CICC Securities: Maintain "Buy" Rating for TRIP.COM-S (09961) with slightly better-than-expected performance in the fourth quarter

Guotou Securities releases a research report stating that it maintains a "Buy" rating on TRIP.COM-S (09961), with slightly better-than-expected performance in the fourth quarter. Revenue exceeds the bank/market expectations by 5%/4%, and adjusted net profit exceeds the bank/market expectations by 5%/8%. The contribution of international business to total revenue is expected to increase to 40% by 2025, with management emphasizing international business and AI investment. The bank maintains its revenue forecast for 2026 unchanged, but lowers adjusted net profit by 5%. It gives a valuation of 16 times the 2026 P/E ratio (unchanged), and slightly lowers the target price to 541 Hong Kong dollars (9961.HK)/69 US dollars (TCOM.US). Key points from Guotou Securities: Summary of the report Slightly better-than-expected performance in 4Q25: Net revenue of 15.4 billion yuan, a year-on-year increase of 21%, exceeding the bank/market expectations by 5%/4%. Accommodation bookings increased by 15% year-on-year, and transportation ticket revenue increased by 12% year-on-year, accounting for 41% and 35% of total revenue, respectively. Gross profit increased by 20% year-on-year, with a gross profit margin stable at 79%. Operating profit was 2.5 billion yuan, a 10% increase year-on-year, slightly lower than the bank/market expectations by 2%/4%; adjusted net profit attributable to shareholders was 3.5 billion yuan, exceeding the bank/market expectations by 5%/8%. Key operating data for 2025 1) GMV: The core OTA business GMV in 2025 was 1.1 trillion yuan, a decrease of 8% year-on-year, with accommodation bookings/air ticket bookings at approximately 280 billion yuan/550 billion yuan. 2) International business: In 2025, total bookings on the international OTA platform increased by about 60% year-on-year, serving approximately 20 million inbound travelers (APAC as the main source of travelers), connecting over 150,000 hotels. International platform bookings reached a record high in 4Q25. In 2025, international business contributed approximately 40% of total revenue and bookings, an increase from 35% in 2024. 3) Eco-investment: In 2025, investment in user experience improvement was 2.9 billion yuan, and investment in inbound tourism exceeded 1 billion yuan. Management emphasizes current investment focuses on inbound tourism, social responsibility, and AI innovation. 1Q26 operational data update According to performance meeting information, during the Spring Festival holiday, domestic travel bookings on Trip.com Group Ltd. Sponsored ADR platform saw a double-digit year-on-year growth, with ADR slightly increasing year-on-year. Outbound tourism saw a double-digit growth. As of the first quarter, international OTA platform bookings increased by 60% year-on-year, with future strategic focuses on enhancing brand influence and increasing local product supply. The bank expects total revenue to increase by 15% year-on-year in the first quarter, with accommodation bookings/transportation bookings increasing by 16%/10% year-on-year. For the full year of 2026, the bank maintains its expectation of a 13% year-on-year increase in total revenue. Considering increased investment in international business and the increase in revenue contribution, adjusted net profit is lowered by 5% to 20.2 billion yuan, with a profit margin of 28.6%. The bank remains optimistic about the company's advantages in domestic supply-side, maintaining relative market share, high growth in international business, and profitability above 30% in the medium to long term. The bank believes that the current price reflects potential regulatory impacts and business adjustments. Risk warnings Weak consumer spending affecting tourism expenditure; international business progress falling short of expectations; extreme weather affecting travel.