September 18, 2025 02:49 PM GMT Trip.com Group Ltd | Asia Pacific Catalyst Driven Idea We think the travel industry data release around the upcoming National Day + Mid-Autumn Festival will be a key share price catalyst. What and when is the catalyst? We view the upcoming National Day + Mid-Autumn Festival Holidays travel data as the key catalyst for OTAs. This year is likely to show strong data, given that the two holidays coincide with each other (not the case in 2024, 6.3% YoY growth); the eight-day holid ...

Financial Data and Key Metrics Changes - The company reported a net revenue of RMB4.7 billion, marking a 10% year-over-year increase from the same period in 2024 [26] - Adjusted net profit rose to RMB775 million, reflecting an 18% year-over-year growth, with adjusted net margin expanding to 16.6% compared to 15.5% in the same period last year [26] - Gross profit increased by 10.6% year-over-year to RMB3.0 billion, with gross margin rising slightly to 65% [29] - Adjusted EBITDA increased by 29.7% to RMB1.2 billion, with a 25.4% margin compared to a 21.5% margin in the same period last year [30] Business Line Data and Key Metrics Changes - The accommodation reservation business achieved RMB1.4 billion, representing a 15.2% increase from the same period in 2024 [27] - Transportation ticketing revenue reached RMB1.9 billion, marking a 7.9% year-over-year increase [28] - The hotel management business sustained healthy expansion, with over 2,700 hotels in operation and nearly 1,500 in the pipeline [16] Market Data and Key Metrics Changes - The international air ticketing volume reached a historical high, delivering nearly 30% year-over-year growth [14] - The cumulative number of passengers served on the platform reached 2 billion, suggesting a stable user purchase frequency of 8 times per year [20] - The twelve-month annual paying users climbed to over 250 million, representing a 10% year-over-year increase [20] Company Strategy and Development Direction - The company is focused on expanding its core OTA business while enhancing its brand awareness and market share [34] - There is a commitment to leveraging technology, including AI, to drive growth and improve user experience [21][23] - The company aims to deepen its presence in the hotel management sector, targeting over 3,000 hotels in operation by the end of 2025 [73] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the Chinese travel market, anticipating steady year-over-year growth in both top line and bottom line [33] - The shift in consumer preferences towards experiential travel is seen as a significant opportunity for growth [56] - The company plans to maintain a disciplined approach to sales and marketing spending to ensure optimal returns [56] Other Important Information - The company announced the acquisition of a 100% stake in Wanda Hotel Management, which is expected to diversify brand metrics and strengthen market presence [17] - The balance of cash, cash equivalents, restricted cash, and short-term investments was RMB13.5 billion as of June 30, 2025 [32] Q&A Session Summary Question: Can management provide more color regarding the volume growth, ADR, and take rate in the accommodation business? - Management noted that the domestic ADR has stabilized year-over-year and is expected to continue growing, driven by a shift in user behavior towards higher quality products [41][43] Question: How does the company balance strategic resource allocation between core OTA and pursuing a diverse business portfolio? - Management emphasized that the OTA business remains the foundation and strategic focus, while also pursuing organic growth opportunities and selective M&A [46][48] Question: What are the reasons for the low growth in domestic airline ticketing volume? - Management indicated that the industry has returned to a normalized growth trajectory after two exceptional years, but expects the OTA business to outpace overall market growth [52][54] Question: Can management share more details on outbound travel performance? - Management reported significant growth in international air ticketing and accommodation volumes, with a focus on improving marketing efficiency and ROI [58][59] Question: How does management view the impact of JV and BaBa's investments in the OTA market? - Management believes that the competitive landscape remains stable, as new entrants face challenges in replicating established relationships and operational efficiencies [64][66] Question: What is the expected margin outlook for the OTA business? - Management expects steady year-over-year improvement in margins, driven by reduced sales and marketing expenses and improved operational efficiency [69][70] Question: What is the latest development plan for the hotel management business? - Management aims to operate over 3,000 hotels by the end of 2025, with a focus on enhancing quality and brand recognition [73][74] Question: Can management comment on the standalone app's user base and revenue contribution? - Management reported that the app accounted for over 8% of core OTA revenue in Q2, with ongoing efforts to grow the user base and engagement [82] Question: How is AI evolving within the company? - Management highlighted the integration of AI into the travel planning process, improving operational efficiency and user experience [85][86]

Core Insights - ly.com demonstrated significant growth in Q1 2025, with revenue reaching RMB 4.377 billion, a 13.2% year-over-year increase, and adjusted net profit of RMB 788 million, up 41.1% YoY, indicating strong demand in the mass-market tourism sector [1][2][4] Operational Performance - Revenue from the online travel platform segment grew by 18.4% YoY to RMB 3.792 billion, accounting for approximately 86.6% of total revenue, driven by accommodation booking services and transportation ticketing [4][5] - Adjusted EBITDA reached RMB 1.159 billion, reflecting a robust business mix and multi-dimensional expansion [2][4] Business Developments - ly.com is focusing on mass-market tourism, targeting consumers in non-first-tier cities, which represent a significant growth opportunity, with 87% of registered users from these areas [9][11] - The company has integrated AI capabilities to enhance operational efficiency, reducing labor costs by 20% and improving user experience through personalized travel planning [16][17] Strategic Insights - The mass-market tourism sector is experiencing segmentation and diversification, with a growing demand for differentiated travel experiences among various consumer groups [20][21] - Outbound tourism is expected to drive future growth, particularly from non-first-tier cities, as ly.com enhances its international offerings and partnerships [7][23]

