TRIP.COM-携程：Solid business growth momentum continues

Investment Rating - Maintain BUY rating with a target price of US $71 0, representing a 15 8% upside from the current price of US$ 61 32 [1][2] Core Views - Trip com Group (TCOM) reported strong 3Q24 results with total revenue of RMB15 9bn, up 16% YoY, 2% above Bloomberg consensus estimates [1] - Non-GAAP operating income (OP) was RMB5 5bn, 6% better than consensus, driven by optimized sales and marketing spend [1] - Domestic business volume growth exceeded expectations, and outbound business recovery is on track, reaching 120% of 2019 levels in 3Q24 [1] - Incremental investment in international expansion is expected to support long-term revenue and earnings growth [1] - DCF-based target price raised by 8% to US $71 0, reflecting a more positive earnings outlook and valuation rollover to 2025E [1][10] Financial Performance Revenue and Profitability - 3Q24 revenue: RMB15 9bn, up 16% YoY, with domestic hotel reservations growing by mid-to-high-teens YoY and outbound air and hotel reservations recovering to 120% of 2019 levels [1] - Non-GAAP OPM for 3Q24 was 34 4%, 1 5ppts better than consensus, driven by efficient S&M spend [1] - 4Q24E revenue estimated at RMB12 4bn, up 20% YoY, 2% ahead of consensus [1] - Non-GAAP OPM for 4Q24E/2024E estimated at 20 7%/30 3%, compared to 25 6%/29 6% in 4Q23/2023 [1] Segment Performance - Domestic air tickets volume grew by mid-to-high single digits (MHSD) YoY in 3Q24, with a similar trend in 4Q24 QTD [1] - Outbound air and hotel reservations outperformed the industry by ~40ppts, reaching 120% of 2019 levels in 3Q24 [1] - Trip com achieved robust YoY revenue growth of ~60% in 3Q24, driven by strong growth in air tickets and hotel reservations [1] Forecasts - Revenue for 2024E/2025E/2026E estimated at RMB52 985bn/60 765bn/67 886bn, with YoY growth of 18 9%/14 7%/11 7% [5] - Adjusted net profit for 2024E/2025E/2026E estimated at RMB16 811 7bn/17 807 3bn/20 149 2bn, with YoY growth of 28 6%/5 9%/13 2% [5] Valuation and Growth - DCF-based target price of US$ 71 0, translating into 21 3x/20 7x 2024E/2025E PE (non-GAAP) [1][10] - Non-GAAP OP expected to grow at a 23-25E CAGR of 19% [1] - Gross margin for 2024E/2025E/2026E estimated at 81 5%/81 4%/81 4%, with operating margin at 26 3%/27 4%/28 5% [5][19] International Expansion - Trip com's international expansion, particularly in Asia, is supported by low online penetration and strong supply chain capabilities [1] - The company is expected to achieve a better OPM profile in international markets compared to domestic business, driven by higher AOV for international hotels and higher take rates for international ticketing [1]