BOCOM International·2025-08-29 02:49Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of HKD 653, representing a potential upside of 18.3% from the current price of HKD 552 [2][11]. Core Insights - The company's Q2 performance exceeded expectations, driven by better-than-expected growth in hotel business and an increase in market share. The trend of improving marketing efficiency in mainland China is expected to continue. Despite increased competition in overseas markets, the impact on overall profitability is manageable. The valuation has been rolled forward to 2026, with a target price adjustment based on a 20x P/E ratio for 2026 [2][6]. Financial Performance Summary - For Q2 2025, total revenue reached RMB 14.864 billion, a year-on-year increase of 16%, slightly above market expectations. The hotel segment grew by 21%, transportation by 11%, and vacation services by 5% [6][7]. - The adjusted net profit for Q2 was RMB 4.846 billion, showing a year-on-year increase of 13% [8][14]. - The company expects Q3 revenue to grow by 15%, driven by an 18% increase in hotel bookings, with continued expansion in market share in mainland China [6][8]. Earnings Forecast Changes - Revenue forecasts for 2025E, 2026E, and 2027E are RMB 61.611 billion, RMB 69.659 billion, and RMB 78.590 billion, respectively, with growth rates of 15.4%, 13.1%, and 12.8% [5][14]. - Adjusted operating profit for 2025E is projected at RMB 17.981 billion, with a margin of 29.2% [5][14]. - The adjusted net profit for 2025E is expected to be RMB 17.974 billion, with a net profit margin of 29.2% [5][14]. Market Position and Competitive Landscape - The company is well-positioned in the competitive landscape of the mainland China market, benefiting from effective marketing strategies and a strong recovery in travel demand [2][6]. - The recovery in outbound travel bookings has surpassed pre-pandemic levels, indicating robust growth potential [6][7].