Trip.com: Positioned To Recover As China Actively Attempts To Boost Tourism

Economic Outlook - Investor confidence in China has declined, but there is a belief that the investing landscape will improve in the future [1] - The current equity environment in China remains challenging, yet opportunities persist for traders who can identify key price levels [1] Company Analysis: NetEase (NTES) - A recent Black Swan event negatively impacted NetEase's stock, but traders found opportunities to profit from long-dated calls, achieving a 30% intraday gain [1] - The trading environment for NetEase requires a focus on price action due to unpredictable macro policies [1][4] Company Analysis: Trip.com (TCOM) - Trip.com is the leading online travel agency in China, with over 1.4 million hotels listed, significantly ahead of competitors like Meituan and Fliggy [5] - The company reported 13.74 billion Yuan in revenue with a 29% operating margin, exceeding expectations in a tough spending environment [6] - Trip.com's international travel business has recovered approximately 80% of pre-pandemic revenue, although visa wait times and geopolitical factors remain challenges [6][10] Market Trends and Projections - Domestic tourism in China has shown strong growth, with 3.67 billion visits and 3.7 trillion Yuan in tourism-related revenue in the first nine months of 2023 [7] - The China Tourism Academy projects a 114% increase in tourism-related revenue compared to the previous year, nearing pre-pandemic levels [6][7] - Analysts expect Trip.com’s revenue and EBITDA to grow by 10-20% from 2023 to 2025, driven by improved cost management and market positioning [8] Geopolitical Considerations - The U.S. Travel Association highlights that resolving visa wait times could significantly boost U.S. tourism revenue from Chinese visitors, who typically spend over $5,000 per trip [6] - Current visa wait times from China to the U.S. are approximately 164 days, and flight capacity is less than 10% of pre-pandemic levels, indicating potential for future growth [6][10] Investment Sentiment - The travel industry is viewed as more insulated from regulatory changes compared to other sectors, with a potential for recovery in both domestic and international travel segments [10] - Trip.com is expected to gradually ascend in investment value as the travel market stabilizes and grows [10]