2026-01-15 02:51Summary of Trip.com Group (TCOM) Conference Call Company Overview - Company: Trip.com Group (TCOM) - Market Cap: $39.9 billion - Enterprise Value: $33.5 billion - Current Price: $62.78 - 12-Month Price Target: $91.00 (Upside: 45.0%) [1][34] Key Industry Insights - Regulatory Environment: The State Administration for Market Regulations (SAMR) of the PRC has initiated an anti-trust investigation into TCOM, marking the first formal inquiry against the company under the Anti-Monopoly Law [1][3] - Historical Context: The investigation aligns with China's broader regulatory focus on online businesses, particularly in the OTA (Online Travel Agency) sector, aimed at promoting fair competition and preventing monopolistic practices [2][20] - Previous Cases: Similar investigations have been conducted against Alibaba and Meituan, resulting in significant fines and stock price volatility during the investigation periods [21][23] Financial Performance and Projections - Revenue Forecast: Projected revenues for FY24, FY25, FY26, and FY27 are Rmb 53.3 billion, Rmb 62.1 billion, Rmb 70.9 billion, and Rmb 79.4 billion respectively, indicating a growth trajectory [7][18] - EBITDA Growth: Expected EBITDA for the same periods is Rmb 17.1 billion, Rmb 18.9 billion, Rmb 22.0 billion, and Rmb 25.0 billion, reflecting a positive growth outlook [7][18] - Earnings Per Share (EPS): Projected EPS for FY24, FY25, FY26, and FY27 are Rmb 26.20, Rmb 46.30, Rmb 31.43, and Rmb 34.72 respectively [7][18] Market Reaction and Volatility - Stock Price Reaction: Following the announcement of the investigation, TCOM's stock price dropped by 18% intraday, indicating heightened market sensitivity to regulatory news [23] - Historical Volatility: Previous investigations into Alibaba and Meituan resulted in stock price declines of 13% and 23% respectively during their investigation periods, suggesting potential for similar volatility for TCOM [23][24] Investment Thesis - Market Position: TCOM is recognized as a dominant player in China's OTA market, with expectations of continued market share gains and expansion into lower-tier cities [33] - Valuation: The current valuation is considered undemanding, trading at approximately 14x FY26E P/E, close to the low end of its historical range [23][34] - Risks: Key risks include regulatory scrutiny, increased competition, and slower-than-expected recovery in outbound travel [34] Conclusion - TCOM is positioned for growth despite regulatory challenges, with a strong financial outlook and potential for market share expansion. However, investors should remain cautious of the volatility associated with ongoing investigations and regulatory actions [22][34]