Summary of Tongcheng Travel 1Q25 Earnings Call Company Overview - Company: Tongcheng Travel - Industry: Internet Services, specifically in travel and accommodation Key Points Earnings Performance - 1Q25 Revenue: Tongcheng reported revenue of RMB 4,377 million, which was in line with expectations and represented a year-over-year growth of 13.2% [1] - Margins: The company achieved a gross margin of 68.8%, an increase of 295 basis points compared to the previous quarter [9] - Net Profit: The net profit attributable to the company was RMB 669 million, with a net margin of 15.3% [9] Industry Trends - Pricing Trends: Management noted improving pricing trends in domestic hotel Average Daily Rate (ADR) and airfare, expecting this momentum to continue due to resilient travel demand and a low base effect [1] - Market Position: Tongcheng continues to outperform the industry, with domestic hotel ADR remaining flat year-over-year in 1Q and expected to turn positive from 2Q onwards [1] Business Updates - Gross Merchandise Volume (GMV): Although GMV was not disclosed, it is estimated to have negative year-over-year growth primarily due to weakness in domestic airfare, while domestic hotel GMV is expected to show double-digit room night growth [2] - Outbound Travel: Outbound air ticketing and hotel room nights grew robustly by 40-50% year-over-year in 1Q, contributing approximately 5% to transportation and accommodation revenues [2] - Hotel Management: Tongcheng currently manages 2,500 hotels, with over 1,400 in the pipeline. The addition of Wanda Hotel Management is expected to enhance brand portfolio and profitability [2] Financial Estimates - Revenue Estimates: Total revenue estimates for 2Q and 2025 remain unchanged, with expected growth rates of 9.9% and 12.1% respectively [3] - Core OTA Revenue: Anticipated to grow at 13.4% for 2Q and 16.4% for FY25E, while tourism revenue is under pressure with a high single-digit decline due to safety concerns in Southeast Asia [3] Valuation - Price Target: The price target is maintained at HK$24.5, implying a price-to-earnings ratio of 15x for 2025 and 13x for 2026 [4] - Current Trading Metrics: As of May 23, 2025, the stock was trading at HK$20.50, with a market capitalization of HK$46.5 billion (approximately US$5.94 billion) [6] Additional Insights - Net Margin Expansion: Expected steady net margin expansion of approximately 1 percentage point per year driven by scale and cost optimization [2] - Valuation Metrics: The company is trading at a price-to-earnings growth (PEG) ratio of 0.8x, indicating an undemanding valuation [1] Conclusion Tongcheng Travel is positioned well within the travel industry, showing resilience in revenue growth and profitability despite some challenges in the tourism segment. The company is focusing on enhancing monetization strategies and expanding its hotel management portfolio, which could provide further growth opportunities in the coming quarters.
同程旅行-2025 年第一季度业绩回顾：持续专注于提升货币化水平和盈利能力