Group 1 - The core viewpoint of the report is that Ctrip Group-S (09961) is rated as "Buy" with projected revenues of 62 billion, 71.2 billion, and 80.9 billion yuan for 2025-2027, and Non-GAAP net profits of 19.4 billion, 22.4 billion, and 25.6 billion yuan respectively [1] - Ctrip is recognized as a leader in the domestic OTA industry, establishing strong competitive barriers in supply chain, user mindset, and global resource integration [1] - The recovery of the domestic tourism market provides stable support for Ctrip's domestic business growth, while inbound and international business is seen as the core driver for long-term performance growth [1] Group 2 - Ctrip has been early in adopting AI technology, starting large model research and development in 2013, and has released its first travel-specific large model product [2] - In 2024, Ctrip plans to launch two AI-driven content products that integrate user search data and real reviews, enhancing user engagement and experience [2] - In Q1 2025, Ctrip's AI applications have saved 20% in labor costs, and AI-assisted content production tools have reduced content creation time from 8.5 minutes to 15 seconds, achieving a content qualification rate of over 98.9% [2]

Core Viewpoint - The report from Caitong Securities initiates coverage on Trip.com Group (09961) with a "Buy" rating, projecting revenue growth from 62 billion to 80.9 billion yuan and Non-GAAP net profit growth from 19.4 billion to 25.6 billion yuan from 2025 to 2027, highlighting the company's strong competitive advantages in the domestic OTA industry and the recovery of the domestic travel market as key growth drivers [1][2]. Group 1: Financial Projections - Revenue projections for Trip.com Group are estimated at 62 billion yuan in 2025, 71.2 billion yuan in 2026, and 80.9 billion yuan in 2027 [1]. - Non-GAAP net profit is expected to reach 19.4 billion yuan in 2025, 22.4 billion yuan in 2026, and 25.6 billion yuan in 2027 [1]. Group 2: Market Position and Growth Drivers - Trip.com Group is recognized as a leader in the domestic OTA industry, establishing significant competitive barriers in supply chain management, user perception, and global resource integration [1]. - The recovery of the domestic travel market provides stable support for the company's domestic business growth, while inbound and international business is identified as a core driver for long-term performance growth [1]. Group 3: International Business Performance - The outbound travel market is rapidly recovering, with the gross transaction value (GTV) for outbound travel in Q1 2025 reaching 120% of the same period in 2019, significantly surpassing the industry average [1]. - In Q1 2025, the volume of flight orders recovered to 95%, hotel accommodation orders to 80%, and vacation business orders to over 70% [1]. Group 4: AI Technology Integration - The company began its AI technology layout in 2013, launching its first travel-specific large model product, and plans to release two AI-driven content products in 2024 [2]. - In Q1 2025, the company reported a 20% reduction in labor costs through applications like intelligent customer service and guide service monitoring, while AI-assisted content production tools reduced content creation time from 8.5 minutes to 15 seconds, achieving a content qualification rate of over 98.9% [2]. - The integration of AI technology is expected to enhance internal efficiency and external user experience, thereby improving user stickiness and profitability [2].

Core Insights - The online travel industry is experiencing a rapid transformation driven by AI, with major platforms launching various AI travel assistants to enhance user experience and efficiency [1][3][26] - Despite the advancements, the penetration of AI in the online travel sector remains slow, particularly on the consumer side, due to the highly personalized nature of consumer demands and the complexity of data involved [3][17] - The current AI travel assistants face significant challenges, including outdated training data, data silos, and a lack of customized solutions to meet evolving user needs [3][20][21] AI Travel Assistants Overview - Major platforms like Mafengwo, Tuniu, Fliggy, Tongcheng Travel, and Ctrip have introduced AI travel assistants, each with unique features aimed at addressing user pain points [1][4][11] - The AI assistants provide comprehensive services, including ticket booking, hotel recommendations, and itinerary planning, but the user experience varies across platforms [4][9][11] Efficiency and Experience Optimization - AI travel assistants are designed to enhance efficiency by offering one-stop services for travel planning, from ticket queries to hotel bookings [4][16] - The depth of understanding and response quality varies, with some platforms providing detailed explanations and recommendations, while others offer more basic responses [4][9][11] Challenges in AI Implementation - The accuracy of AI-generated travel information is often compromised due to the fast-changing nature of travel-related data, leading to user dissatisfaction [18][20] - The lack of scene-specific customization and the tendency for AI-generated itineraries to be formulaic limit the effectiveness of these assistants in catering to niche travel needs [20][21] Future Directions - Companies are exploring ways to leverage their unique data and technological advantages to improve the accuracy and personalization of AI travel assistants [22][23] - The introduction of multi-agent systems aims to enhance the efficiency and accuracy of AI responses by integrating various specialized functions [23][24] - A shift towards user-centric design, where AI assistants adapt to individual preferences and provide tailored recommendations, is seen as a potential solution to current limitations [25][26]