Financial Data and Key Metrics Changes - The company reported a net revenue of RMB4.4 billion, representing a 13.2% year-over-year increase from the same period in 2024 [26] - Adjusted net profit reached RMB788 million, reflecting a 41.1% year-over-year growth, with an adjusted net margin of 18% compared to 14.4% in the same period of 2024 [26] - The core OTA business revenue grew by 18.4% year-over-year, totaling RMB3.8 billion, driven by growth in accommodation reservation and transportation ticketing [26] Business Line Data and Key Metrics Changes - Transportation ticketing revenue was RMB2.0 billion, a 15.2% increase year-over-year [26] - Accommodation reservation business achieved RMB1.2 billion, representing a 23.3% increase from the same period in 2024 [27] - International accommodation business saw over 50% growth year-over-year in room nights sold [17] Market Data and Key Metrics Changes - The outbound travel segment accounted for more than 5% of total transportation ticketing revenues, marking a year-over-year increase of three percentage points [27] - The number of hotels in operation totaled over 2,500, with more than 1,400 in the pipeline [18] - The annual paying user count reached a historical high of 247 million, with cumulative travelers served achieving 1,496 million [21] Company Strategy and Development Direction - The company aims to deepen its domestic market presence while accelerating the expansion of its outbound travel business [7] - Plans to acquire Wanda Hotel Management Company were announced, which is expected to enhance the company's influence within the hotel management sector [11] - The company is committed to technological advancements, integrating AI into business operations to improve service quality and efficiency [8] Management Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term prospects of China's travel industry, supported by government initiatives and changing consumer preferences [11][30] - The company is focused on enhancing user value and driving technological iteration to improve service efficiency [10] - Management expects continued growth in the travel industry, with a focus on diverse travel preferences and experiences [30] Other Important Information - The company has been recognized for its ESG performance, being included in the S&P Global Sustainability Yearbook China for the third consecutive year [24] - The standalone app has shown strong growth, with daily active users increasing by nearly 60% year-over-year [19] Q&A Session All Questions and Answers Question: Growth pattern of core OTA business in upcoming quarters - Management highlighted the resilience of the Chinese travel market and expects steady growth with healthy profitability, focusing on enhancing ARPU and optimizing marketing investments [35][37] Question: Forecast for outbound business growth and its contribution to total revenue - The outbound travel segment has shown remarkable growth, with international room night sales and air ticketing volumes increasing by over 50% year-over-year, expected to be a key growth driver [45][48] Question: Impact of AI agent DeepTrip on user engagement and future features - DeepTrip is still in early adoption stages, with innovative features being integrated to enhance user experience and engagement, expected to grow organically over time [49][51] Question: Update on standalone app performance and its contribution to revenue - The standalone app has seen significant user growth and is expected to continue contributing to overall revenue, with a focus on enhancing user engagement and ARPU [55][58] Question: Macro uncertainties and their impact on travel demand - Despite macro uncertainties, management remains optimistic about the travel industry's growth, citing strong consumer demand and positive trends in pricing [64][66] Question: Rationale behind the acquisition of Wanda Hotel Management - The acquisition is seen as a strategic move to enhance the company's hotel management capabilities and market presence in the luxury segment, leveraging existing user insights and technology [68][70]

Summary of the Conference Call Transcript Company and Industry Overview - **Company**: MakeMyTrip (MMYT) - **Industry**: Online Travel Agency (OTA) in India Key Points and Arguments Passenger Traffic Trends - Domestic passenger traffic increased by 2% month-over-month (MoM) in April 2025, following a 6% decrease in March 2025 and a 5% increase in February 2025, indicating seasonal fluctuations [2] - Year-over-year (YoY) growth for domestic traffic normalized to approximately 10% in April 2025, compared to 15-16% in the previous months [2] - International passenger traffic rose by 6% MoM in April 2025, with a healthy YoY growth of 12%, up from 6% in March 2025 [2] Impact of Military Conflict - Both domestic and international passenger traffic were negatively affected by military conflict starting April 22, 2025, with domestic traffic down 20% and international traffic down 3% [2] - Management noted improvements in bookings following a ceasefire announcement on May 10, 2025, suggesting a potential recovery in traffic [2] Competitive Landscape - MMYT maintained a dominant position in app downloads, with a 9 percentage point (pp) increase in share to 45% in April 2025, while competitors IRCTC and OYO saw declines of 2pp each [4] - Monthly Active Users (MAU) for MMYT increased by 1pp to 49%, while IRCTC's share decreased by 70 basis points (bps) to 26% [22] Web Traffic and Search Interest - MMYT led web traffic with 72 million visits in March 2025, a 15% YoY increase, significantly surpassing competitors [5] - Google search interest trends indicated continued dominance for MMYT, reflecting strong brand recognition and consumer interest [30] International Travel Demand - Recent news highlighted increasing demand for international travel, with new flight routes being established, such as Indigo's new service from Visakhapatnam to Abu Dhabi starting June 13, 2025 [6][33] - The resumption of operations from previously closed airports due to military conflicts was also noted, indicating a recovery in travel infrastructure [6] Company Outlook and Ratings - UBS maintains a positive outlook on the OTA sector, with a "Buy" rating on MMYT and a price target of US$135 [6] - Risks to MMYT's long-term estimates include potential economic slowdowns, increased competition, and the impact of COVID-19 on travel recovery [38][39] Additional Important Information - The report utilized data from UBS Evidence Lab, which provides insights into app usage and competitive analysis within the OTA sector [36] - The analysis indicates that while MMYT faces competition, it continues to outperform in key metrics such as downloads, MAU, and web traffic [4][5][28] This summary encapsulates the critical insights from the conference call, focusing on MMYT's performance, competitive positioning, and market dynamics within the Indian OTA industry.