Summary of Tongcheng Travel Holdings Conference Call Company Overview - Company: Tongcheng Travel Holdings (0780.HK) - Industry: Online Travel Services in China Key Points and Arguments 1. Financial Performance and Guidance - 4Q25 GMV Growth: Accelerated to high-single digit % year-over-year, compared to mid-single digit % in 3Q25, primarily driven by the hospitality segment [1] - Hotel ADR Increase: Low-to-mid single digit % increase in Average Daily Rate (ADR) on the platform, attributed to a slowdown in hotel supply [1] - Ticketing Business Performance: Tracking low-to-mid single digit % year-over-year growth, aligning with broader industry trends due to high online penetration rates of 80-90% [1] - 4Q25 Revenue Guidance: Expected revenue growth of 10-15%, with 15-20% from Online Travel Agency (OTA) services and a stable EBIT margin of 28.4% [1] 2. Strategic Focus for 2026 - Leisure Travel Demand: Management is optimistic about resilient demand supported by favorable policies, such as more school holidays [2] - User Base Monetization: Targeting existing 252 million user base with promotions and subsidies; users are willing to spend more on upgraded services [2] - Outbound Travel Business: Currently represents ~5% of group revenue but has reached breakeven profitability; plans to prioritize air ticket bookings before expanding into hospitality [2] - Mobile App Development: Mobile apps account for ~10% of Monthly Active Users (MAU), up from 5% in 2023, reducing reliance on Weixin platform from ~80% to 75% [2] 3. Competitive Landscape - Competition Analysis: Competition remains benign with smaller operators focusing on niche markets; it will take time for them to build supply chains and customer service teams [3] 4. Margin Improvement Potential - EBIT Margin Improvement: Potential for further improvement driven by increased GMV contribution from mobile app users, improved profitability from hotel management and outbound travel, and operational efficiency through AI adoption [7] 5. Market Sentiment and Valuation - Share Price Performance: The share price has been range-bound due to concerns over domestic competition and profit margin comparisons [8] - Valuation Metrics: Current trading at 13x FY26E P/E, representing a 24% discount to 17x for TCOM, in line with historical averages [8] 6. Price Target and Risks - Price Target: 12-month target price set at Rmb28.8, based on an 85% weighting to fundamental value and a 15% weighting to M&A value [9] - Downside Risks: Increased competition, potential decline in transportation take rates, reliance on Tencent/WeChat, and weaker macroeconomic conditions [10] 7. Investment Thesis - Investment Recommendation: Rated as a Buy due to leverage on resilient domestic travel, upside from hospitality segment, and ongoing business initiatives that could drive earnings growth [11] Additional Insights - Market Capitalization: HK$52.6 billion / $6.7 billion [13] - Revenue Forecasts: Expected revenue growth from Rmb17,340.7 million in FY24 to Rmb24,372.1 million in FY27 [13] - Free Cash Flow Yield: Projected to increase from 6.8% in FY25 to 10.5% in FY27 [13]
同程旅行-企业日核心纪要_2025 年第四季度指引达成，利润率仍有提升空间