Tongcheng is likely to report 4Q25E results ~mid-Mar, and we expect revs and adj. profit largely in line with consensus. With expectation of ADR recovery and low teens room nights growth, we maintain 4Q25E hotel revs growth at 15.8% yoy, while transportation growth could be more supported by take rates improvement. Into 2026E, expansion into lower-tier cities and outbound travel, together with further ADR improvement, likely continue to drive teens hotel revs growth as well as slight margin improvement. We ...

Summary of Tongcheng Travel Holdings 3Q25 Earnings Call Company Overview - **Company**: Tongcheng Travel Holdings - **Industry**: Online Travel Agency (OTA) in Asia Pacific - **Date of Earnings Call**: November 25, 2025 Key Financial Results - **3Q25 Revenue**: Revenue exceeded estimates by 1%, driven by a 15% growth in the core OTA business, outperforming peers in the domestic market [2][4] - **Gross Profit Margin (GPM)**: Achieved 65.7%, 1 percentage point better than estimates due to a favorable mix shift towards core OTA [2][4] - **Net Profit**: Beat estimates by 3%, with a year-over-year margin improvement of 1 percentage point [2][4] M&A Activity - **Wanda Hotel Management Acquisition**: Closed in mid-October, expected to contribute approximately RMB 160-180 million in revenue and RMB 20 million in profit for 4Q25. This acquisition includes 239 hotels, primarily high-end in tier two or lower cities, and is seen as a future growth engine [3][4] 4Q25 Outlook - **Revenue Growth Projection**: Anticipated growth of 10-15% overall, with core OTA growth at 15-20%. Accommodations expected to be the main contributor with 12-17% revenue growth [4] - **Transportation Revenue Growth**: Projected at 6-11%, driven by improved take rates and value-added service (VAS) adoption [4] - **Other Revenue Growth**: Expected to accelerate to 45-50% due to M&A contributions [4] - **Profit Guidance**: Adjusted profit range for 4Q25 is RMB 720-780 million, with no change to full-year guidance [4] Long-term Projections - **2026 Revenue Growth**: Management expects low to mid-teens organic core OTA revenue growth (13-18% including M&A) and a further 0.5 percentage point margin improvement [4] - **Marketing Investments**: Plans to increase marketing spending for emerging outbound business and its own app [4] Valuation Metrics - **Current P/E Ratios**: Trading at 13.6x for 2025 and 11.6x for 2026, considered attractive given the double-digit core OTA revenue growth and margin expansion [5] - **Price Target**: Set at HK$29.00, indicating a 34% upside from the current price of HK$21.62 [7] Risks and Considerations - **Upside Risks**: Strong pent-up demand and moderating competition in lower-tier cities could enhance margins [12] - **Downside Risks**: Softer macroeconomic growth in China and intensifying competition in lower-tier cities could impact performance [12] Additional Insights - **Market Capitalization**: Approximately RMB 45.203 billion [7] - **Average Daily Trading Value**: HK$253 million [7] - **52-Week Price Range**: HK$24.90 - HK$17.02 [7] This summary encapsulates the key points from the earnings call, highlighting the company's performance, strategic initiatives, and market outlook.

Core Financial Performance - Tongcheng Travel (TC) reported total revenue of RMB4.4 billion for 1Q25, representing a 13% year-over-year increase, which was 0.7% and 0.9% better than the company's forecast and Bloomberg consensus estimates respectively, driven by a 1% revenue beat in the core OTA business [1] - Adjusted net profit for 1Q25 was RMB788 million, up 41% year-over-year, exceeding forecasts by 6.6% and 7.3%, attributed to better-than-expected operating leverage in the core OTA business and operational refinements in the Tourism segment [1] - The operating profit margin (OPM) of the core OTA business expanded to 29.2% in 1Q25, compared to 22.6% in 1Q24, indicating improved efficiency [1][4] Core OTA Business Insights - In 1Q25, TC's core OTA business revenue reached RMB3.8 billion, accounting for 86.6% of total revenue, with an 18.4% year-over-year growth, slightly ahead of consensus estimates [2] - Revenue growth in the core OTA business was driven by a 15% increase in transportation ticketing services, a 23% increase in accommodation reservation services, and a 20% increase in other services [2] - The accumulated number of travelers served reached 2.0 billion by the end of March, reflecting a 7.3% year-over-year increase [2] Future Outlook - For 2Q25, total revenue is estimated to be RMB4.7 billion, up 10% year-over-year, with core OTA segment revenue expected to grow by 13%, while Tourism revenue is projected to decline by 7.5% [3] - The company anticipates a reacceleration in revenue growth for accommodation reservations in 3Q-4Q25, supported by easier comparisons and stronger seasonality [3] - The overall OPM is expected to reach 18.7% in 1Q25, up from 11.8% in 1Q24, with core OTA OPM forecasted to expand to 25.5% in 2Q25 [4]