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 - The report assigns a "Buy" rating for the company [2]. Core Views - The domestic market remains strong while the overseas market continues to expand [2]. - The company achieved robust performance in Q3 2024, with revenue and adjusted net profit reaching RMB 406.1 billion and RMB 150.0 billion, respectively, representing year-on-year growth of +18.7% and +44.3% [2]. - The strong growth is attributed to robust travel demand during the domestic summer vacation and Golden Week, as well as continued expansion in overseas markets [2]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company reported revenue and adjusted net profit of RMB 406.1 billion and RMB 150.0 billion, respectively, with year-on-year increases of +18.7% and +44.3% [2]. - The company’s revenue for Q3 2024 was RMB 68.0 billion, reflecting a year-on-year growth of +16.2% [2]. - The company’s gross margin improved to 81.8% in Q3 2024, with a net profit margin of 36.9% [2]. Business Segments - The company’s revenue from accommodation bookings, transportation ticketing, and vacation travel for Q1-Q3 2024 was RMB 164.3 billion, RMB 155.2 billion, and RMB 34.7 billion, respectively, with year-on-year growth rates of +23.1%, +8.3%, and +42.3% [2]. - The international OTA platform continued to expand rapidly, with hotel and flight bookings growing over 60% year-on-year in Q3 2024 [2]. Market Outlook - The report anticipates that domestic travel demand will gradually stabilize, while outbound, inbound, and pure overseas markets are expected to maintain strong growth momentum [2]. - The target price for the company is set at USD 71.25, indicating a potential upside of 16.2% from the current stock price of USD 61.32 [2]. Financial Projections - The company’s projected revenue for 2024 is RMB 44,562 million, with a growth rate of 122.2% compared to 2023 [4]. - The projected Non-GAAP net profit for 2024 is RMB 13,071 million, reflecting a year-on-year increase of 910.1% [4]. Shareholder Information - Major shareholders include Baidu Group (8.89%) and Capital World Investors (5.92%) [2].

Investment Rating - Maintain BUY rating with a target price of US$71 0, representing a 15 8% upside from the current price of US$61 32 [1][2] Core Views - Trip com Group (TCOM) reported strong 3Q24 results with total revenue of RMB15 9bn, up 16% YoY, 2% above Bloomberg consensus estimates [1] - Non-GAAP operating income (OP) was RMB5 5bn, 6% better than consensus, driven by optimized sales and marketing spend [1] - Domestic business volume growth exceeded expectations, and outbound business recovery is on track, reaching 120% of 2019 levels in 3Q24 [1] - Incremental investment in international expansion is expected to support long-term revenue and earnings growth [1] - DCF-based target price raised by 8% to US$71 0, reflecting a more positive earnings outlook and valuation rollover to 2025E [1][10] Financial Performance Revenue and Profitability - 3Q24 revenue: RMB15 9bn, up 16% YoY, with domestic hotel reservations growing by mid-to-high-teens YoY and outbound air and hotel reservations recovering to 120% of 2019 levels [1] - Non-GAAP OPM for 3Q24 was 34 4%, 1 5ppts better than consensus, driven by efficient S&M spend [1] - 4Q24E revenue estimated at RMB12 4bn, up 20% YoY, 2% ahead of consensus [1] - Non-GAAP OPM for 4Q24E/2024E estimated at 20 7%/30 3%, compared to 25 6%/29 6% in 4Q23/2023 [1] Segment Performance - Domestic air tickets volume grew by mid-to-high single digits (MHSD) YoY in 3Q24, with a similar trend in 4Q24 QTD [1] - Outbound air and hotel reservations outperformed the industry by ~40ppts, reaching 120% of 2019 levels in 3Q24 [1] - Trip com achieved robust YoY revenue growth of ~60% in 3Q24, driven by strong growth in air tickets and hotel reservations [1] Forecasts - Revenue for 2024E/2025E/2026E estimated at RMB52 985bn/60 765bn/67 886bn, with YoY growth of 18 9%/14 7%/11 7% [5] - Adjusted net profit for 2024E/2025E/2026E estimated at RMB16 811 7bn/17 807 3bn/20 149 2bn, with YoY growth of 28 6%/5 9%/13 2% [5] Valuation and Growth - DCF-based target price of US$71 0, translating into 21 3x/20 7x 2024E/2025E PE (non-GAAP) [1][10] - Non-GAAP OP expected to grow at a 23-25E CAGR of 19% [1] - Gross margin for 2024E/2025E/2026E estimated at 81 5%/81 4%/81 4%, with operating margin at 26 3%/27 4%/28 5% [5][19] International Expansion - Trip com's international expansion, particularly in Asia, is supported by low online penetration and strong supply chain capabilities [1] - The company is expected to achieve a better OPM profile in international markets compared to domestic business, driven by higher AOV for international hotels and higher take rates for international ticketing [1]

Investment Rating - The report maintains a "Buy" rating for Trip.com Group (TCOM) with a target price of $71.00, reflecting an upside potential of 15.8% from the current price of $61.32 [10][19]. Core Insights - Trip.com Group reported solid business growth, with total revenue for Q3 2024 reaching RMB 15.9 billion, a year-on-year increase of 16%, exceeding Bloomberg consensus estimates by 2% [7][8]. - The company’s non-GAAP operating profit for the same period was RMB 5.5 billion, surpassing expectations by 6%, driven by better-than-expected sales and marketing expenditure optimization [7][8]. - The report highlights the robust recovery in outbound travel and the company's ongoing international expansion efforts, which are expected to contribute to long-term revenue and profit growth [7][9]. Financial Performance Summary - For FY 2024, total revenue is projected to be RMB 52.985 billion, representing an 18.9% year-on-year growth [13]. - Non-GAAP net profit is expected to reach RMB 16.812 billion in FY 2024, reflecting a 28.6% increase compared to the previous year [13]. - The report anticipates a compound annual growth rate (CAGR) of 23-25% for non-GAAP operating profit over the next few years [7][9]. Booking and Revenue Growth - The report indicates that domestic hotel bookings in Q3 2024 grew in the mid to high single digits year-on-year, with a similar trend expected to continue into Q4 2024 [8]. - Outbound flight and hotel bookings have recovered to 120% of 2019 levels, outperforming the industry average by approximately 40 percentage points [8][9]. - The company is expected to achieve a revenue of RMB 12.4 billion in Q4 2024, a 20% increase year-on-year, which is above market expectations [8]. Cost Management and Profitability - Trip.com’s non-GAAP operating profit margin for Q3 2024 was 34.4%, exceeding market expectations by 1.5 percentage points, primarily due to better-than-expected sales and marketing expenses [9]. - The report projects that the non-GAAP operating profit margin will reach 20.7% for Q4 2024 and 30.3% for the full year [9]. Valuation Metrics - The target price of $71.00 corresponds to non-GAAP P/E ratios of 21.3x and 20.7x for FY 2024 and FY 2025, respectively [19]. - The report emphasizes a positive outlook on Trip.com’s global expansion, particularly in the Asian market, where online penetration remains low [9][19].

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]

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]

The most recent trading session ended with Trip.com (TCOM) standing at $66.68, reflecting a +1.83% shift from the previouse trading day's closing. This move outpaced the S&P 500's daily gain of 0.1%. At the same time, the Dow added 0.69%, and the tech-heavy Nasdaq gained 0.06%.Heading into today, shares of the travel services company had gained 0.69% over the past month, lagging the Consumer Discretionary sector's gain of 5.33% and the S&P 500's gain of 4.37% in that time.Market participants will be closely ...