]. - Ctrip is under investigation for suspected abuse of market dominance, with the company stating it will cooperate with the investigation [2]. - The National Market Supervision Administration has emphasized the need for continuous regulation of platform economies, with key tasks for 2026 including strengthening regular oversight and ensuring compliance [2]. Group 2: Impact on Platform Enterprises - Ctrip may face operational adjustments, confiscation of illegal gains, and substantial fines, estimated between 533 million to 5.33 billion yuan based on its 2024 revenue of 53.3 billion yuan [3]. - The investigation serves as a critical reminder for all platform enterprises to abandon monopolistic practices and ensure transparency and fairness in transactions [3]. Group 3: Broader Regulatory Framework - The Chinese government has been enhancing its antitrust framework, with recent statistics showing a significant increase in enforcement actions against monopolistic practices [4][6]. - New regulations, such as the "Internet Platform Antitrust Compliance Guidelines," aim to delineate compliance boundaries and encourage self-assessment among platform operators [6]. - The government is also focusing on addressing "involutionary" competition, which is characterized by low-quality, low-price competition that disrupts market efficiency [4][6]. Group 4: Specific Industry Regulations - The food delivery platform sector is under scrutiny, with new national standards introduced to regulate competition and address issues like excessive subsidies and price wars [4]. - The Market Supervision Administration is conducting evaluations of the competitive landscape in the food delivery industry to mitigate monopolistic risks and ensure market order [4]. Group 5: Responsibilities of Platform Enterprises - Platform enterprises are seen as key players in the regulatory landscape, with a need for clear delineation of responsibilities in various scenarios [10][11]. - New regulations will require platform operators to fulfill obligations related to product information disclosure and quality monitoring, reinforcing their role as market order maintainers and consumer rights protectors [12].

Core Viewpoint - The article discusses the increasing complaints against Ctrip for monopolistic practices in the online travel platform industry, highlighting the rising commission rates and the financial strain on small accommodation providers [1][3][4]. Group 1: Ctrip's Market Practices - Ctrip has raised its commission rates from 8%-10% to 12%-18%, leading to a situation where the total costs for some accommodations, including hidden fees, can reach up to 40% [1][7]. - The National Market Supervision Administration has initiated an investigation into Ctrip for suspected monopolistic behavior, which may require the company to alter its current profit model [2][12]. - Ctrip's practices include "choose one from two" policies and unreasonable restrictions on pricing, which have been previously flagged by market supervision authorities [2][5]. Group 2: Impact on Small Accommodation Providers - Small accommodation providers, like the one operated by Chen Lei, report that over 90% of their bookings come from Ctrip, creating a dependency that forces them to comply with the platform's demands [3][4]. - Providers often face pressure to pay for promotional services to improve their visibility on the platform, with some reporting that up to 25% of their annual revenue goes to Ctrip in commissions [4][9]. - The lack of formal contracts for "special badge" merchants leads to a de facto "choose one from two" situation, where merchants must choose between Ctrip and other platforms to maintain their status [5][11]. Group 3: Financial Performance and Market Position - Ctrip holds a significant market share in the domestic travel industry, with a reported 56% of the total transaction volume in 2024 [8]. - In Q3 2025, Ctrip reported an operating profit of 5.574 billion yuan, with an operating profit margin of 30%, although some profits were attributed to the disposal of certain investments [8][12]. - The company is also involved in the hotel sector, holding a 7.2% stake in Huazhu Group, which pays substantial commissions to Ctrip for booking services [8]. Group 4: Legal and Regulatory Implications - Legal experts suggest that Ctrip may face significant penalties under the Anti-Monopoly Law, with potential fines ranging from 5.33 billion to over 65 billion yuan based on its revenue [11][12]. - The focus of the investigation may lead to changes in Ctrip's operational practices, particularly regarding its commission structure and treatment of small merchants [12][13]. - The article emphasizes the importance of monitoring how Ctrip will adapt its business model in response to regulatory scrutiny, rather than solely focusing on potential fines [12][13].

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]