Core Insights - The company achieved revenue of 5.509 billion yuan in Q3 2025, representing a year-on-year increase of 10.4%, and an adjusted net profit of 1.06 billion yuan, up 16.5% year-on-year [1] - The adjusted net profit margin reached 19.2%, an increase of 1 percentage point year-on-year [1] Revenue Breakdown - The core OTA (Online Travel Agency) business showed robust growth with revenue of 4.609 billion yuan, up 14.9% year-on-year; however, vacation revenue decreased by 8.0% to 900 million yuan due to impacts in Southeast Asia and reduced buyout business [1] - Within the OTA business, accommodation revenue was 1.580 billion yuan (+14.7%), transportation revenue was 2.209 billion yuan (+9.0%), and other revenues, including hotel management, reached 821 million yuan (+34.9%) [1] Accommodation and Transportation Insights - The accommodation booking business benefited from increased room nights, a recovery in ADR (Average Daily Rate) since Q2, and a shift towards higher-quality products, leading to a 15% year-on-year revenue growth in Q3 [1] - The transportation business saw a 9% year-on-year revenue increase in Q3, supported by normalized domestic flight demand, with expectations for further improvement in the company's take rate [1] Hotel Management Business - The hotel management business, identified as the company's second growth curve, maintained high growth, with nearly 3,000 hotels in operation as of the end of September, an increase of about 300 from Q2, and 1,500 hotels in preparation [2] - Wanda Hotel Management is expected to be consolidated in Q4, contributing some revenue, although its impact on the annual results is limited [2] International Travel Business - The outbound travel business turned profitable in Q3 and is expected to reach breakeven for the full year; the international air ticketing business showed strong growth, accounting for 6% of total transportation ticketing revenue, up 2 percentage points year-on-year [2] - The company aims to increase the share of outbound travel business in ticketing and hotel revenue to 10-15% in the future [2] Profitability and Forecast - The company's profitability is on an upward trajectory, with the adjusted net profit margin continuing to improve, reaching 19.2% in Q3, up 1 percentage point year-on-year [2] - The company forecasts overall revenues of 19.32 billion, 21.66 billion, and 24.60 billion yuan for 2025-2027, with adjusted net profits of 3.37 billion, 3.87 billion, and 4.40 billion yuan respectively, corresponding to a PE ratio of 14, 13, and 11 times at the current stock price [3]

Core Insights - Tongcheng Travel's Q2 2025 revenue increased by 10% to 4.67 billion yuan, slightly above market expectations by 0.6%, driven by better-than-expected hotel and other revenues [1] - Non-IFRS net profit reached 770 million yuan, exceeding market expectations by 3.3%, with a Non-IFRS net profit margin of 16.6%, attributed to improved marketing efficiency [1] Revenue Growth - Domestic hotel business outperformed the industry, with Q2 2025 Average Daily Rate (ADR) showing positive year-on-year growth, reflecting changes in consumer habits; the share of room nights from three-star hotels increased by 4 percentage points year-on-year [1] - The company expects Q3 2025 hotel room nights to grow by 10-15% year-on-year, with ADR showing low single-digit growth, anticipating a 13% year-on-year increase in hotel revenue [1] - International flight ticket volume increased by over 30% in Q2 2025, with international ticket revenue accounting for over 6% of transportation revenue, a 2 percentage point increase year-on-year [1] Future Growth Engines - The outbound business and hotel management are identified as dual growth engines; the company is tapping into the outbound travel demand from lower-tier markets and aims for international business to break even by year-end [2] - The hotel management business is expanding, with over 2,700 hotels currently operating on the Yilong hotel technology platform and another 1,500 in preparation, ranking 8th in the China Hotel Association's list for 2024 [2] Profitability Improvement - Core OTA operating profit reached 1.07 billion yuan in Q2 2025, with an operating profit margin of 26.7%, up from 24.3% in the same period last year [2] - The company anticipates continued improvement in profit margins due to enhanced marketing efficiency, operational leverage, and the maturation of international business [2] Earnings Forecast and Valuation - The company maintains its revenue and profit expectations for 2025/2026, with a target price of 23 HKD, corresponding to 15x/12x 2025e and 2026e Non-IFRS P/E, indicating a potential upside of 17% [2]