2026-03-01 17:23Trip.com Group Ltd (TCOM.O) Conference Call Summary Industry Overview - Company: Trip.com Group Ltd (TCOM.O) - Industry: Online Travel Agency (OTA) and Travel Services - Market: Asia Pacific, with significant operations in China Key Points and Arguments Financial Performance - Revenue Growth: Trip.com reported strong revenue growth, with a 4Q25 revenue beat and a guidance of 12-17% revenue growth for 1Q26, indicating a midpoint 1 percentage point above consensus [2][5] - Booking Trends: CNY domestic hotel bookings are growing at double-digit rates, and outbound travel is also experiencing double-digit growth. Trip.com’s QTD bookings are up 60% [2] - Revenue Breakdown: Hotel, packaged tours, and corporate travel are growing in the high teens year-over-year, while transportation growth is in the 8-13% range [2] International Expansion - International Business Growth: International business accounted for approximately 40% of total revenue in 2025, up from 35% in 2024, with inbound travel showing close to triple-digit growth [3] - Market Strategy: The mobile-first and one-stop solution strategy is yielding positive results in both APAC and Middle East markets [3] AI and Technology - AI Development: Management views AI as a catalyst for OTA businesses rather than a threat, emphasizing the importance of proprietary data and service capabilities [4] - Investment in AI: Trip.com continues to invest in vertical AI technology to enhance travel-related search results, positioning itself against general AI applications [4] Regulatory Environment - Regulatory Uncertainty: No updates on the regulatory front were provided, but management expects the business to remain intact despite ongoing investigations [5] - Impact on Financials: Revenue forecasts for 2026/27 were raised by 1%, but EPS was cut by 3-4% due to higher operating expenses [5] Valuation and Price Target - Price Target Adjustment: The price target was revised down from US$87.00 to US$75.00, reflecting an 18x/16x P/E for 2026/27 [1][5] - Market Capitalization: As of February 25, 2026, the market cap is approximately US$36.96 billion, with a share price of US$53.66 [6] Investment Thesis - Growth Engines: Trip.com is positioned to benefit from multiple growth engines, including domestic travel, outbound travel, and international expansion [22] - Market Share Gains: The company is gaining market share due to post-COVID tailwinds and a shift in consumer spending towards travel in China [22] - Share Repurchase Program: A US$5 billion share repurchase program was announced, representing over 10% of the market cap at the time of announcement [22] Risks and Considerations - Market Risks: Potential risks include rising competition in the domestic market and macroeconomic uncertainties that could impact travel demand [34] - Regulatory Risks: Ongoing regulatory investigations may pose risks to operational stability and financial performance [5][34] Additional Important Information - Operating Profit Margin: The operating profit margin is expected to be around 28% in 1Q26, slightly lower due to a shift in revenue mix [2] - WACC Increase: The weighted average cost of capital (WACC) assumption was increased from 10.5% to 11.2% due to higher equity risk premiums [5][11] This summary encapsulates the key insights from the conference call, highlighting Trip.com Group Ltd's financial performance, growth strategies, regulatory environment, and investment outlook.