Summary of Trip.com Group Ltd (TCOM) 4Q24 NDR Takeaways Company Overview - Company: Trip.com Group Ltd (TCOM) - Industry: China Internet and Other Services - Market Cap: US73.00, representing a 25% upside from the current price of US$58.61 as of February 26, 2025 Key Points Financial Performance and Strategy - Operating Expenses: Investors are concerned about the rationale behind the higher operating expenses (opex) as TCOM prioritizes revenue growth and market share over margins in its international business [1][2] - Margin Guidance: TCOM expects a net margin of approximately -10% as a reasonable assumption for the near term, which is attributed to its focus on international expansion [2] - Breakeven Timing: TCOM is already seeing decent profits in Hong Kong and Singapore, with expectations for similar growth in other Southeast and Northeast Asian markets. The company anticipates an operating margin of 20-30% in a stable stage, potentially higher for domestic China business [3] International Expansion - Focus on Overseas Markets: The company is actively pursuing international expansion, particularly in markets like Thailand and Japan, where the focus is on gaining market share and fast revenue growth [2] - ROI Approach: TCOM employs a return on investment (ROI) approach to assess its investments, with higher ROI requirements in more profitable markets like Hong Kong [2] Competitive Positioning - Market Size: TCOM believes its key Asia market is at least as large as the China market, albeit more fragmented, making market share acquisition crucial [5] - Unique Value Proposition: TCOM offers a one-stop travel platform that includes attractions and visa services, along with high inventories from both direct suppliers and third parties [5] Operational Insights - Headcount Growth: The growth in personnel costs is driven by a mix of salary increases for domestic employees and overseas headcount expansion, particularly in Thailand. The company is also hiring high-end AI talent to improve its supply chain [4] - Supply Chain Improvement: TCOM is focused on enhancing its supply chain to expand future take rates, emphasizing the importance of direct connections with suppliers [4] Risks and Market Conditions - Macroeconomic Factors: Risks to TCOM's performance include macroeconomic growth rebounds, recovery in outbound travel, and rising competition from domestic players like Tongcheng Travel and Meituan [11] - Pandemic Uncertainties: Ongoing pandemic uncertainties and macroeconomic slowdowns could lead to lower travel demand, posing risks to the company's growth trajectory [11] Financial Projections - Revenue Growth: Projected revenue for fiscal year ending December 2024 is Rmb 53.294 billion, with estimates of Rmb 61.245 billion for 2025 and Rmb 68.354 billion for 2026 [6] - Earnings Per Share (EPS): Expected EPS for 2024 is Rmb 24.78, with projections of Rmb 23.71 for 2025 and Rmb 27.97 for 2026 [6] Conclusion Trip.com Group Ltd is strategically focused on international expansion and revenue growth, with a clear emphasis on market share over immediate profitability. While the company faces challenges related to operating expenses and competitive pressures, its unique value proposition and operational improvements position it well for future growth in the Asia Pacific travel market.
Trip.com Group Ltd_ 4Q24 NDR Takeaways
2025-03-03 10:45