Core Insights - Tongcheng Travel reported a revenue of Rmb4.38 billion in 1Q25, representing a 13% year-over-year increase, and an adjusted net profit of Rmb788 million, up 41% year-over-year, exceeding expectations due to a higher-than-expected core OTA operating profit margin [1] - The company raised its 2025 EPS forecast from Rmb1.38 to Rmb1.41, while maintaining forecasts for 2026 and 2027 at Rmb1.57 and Rmb1.74 respectively, and increased the target price from HK$24.8 to HK$26.5, indicating a 21% upside potential [1] Domestic Operations - In 1Q25, core OTA revenue increased by 18% year-over-year, with accommodation reservation revenue up 23% and transportation ticketing revenue rising 15% [2] - Monthly paying users (MPUs) grew by 9% year-over-year to 46.5 million, and annual paying users (APUs) increased by 8% year-over-year to 250 million, both reaching historical highs [2] - The domestic hotel take rate is expected to rise by 0.5 percentage points quarter-over-quarter to 9.5-10% in Q2, driven by reduced subsidies [2] - Hotel average daily rate (ADR) growth is anticipated to turn positive in 2Q25, with an upward trend in the proportion of three-star and above hotels on the platform [2] Outbound Travel Business - The outbound travel business is projected to turn from loss to profit in 2025, with outbound flight tickets contributing approximately 5% to transportation revenue in 1Q25 [2] - By the end of the year, outbound flight tickets and hotels are expected to contribute more than 7% to flight and hotel revenue, with the loss from outbound flight tickets decreasing quarter-over-quarter [2] Investment Outlook - The company maintains a Buy rating, reflecting optimism about the growth certainty of the online travel industry and the stability of its competitive landscape [3] - Improvements in marketing efficiency and the expansion of outbound travel are expected to enhance margins, while the hotel management business is poised to provide additional growth drivers [3]