Trip.com Group reported 3Q24 revenue of Rmb15.9bn (+16% YoY), non-gaap operating profit of Rmb5.5bn, and non-gaap operating profit margin of 34%, higher than our expectations, thanks to better-than-expected marketing efficiencies. We raise non-gaap EPS forecasts from Rmb21.8 to Rmb25.9 in 24E, from Rmb24.2 to Rmb28 in 25E and from Rmb26.7 to Rmb29.7 in 26E. We raise target price from HK$517 to HK$611, with 21% upside, we maintain Buy rating.
3Q24 performance. By business segment, the company’s accommodation reservation revenue increased by 22% YoY, transportation ticketing revenue increased by 5%, packaged-tour revenue increased by 17%, corporate travel revenue increased by 11%, and other revenue increased by 41%.
Outbound travel continues to recover. In 3Q24, the company’s outbound travel revenue increased by 40% YoY, fully recovered to 2019 level, and is expected to increase by over 30% YoY in 4Q24. The company continues to recover 40ppts faster than the international flight capacity. 4Q24 outbound accommodation reservation revenue is expected to increase 20% over 2019 level, outbound air ticketing revenue is expected to increase over 25% over 2019 level, and outbound packaged-tour revenue is expected to recover from 50% in 3Q24 to nearly 60%.
Trip.com brand consistently sustains high growth. In 3Q24, Trip.com’s revenue increased by 60% YoY, contributing 9% of the company’s total revenue, and is expected to maintain a growth rate of over 50% in 4Q24, contributing over 11% of the total revenue.
Maintain Buy. We continue to be optimistic about Trip.com Group’s leading position in China's online travel industry and its potential to gain market share in the international market. We raise target price from HK$517 to HK$611, with 21% upside, we maintain Buy rating.
Risks: Lower-than-expected revenue growth; decline in profit margin due to increased competitions.