2026-03-04 14:17Trip.com Group Ltd (TCOM.O) Conference Call Summary Company Overview - Company: Trip.com Group Ltd (TCOM.O) - Industry: Online Travel Agency (OTA) - Market: Asia Pacific - Current Price Target: US$75.00, revised from US$87.00 [1] Key Points Financial Performance - Solid Earnings: TCOM reported strong earnings with a healthy outlook for 2026, driven by robust travel demand [2] - Revenue Growth: Management expects revenue growth of 12-17% in Q1 2026, with a high likelihood of reaching the upper end of this guidance [2] - Booking Growth: QTD bookings are up 60%, with domestic hotel bookings in China growing at double-digit rates [2] - Segment Performance: - Hotel and packaged tours are growing in the high teens YoY - Transportation growth is projected at 8-13% [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 APAC and Middle East markets [3] Regulatory Environment - Regulatory Investigation: No updates on the regulatory front; TCOM is cooperating fully with regulators. The ongoing investigation has led to a higher WACC assumption of 11.2% [5] - Impact on Earnings: Revenue forecasts for 2026/27 have been raised by 1%, but EPS estimates have been cut by 3-4% due to increased operating expenses [5] 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: TCOM continues to invest in vertical AI technology to enhance travel-related search results [4] Market Position and Valuation - Market Share: TCOM is gaining market share due to post-COVID tailwinds and a shift in consumer spending towards travel [25] - Valuation Metrics: The new price target of US$75 implies a P/E ratio of 18x for 2026 and 16x for 2027 [5] - Stock Rating: The stock is rated as "Overweight" with a significant upside potential of 40% from the current price [6] Risks and Considerations - Market Risks: Potential risks include rising competition in the domestic market and macroeconomic uncertainties affecting travel demand [37] - Investment Risks: The ongoing regulatory investigation poses a risk to the company's operational outlook and financial performance [5] Additional Insights - Share Repurchase Program: TCOM announced a US$5 billion share repurchase program, representing over 10% of its market cap at the time of announcement [25] - Long-term Growth: The company is well-positioned to benefit from multiple growth engines, including domestic and outbound travel, as well as international expansion [25] This summary encapsulates the key insights from the conference call, highlighting the company's financial performance, growth strategies, regulatory environment, and market positioning.