Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Online Travel Agencies (OTAs) and Internet Services - **Key Players**: Trip.com Group Ltd (TCOM), Tongcheng Travel Holdings (0780.HK), Tencent Music Entertainment Group (TME) Core Insights and Arguments - **Positive Policy Support**: The Ministry of Commerce and other government entities have released new policy guidelines aimed at boosting services consumption in China, which is expected to benefit OTA players like TCOM and Tongcheng [1][2] - **Upcoming Events**: The National Day and Mid-Autumn Festival are anticipated to drive stock performance for TCOM and Tongcheng, with TCOM having significant exposure to inbound travel [1] - **TME's Strategy**: TME is exploring offline event opportunities and leveraging the fans-based economy, which aligns positively with the new policies [1] Policy Measures Highlighted 1. Expansion of visa-free entry to China and facilitation of accommodation, payment, and telecom services for foreign travelers [5] 2. Introduction of Spring/Autumn holidays for students to encourage travel [5] 3. Promotion of popular foreign sports events and domestic cultural events to stimulate travel [5] 4. Extension of operating hours for high-quality museums and attractions, along with an optimized reservation system [5] Valuation and Risk Analysis - **Tongcheng Travel Holdings**: - WACC of 11.5%, slightly higher than TCOM due to its smaller size, with a terminal growth rate of 3% [6] - **Trip.com Group Ltd**: - Base case DCF with a WACC of 10.5% and terminal growth of 3% [7] - **TME**: - Probability-weighted approach for risk assessment [8] Risks Identified - **Upside Risks**: - Strong pent-up demand and moderating competition in lower-tier cities could lead to margin improvements [9] - **Downside Risks**: - Softer macroeconomic growth in China may impact price-sensitive users, alongside intensifying competition in lower-tier cities [9] Financial Projections - **Trip.com Group Ltd**: - Base case price target of US$22.7 per share, bull case of US$34.0, and bear case of US$16.3 [10] - **TME**: - Potential for stronger-than-expected growth in music subscribers and social entertainment revenue [10] Additional Considerations - **Market Dynamics**: The report indicates a rebound in macroeconomic growth and recovery in outbound travel, which could positively impact the sector [10] - **Regulatory Environment**: The report highlights the importance of regulatory approvals, particularly for TME's acquisition strategies [10] This summary encapsulates the key points from the conference call, focusing on the industry dynamics, company strategies, and financial outlooks while identifying potential risks and opportunities.