Core Viewpoint - The report from Guotai Junan maintains a buy rating for Tongcheng Travel (00780), citing a stable competitive landscape in the OTA industry and the company's ability to enhance profit margins through improved subsidy efficiency [1] Group 1: Financial Performance - In Q2 2025, the company achieved revenue of 4.669 billion yuan, a year-on-year increase of 10%, with core OTA revenue reaching 4.008 billion yuan, up 13.66% year-on-year [3] - Adjusted net profit for Q2 2025 was 775 million yuan, representing an 18% year-on-year increase, with an adjusted net profit margin of 16.6%, up 1.1 percentage points year-on-year [3][4] - The core OTA platform's operating profit was 1.07 billion yuan, a 24.69% increase, with an operating profit margin of 26.7%, up 2.4 percentage points year-on-year [3] Group 2: Market Dynamics - The competitive landscape in the OTA industry remains stable, with no significant increase in competition, as evidenced by a 2.2 percentage point decrease in the sales expense ratio [4] - The improvement in marketing efficiency continues to drive profit growth, confirming the stability of the industry structure [4] - The company's market share has slightly increased, and the GMV growth has returned to positive territory, indicating a recovery in demand for travel and accommodation [2][3] Group 3: Future Outlook - The company maintains a target market value of 59.6 billion yuan, with a corresponding target price of 27.88 HKD, based on an 18x PE valuation for 2025 [1] - The expected adjusted net profits for 2025, 2026, and 2027 are projected to be 3.311 billion yuan, 3.847 billion yuan, and 4.402 billion yuan, respectively [1]