CICC International: Maintains "outperform" rating on TRIP.COM-S (09961), lowers target price to 531 Hong Kong dollars.

CICC International released a research report, maintaining a "outperform the market" rating for TRIP.COM-S (09961) and lowering the target price from HK$585 to HK$531. The group's total revenue in the fourth quarter of 2024 reached RMB 12.17 billion, a year-on-year increase of 23%, with Non-GAAP net profit of RMB 3.04 billion, a year-on-year increase of 14%. The bank lowered its profit forecasts for 2025/2026 by 10%/7% to reflect the expected increase in the group's technological and marketing investments; it is expected that revenue growth in 2025 will be 18%/15%, Non-GAAP profit growth will be 15%/5%, and net profit growth will be 25%/25%. CICC International pointed out that Ctrip's revenue performance in the fourth quarter of 2024 was strong, exceeding the bank's and Bloomberg's consensus expectations, driving profits above expectations. However, net profit calculated according to GAAP only met expectations and was below market expectations, mainly due to the company's continued increase in investment in its international platform Trip.com. In recent years, Trip.com has achieved over 50% growth in the Hong Kong QTA market, with a net profit margin exceeding 10%, driving balanced profit contributions in various regions. The company plans to continue its strategic investments in overseas markets. Although the current investment scale will suppress short-term profit margins, in the long term, it will strengthen its position in overseas markets. At the same time, the dominant position in the domestic market remains stable, with the trend continuing. Core data for the fourth quarter of 2024 show total revenue of RMB 12.17 billion (up 23% year-on-year), exceeding expectations/market consensus by 3%; Non-GAAP net profit was RMB 3.04 billion (up 14% year-on-year), exceeding expectations/market consensus by 33%/26%. Breaking it down by business, hotel/accommodation booking revenue increased by 28% year-on-year, ticketing increased by 11%, and travel vacation and business travel services increased by 25%. The bank also mentioned that the resilience of domestic tourism consumption is evident, with the group's outbound travel bookings in the fourth quarter recovering to 120% of pre-epidemic levels in 2019, leading the industry by 30 percentage points; quarterly bookings on global QTA platforms increased by over 70% year-on-year. The gross profit margin decreased by 7.0 percentage points to 75.9% quarter-on-quarter, mainly due to the increase in Trip.com's revenue share from 10% to 14% in the previous period; Non-GAAP operating profit increased by 6% year-on-year to RMB 2.746 billion, exceeding expectations by 3%; operating profit margin decreased by 4.0 percentage points year-on-year to 10.21%, in line with expectations. Risk warning: Consumer policy support levels, overseas market investment returns lower than expected.