Yamato: Maintains "Buy" rating on TRIP.COM-S (09961), raises target price to 735 Hong Kong dollars.

Daiwa released a research report stating that it maintains a "buy" rating on TRIP.COM-S (09961) with a target price raised from 705 Hong Kong dollars to 735 Hong Kong dollars. The firm has raised Ctrip's earnings forecast for 2025 to 2027 by 3% to 5% and expects a 58% year-on-year revenue growth in 2025. Daiwa pointed out that despite concerns about the "downgrade effect," Chinese consumer spending remains strong, with consumers showing a stronger willingness to travel long distances. Even with the increase in supply of chain hotels, pressure on industry average room rates may persist in the first quarter of this year, but Ctrip's average room rate in China has seen a year-on-year decrease lower than the industry average. Additionally, the Asia-Pacific region (APAC) contributes 70% of Trip.com's revenue, followed by Europe (20%) and other regions (10%). In terms of profitability, the firm believes that the profit margins in some Southeast Asian countries are significantly lower than those in Hong Kong and Singapore. The online travel agency penetration rate in the Asia-Pacific region is lower than in China. Meanwhile, South Korea is the fastest-growing market in terms of inbound income, and Japan is also showing improvement. AI tools, such as AI travel agents, have improved operational efficiency but have not significantly driven revenue growth.