Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [1]. Core Insights - The company has shown robust performance in its core business, with outbound travel operations beginning to gain momentum. In Q1 2024, the company achieved revenue of 3.9 billion RMB, a year-on-year increase of 50%, and a net profit of 400 million RMB, up 5% year-on-year [1]. - The company benefits from the recovery of domestic travel demand, with its core OTA business generating revenue of 3.2 billion RMB, a 24% increase year-on-year. The traffic ticketing segment reached a record high with revenue of 1.7 billion RMB, up 26% year-on-year [1][4]. - User base expansion and value release are evident, with the company serving 1.8 billion users, a 57% increase year-on-year, and a monthly active user count of 42.6 million, up 3% year-on-year [1][4]. Financial Performance - The company reported a significant recovery in financial metrics, with 2023 revenue reaching 11.9 billion RMB, an 81% increase year-on-year, and a net profit of 1.6 billion RMB, compared to a loss of 200 million RMB the previous year [4][19]. - The gross margin for Q1 2024 was 65%, down 10 percentage points year-on-year, primarily due to the different business models between online platforms and offline travel agencies [1][4]. - The adjusted net profit for 2024-2026 is projected to be 2.6 billion RMB, 3.3 billion RMB, and 4.2 billion RMB, respectively, with the current stock price corresponding to an adjusted PE of 15X, 12X, and 10X [1][17]. Market Position and Strategy - The company focuses on the lower-tier market, with 86.9% of its registered users residing in non-first-tier cities, and aims to attract younger consumers through creative marketing strategies [7][11]. - The partnership with Tencent provides a stable flow of users, with significant traffic sourced from WeChat, contributing to the company's user growth [11][12]. - The company is actively expanding its overseas business, with outbound travel revenue showing strong growth, particularly in international ticketing and hotel bookings, which increased by 260% and 150% year-on-year, respectively [15][16].
同程旅行：核心业务表现稳健，出境业务开始发力