Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [2][11]. Core Insights - The company is a leading player in China's online travel industry, focusing on transportation ticketing, accommodation booking, and travel value-added services. It has successfully capitalized on post-pandemic recovery opportunities, achieving significant revenue and net profit growth in 2023 [2][16]. - The online travel market is experiencing strong recovery, with the lower-tier market being a significant growth driver. The top three OTA platforms in China by market share are Ctrip, Meituan, and Tongcheng Travel, with shares of 36.3%, 20.6%, and 14.8% respectively [2][9]. - The company has maintained a strong flow of users through its long-term partnership with Tencent, which contributes over 80% of its traffic via WeChat mini-programs. The company is also expanding its traffic sources by investing in Douyin and enhancing its independent app operations [2][9][10]. Summary by Sections Company Overview - The company was formed by the merger of Tongcheng Network and eLong in 2018, enhancing its ability to provide a comprehensive range of travel products and services [17][18]. - The company has a relatively dispersed shareholding structure, with major shareholders including Tencent and Ctrip, which helps in maintaining a balance of power and democratic decision-making [21][22]. Online Travel Recovery - The online travel market in China is projected to continue its recovery, with a significant increase in online penetration rates. The market size is expected to grow from 1.8 trillion yuan in 2019 to 2.6 trillion yuan by 2025 [44][49]. - The company has a competitive edge in the lower-tier market, which is expected to drive growth as consumer preferences shift towards short-distance travel and lower-tier city tourism [9][58]. Financial Performance - The company reported a revenue increase from 73.93 billion yuan in 2019 to 118.96 billion yuan in 2023, with a CAGR of 12.63%. Net profit grew from 6.88 billion yuan to 15.54 billion yuan during the same period, with a CAGR of 22.59% [27][30]. - The company’s revenue for the first half of 2024 reached 81.12 billion yuan, a year-on-year increase of 48.8%, while net profit increased by 13.08% to 8.30 billion yuan [27][30]. Profitability Forecast - The company is expected to benefit from the increasing hotel chain rate and online penetration in the lower-tier market, with projected revenues of 173.36 billion yuan, 203.55 billion yuan, and 233.69 billion yuan for 2024, 2025, and 2026 respectively [11][8]. - The forecasted net profits for the same years are 19.02 billion yuan, 24.46 billion yuan, and 29.06 billion yuan, indicating a strong growth trajectory [11][8]. Valuation and Target Price - The target price for the company is set at 16.71 HKD, with a corresponding P/E ratio of 15, 12, and 10 for the years 2024, 2025, and 2026 respectively [4][11].
同程旅行：两大股东赋能+自建供应链体系，助力公司疫后强劲复苏