Investment Rating - The report assigns a "Buy" rating for Trip.com Group (TCOM) with a 12-month price target of $78.00, indicating an upside potential of 25.1% from the current price of $62.33 [1][12]. Core Insights - The report highlights Trip.com Group's strategic path to becoming the leading Online Travel Agency (OTA) in Asia within the next 3-5 years, emphasizing a full-funnel marketing strategy to enhance value for both suppliers and customers [1][19]. - The company aims to increase its overseas revenue contribution to approximately 50% in the long run, up from 35% currently, indicating significant growth potential outside of China [1][18]. - Management has established a $100 million Tourism Innovation Fund to support the development of the tourism industry, showcasing a commitment to innovation and growth [1][20]. Financial Projections - Revenue is projected to grow from RMB 53,294 million in 2024 to RMB 77,228.5 million by 2027, reflecting a compound annual growth rate (CAGR) of approximately 19.7% [6][16]. - EBITDA is expected to increase from RMB 17,070 million in 2024 to RMB 23,500 million in 2027, with an EBITDA margin projected to stabilize around 30% [6][13]. - Earnings per share (EPS) is forecasted to grow from RMB 26.20 in 2024 to RMB 33.53 in 2027, indicating a strong profitability outlook [6][16]. Market Strategy - Trip.com Group is focusing on a full-funnel marketing strategy to improve sales conversion rates and enhance partner sales, with significant marketing campaigns planned throughout the year [1][19]. - The company is investing in technology and customer service, aiming to differentiate itself through high service quality and innovative solutions, such as AI-enhanced travel assistants [1][20]. - Management is prioritizing global expansion, particularly in the Asia-Pacific region, through active marketing investments and localized product development [1][19]. Competitive Position - The report notes that Trip.com has achieved positive net profit in markets like Hong Kong, Macau, and Singapore, capturing a significant market share in these regions [1][19]. - The competitive landscape is described as benign, allowing Trip.com to attract customers with competitive pricing strategies [1][19]. - The company aims to achieve comparable profit levels to global peers like Booking.com through economies of scale and improved operational efficiency [1][19].

Financial Data and Key Metrics Changes - For Q1 2025, Trip.com Group reported a net revenue of RMB 13.8 billion, representing a 16% increase year over year and a 9% increase quarter over quarter, driven by strong travel consumption and resilient demand across segments [23] - Adjusted EBITDA grew by 7% year over year, reaching RMB 4.2 billion, compared to RMB 4 billion in the same period last year [13][27] - Diluted earnings per ordinary share were RMB 6.09 (US$0.84), while non-GAAP diluted earnings per share were RMB 5.90 (US$0.82) [27][28] Business Line Data and Key Metrics Changes - Accommodation reservation revenue for Q1 was RMB 5.5 billion, a 23% increase year over year and a 7% increase quarter over quarter [23] - Transportation ticketing revenue was RMB 5.4 billion, reflecting an 8% year over year increase and a 13% increase quarter over quarter [24] - Packaged tour revenue reached RMB 947 million, representing a 7% increase year over year and a 9% increase quarter over quarter [25] - Corporate travel revenue was RMB 573 million, a 12% increase year over year but an 18% decrease quarter over quarter, consistent with normal seasonality [26] Market Data and Key Metrics Changes - Inbound travel bookings surged by approximately 100% year over year, with hotel bookings from key visa-free countries in APAC increasing by over 240% [15][16] - Overall bookings on the international OTA platform grew by over 60% year over year, with APAC remaining a major growth engine [14] - Outbound air bookings returned to more than 120% of 2019 levels, outperforming the market by 30-40% [17] Company Strategy and Development Direction - The company is focusing on enhancing its AI capabilities to improve user experience and streamline the travel booking process, with AI tools integrated throughout the customer journey [10][11] - Trip.com aims to capture the growing inbound travel market by enriching its offerings and improving service capabilities, including multilingual support and personalized itineraries [9] - The company is committed to expanding its market presence in both mature and emerging markets, leveraging strategic partnerships and localized operations [8][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of travel demand, supported by strong consumer confidence and favorable policies [29] - The company anticipates continued growth in inbound travel due to favorable visa policies and increased accessibility to China [16][72] - Management noted that leisure travel demand remains strong, with corporate users expecting their travel budgets to grow or remain unchanged by 2025 [48] Other Important Information - The company has repurchased approximately US$84 million of its shares, demonstrating a commitment to delivering value to shareholders [28][80] - Trip.com has launched free city tours for transit travelers in Shanghai and Beijing to enhance visitor experience [17] Q&A Session Summary Question: Insights on AI in the travel industry - Management discussed the strengths of vertical AI agents in providing real-time travel data and enhancing the travel experience, while general AI agents offer broader information [31][32] Question: Performance during the Labor Day holiday - Domestic hotel bookings increased by over 20% year over year, with inbound bookings surging by approximately 150% [36][37] Question: Outbound travel trends and expectations - Outbound bookings have consistently outperformed the industry, with strong growth in long-haul destinations like Europe [39][40] Question: Hotel price trends and outlook - Hotel ADR decreased by high single digits in Q1, but prices stabilized during the Labor Day holiday, with expectations for stabilization due to increasing travel demand [43][44] Question: Consumer sentiment amid macroeconomic conditions - Travel demand remains resilient, with leisure travel demand strong and corporate travel budgets expected to grow or remain stable [47][48] Question: Domestic competitive landscape - Competition in the domestic market is rationalized, with a strong focus on loyalty programs and customer service [51][52] Question: International business marketing strategies - The company is intensifying marketing efforts in Asia, leveraging mobile app user acquisition as a key growth strategy [59][60] Question: Inbound business developments - Inbound travel has seen strong momentum due to favorable policies, with significant growth in bookings [70][72] Question: Sales and marketing expenses outlook - Marketing expenses may fluctuate due to seasonality, but the company aims to improve marketing efficiencies in the long term [75][76] Question: Capital return program updates - The company plans to continue share buybacks and has approved a total amount of US$600 million for this purpose [79][80]

