Investment Rating - The report initiates coverage with a "Buy" rating for Tongcheng Travel [4]. Core Views - Tongcheng Travel is positioned as a leading OTA in the lower-tier market, focusing on strengthening its own supply chain to enhance competitive advantages [1][2]. - The online travel market in China is expected to reach a scale of 2.2 trillion yuan in 2024, recovering to 120% of the 2019 level, with an online penetration rate of 45.2%, indicating significant growth potential [2][31]. - The company benefits from strong backing by Tencent and Ctrip, which enhances its competitive edge through resource sharing and flow support [2][14]. Summary by Sections Company Overview - Tongcheng Travel was formed through the merger of Tongcheng and eLong, ranking among the top three online travel platforms in China, with a focus on the lower-tier market and supply chain development [1][9]. Industry Analysis - The online travel market is projected to grow significantly, with a stable competitive landscape dominated by a few major players. The penetration rate for online travel remains lower compared to other sectors, suggesting room for growth [2][26][34]. - The company is actively expanding its user base in lower-tier cities, with 87% of registered users from non-first-tier cities as of Q2 2024 [2][34]. Competitive Advantages - Tongcheng Travel leverages Tencent's traffic and Ctrip's inventory to enhance its market position. The company is also diversifying its traffic channels and strengthening its app development [2][3][14]. - The company has established a robust supply chain, including partnerships with travel agencies and hotel management companies, to enhance its service offerings [2][3]. Financial Performance and Forecast - The company reported a revenue of 11.896 billion yuan in 2023, with a growth rate of 81%. The adjusted net profit for 2023 was 1.554 billion yuan, marking a significant recovery post-pandemic [3][17]. - Forecasts for adjusted net profits from 2024 to 2026 are 2.6 billion yuan, 3.1 billion yuan, and 3.6 billion yuan, respectively, with corresponding P/E ratios of 14, 12, and 10 [3][4].
同程旅行：下沉市场OTA龙头，深耕产业强化自有供应链