Trip.com Group reported 2Q25 revenue of Rmb14.9bn (+16% YoY), non-gaap operating profit of Rmb4.7bn, and a non-gaap operating profit margin of 31%, higher than our expectation, mainly thanks to lower-than-expected sales and marketing expense ratio. We raise 2025 non-gaap EPS forecast from Rmb27.7 to Rmb27.8, maintain 2026 forecast of Rmb29.7, and 2027 forecast of Rmb30. Based on DCF model, we raise target price from HK$590 to HK$618, with 21% upside, we maintain a Buy rating.
　　2Q25 performance. By business segment, the company’s accommodation reservation revenue increased by 21% YoY, transportation ticketing revenue increased by 11%, packaged-tour revenue increased by 5%, corporate travel revenue increased by 9%, and other business revenue increased by 31%. Overall reservations on Trip.com brand increased by over 60% YoY, inbound travel bookings surged by over 100% YoY, outbound hotel and air ticket bookings increased by 20% over 2019 level.
　　New share repurchase program. As of August 27, the company has fully utilized the US$400m share repurchase authorization limit for 2025. In August, the board of directors approved a new multi-year repurchase program with a total amount not exceeding US$5bn, aiming to enhance shareholder returns.
　　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.
　　Risks: Lower-than-expected revenue growth; decline in profit margin due to increased competitions.