携程：Resilient travel demand amid peak summer season to ease market concern

Investment Rating - The report reiterates a "BUY" rating for Trip.com Group (TCOM) with a target price of US$65.80, indicating a potential upside of 55.4% from the current price of US$42.34 [2][10]. Core Insights - Trip.com Group reported a net revenue of RMB12.8 billion for 2Q24, reflecting a year-over-year growth of 13.6%, which aligns with Bloomberg consensus estimates. The non-GAAP operating income was RMB4.2 billion, exceeding consensus forecasts by 6% due to effective cost control in R&D [2][3]. - The company is expected to experience resilient revenue growth driven by strong travel demand from its high-end customer base during the summer peak season, despite facing macroeconomic challenges and tougher comparisons in 3Q24 [2][3]. - The management anticipates a reacceleration in year-over-year revenue growth in 4Q24 as the impact of business adjustments diminishes and comparisons become easier [2][3]. Financial Performance Summary - For FY24E, Trip.com is projected to achieve revenue of RMB52.8 billion, representing an 18.5% year-over-year growth. The adjusted net profit is expected to reach RMB16.4 billion, with a year-over-year growth of 25.8% [3][8]. - The non-GAAP operating profit margin (OPM) for 2Q24 was reported at 33.1%, which is 1.9 percentage points higher than consensus estimates, driven by better-than-expected R&D expense ratios [2][3]. - The company achieved a gross profit margin of 81.8% for FY24E, with an operating margin of 27.5% and a non-GAAP net margin of 31.2% [8][9]. Revenue Breakdown - Domestic hotel reservations grew approximately 20% year-over-year in 2Q24, with double-digit growth continuing in 3Q24. Outbound air and hotel reservations have recovered to 110%-120% of 2019 levels, outperforming the market by 20-30% [2][3]. - Revenue from inbound travel accounted for 25% of total revenue in 2Q24, up from 20% in 1Q24, contributing approximately 2.6% to the total group-level revenue [2][3]. Future Projections - For 3Q24E, Trip.com is estimated to record revenue of RMB15.6 billion, reflecting a 13% year-over-year increase, consistent with Bloomberg consensus [2][3]. - The company expects to maintain a non-GAAP OPM of 33.1% for 3Q24E, with projections for FY25E showing continued growth in revenue and profitability [2][3].