Ge Long Hui·2025-08-29 18:53Core Viewpoint - The company reported better-than-expected financial results for Q2 2025, driven by strong accommodation revenue and effective cost control measures [1][2]. Financial Performance - Q2 2025 revenue increased by 16% to 14.9 billion yuan, exceeding market expectations by 1% due to higher-than-expected accommodation revenue [1]. - Non-GAAP net profit reached 5 billion yuan, with a net profit margin of 34%, surpassing market expectations by 15% due to controlled marketing expenses and additional government subsidies [1]. - The company completed its previously announced $400 million shareholder return plan ahead of schedule and approved a new buyback plan of up to $5 billion in August 2025 [1]. Industry Trends - Domestic hotel bookings grew faster than the industry average, with accommodation revenue of 6.2 billion yuan in Q2 2025, a 21% year-on-year increase, exceeding market expectations by 3% [1]. - The overall hotel industry showed a decline in occupancy rates (OCC) by 4% and average daily rates (ADR) by 1% during the summer period, indicating a challenging environment [1]. - The company expects domestic hotel night volume to maintain low double-digit year-on-year growth in Q3 2025, with ADR declines narrowing to low single digits [1]. International Travel - Outbound travel bookings recovered to over 120% of 2019 levels in Q2 2025, outperforming the industry average of 84% recovery in flight volumes [2]. - The company anticipates a slight slowdown in year-on-year growth for outbound revenue due to high base effects from last year's summer travel [2]. - Trip.com maintained rapid growth with international OTA bookings increasing by over 60% in Q2, and the company's share of group revenue rising to 14% [2]. Profit Forecast and Valuation - The company has adjusted its 2025 non-GAAP net profit forecast upward by 8% to 17.7 billion yuan, while maintaining the 2026 forecast at 18.9 billion yuan [2]. - The company continues to rate outperforming the industry and has switched to a 2026 PE valuation method, maintaining target prices of $75.9 for US stocks and HK$588.5 for Hong Kong stocks, indicating potential upside of 16% and 15% respectively [2].