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09961TRIP.COM(09961) 华创证券·2024-06-23 12:01

Investment Rating - The report initiates coverage on Trip.com Group-S (09961 HK) with a "Recommend" rating and a target price of HK506[1]CoreViews−Tripcomisaleadingone−stoponlinetravelplatforminChinawithastrongdomesticmarketpositionandhighgrowthpotentialininternationalmarkets[1]−Thecompany′sdomesticbusinessisstablewithacompetitiveadvantageinhigh−incomehigh−consumptionandstickyuserswhileitsinternationalbusinessisexpectedtodrivefuturegrowth[1][7]−Thereportforecastsrevenuegrowthof153506 [1] Core Views - Trip com is a leading one-stop online travel platform in China with a strong domestic market position and high growth potential in international markets [1] - The company's domestic business is stable with a competitive advantage in high-income high-consumption and sticky users while its international business is expected to drive future growth [1][7] - The report forecasts revenue growth of 15 3% 14 0% and 13 5% for 2024-2026 with non-GAAP net profit growth of 20 6% 15 6% and 13 5% respectively [1][8] Business Model and Industry Overview - Online travel platforms (OTAs) are the optimal business model in the travel industry with leading players like Booking and Airbnb achieving high operation margins [13] - The OTA industry in China has grown rapidly with a CAGR of 34 4% from 2013-2019 and is expected to reach RMB2 53 trillion in 2023 [16] - The industry is divided into three main segments: online transportation online accommodation and online vacation with transportation having the highest online penetration rate [18] Domestic Market - Trip com has a strong domestic market position with a deep supply chain and high-quality user base [1][7] - The company has a competitive advantage in high-star hotels and a strong "air + hotel" integrated service offering [47] - Trip com is expanding its user base by targeting younger users and lower-tier cities while also enhancing its content-to-transaction conversion capabilities [51][53] International Market - China's outbound travel penetration rate is relatively low at 12% in 2019 compared to the global average of 26% indicating significant growth potential [1][59] - Trip com is focusing on outbound travel and its overseas platforms (Skyscanner and Trip com) to drive international growth [1][7] - The company's overseas strategy includes leveraging its brand user acquisition and low commission rates to compete with established players like Booking and Expedia [1][7] Financial Performance - Trip com's revenue and non-GAAP net profit reached RMB44 51 billion and RMB13 07 billion in 2023 representing a 24 8% and 100 3% increase compared to 2019 [1][30] - The company's gross margin improved to 81 8% in 2023 while its sales expense ratio decreased to 20 7% reflecting improved operational efficiency [32] Valuation and Forecast - The report values Trip com at 20x 2024 PE with a target market cap of HK345 7 billion representing a 31% upside from the current price [1][8] - Revenue is expected to grow at a CAGR of 14 3% from 2024-2026 with non-GAAP net profit growing at a CAGR of 16 4% over the same period [8]