Group 1 - Multiple online travel platforms are launching AI assistants to enhance travel planning and improve user experience, addressing the time-consuming nature of travel research [1][2] - Fliggy's AI product "Ask One" operates as a 24/7 online travel customization team, offering various services such as itinerary assistance, route customization, and local recommendations [1] - Mafengwo's "AI Roadbook" provides deep personalization by actively asking users questions to better understand their needs, creating tailored travel plans that include itineraries, accommodations, and practical tips [2] Group 2 - Tuniu's "AI Assistant Little Cow" analyzes user needs from vague information, providing clear recommendations and intelligent evaluations of selected products and itineraries [2] - Tongcheng Travel has upgraded its "Chengxin AI" to enhance user experience by facilitating a seamless transition from AI recommendations to decision execution and booking [2] - Trip.com has introduced TripGenie, an AI assistant that supports multiple languages to assist overseas users with travel inquiries, reflecting the growing demand for customized travel options [3]

Investment Rating - The report maintains a "Buy" rating for the company [5][27]. Core Insights - The company's Q4 2024 performance met expectations, with international business continuing to grow. Q4 revenue reached 12.7 billion yuan, a 23% year-on-year increase, while the full-year revenue for 2024 was 53.3 billion yuan, up 20% year-on-year. The net profit for 2024 was 17.2 billion yuan, reflecting a 72% increase year-on-year, with a net profit margin of 32.3% [1][11][14]. Summary by Sections Financial Performance - In 2024, the company achieved a total revenue of 53.3 billion yuan, with a year-on-year growth of 20%. The net profit for the same year was 17.2 billion yuan, marking a 72% increase. The revenue structure is primarily driven by transportation and accommodation, which together account for approximately 80% of total revenue [11][12][14]. Business Segments - Accommodation revenue for 2024 was 21.6 billion yuan, up 25% year-on-year, while transportation ticketing revenue reached 20.3 billion yuan, a 10% increase. The vacation segment saw a significant growth of 38% year-on-year, reaching 4.3 billion yuan, driven by international business growth [12][14][24]. International Expansion - The company’s international business is expanding rapidly, with Q4 2024 outbound hotel and flight bookings exceeding 120% of the same period in 2019. The international business accounted for 10% of total revenue for the year, with a strong focus on the Asia-Pacific market [2][18][24]. AI Integration - The integration of AI technologies is enhancing operational efficiency, with AI customer service improving response times and IT development efficiency. The AI tools, such as TripGenie, have seen significant engagement growth, indicating their potential as new customer acquisition channels [20][24]. Future Projections - Revenue projections for 2025-2027 are estimated at 61.6 billion yuan, 68.9 billion yuan, and 76.1 billion yuan, respectively, with corresponding year-on-year growth rates of 15.6%, 11.9%, and 10.4%. Net profit is expected to reach 17.9 billion yuan, 20.8 billion yuan, and 23.5 billion yuan over the same period [7][24].