Citigroup: TONGCHENGTRAVEL (00780) has a reasonable valuation and stable fundamentals, rated "buy"

Citi released a research report stating that, against the background of current reasonable valuation and the upcoming peak season of Spring Festival travel, they hold a short-term positive view on TONGCHENGTRAVEL (00780), and believe that Tongcheng's fundamentals are stable, maintaining a "buy" rating. Looking ahead to 2026, the expansion of low-line city markets and outbound travel, coupled with further increases in average room revenue, are expected to continue to drive hotel revenue to achieve double-digit growth and bring about a slight improvement in profit margins. Based on these factors, Citi has slightly raised its profit forecast for TONGCHENGTRAVEL for 2025 to 2027, while maintaining the target price of 28 Hong Kong dollars. The market expects TONGCHENGTRAVEL to announce its fourth-quarter 2025 results in mid-March, with its revenue and adjusted profits likely to broadly meet market expectations. With the recovery of average room revenue and low double-digit growth in room nights, Citi expects hotel revenue to grow by 15.8% year-on-year in the fourth quarter of 2025. In addition, the growth in transportation ticket revenue may mainly benefit from improvements in commission rates.