CICC: Maintains TONGCHENG TRAVEL (00780) Outperform rating with a target price of HK$28.

CICC released a research report stating that it maintains its basic revenue forecast for TONGCHENGTRAVEL (00780) in 2026 at 21.7 billion yuan. Considering the optimization of the company's operating efficiency, it raised the profit forecast for 2026 by 1% to 3.92 billion yuan and introduced revenue and Non-IFRS net profit forecasts for 2027 at 23.8 and 4.49 billion yuan, respectively. It maintains an outperform industry rating and a target price of 28 Hong Kong dollars (corresponding to 15x/13x 2026/2027 e Non-IFRS P/E), with an upside potential of 49%, as the company is currently trading at 10x/9x 2026/2027 e Non-IFRS P/E. CICC's main points are as follows: 4Q25 performance basically meets market expectations TONGCHENGTRAVEL's revenue in 4Q25 increased by 14% to 4.84 billion yuan, basically meeting market expectations; Non-IFRS attributable net profit was 760 million yuan (profit margin 15.7%), basically meeting market expectations. Strong travel demand, increased demand for high-quality hotels 1) Accommodation: The company's accommodation business revenue in 4Q25 increased by 15%, with ADR increasing year-on-year, with the sales proportion of high-quality hotels in 2025 increasing by about 5 percentage points. During the Spring Festival holiday, the company's daily room nights increased by 30%, and the bank predicts that hotel revenue in 1Q26 will increase by 10-15%, with ADR increasing in the mid-single digits, and commission rates remaining stable. 2) Transportation: Transportation revenue in 4Q25 increased by 6.5%; the bank predicts that transportation revenue in 1Q26 will increase by 5-10%, with the company focusing on revenue realization. Outbound business releases profits, Wanda Hotel Management assists in new growth engine 1) Outbound business: The company's outbound business revenue in 4Q25 accounted for about 6% of the total hotel + transportation revenue, with the international room nights in 2025 increasing by nearly 30% year-on-year; by strengthening pricing control, optimizing marketing efficiency, and promoting cross-selling of travel products such as flights to accommodation, the outbound business achieved breakeven for the full year in 2025, and the bank predicts that the operating profit margin in 2026 could reach about 10%. 2) Hotel management business: As of the end of December 2025, the number of hotels in operation under the Group's hotel management platform has grown to over 3000, with another 1800 hotels in preparation. The successful integration of Wanda Hotel Management has enabled the company to achieve resource sharing, and the addition of Wanda's high-end brand can enhance the company's brand matrix, further consolidating the company's accommodation supply chain capabilities. Embrace AI actively, develop in-house and cooperate simultaneously On one hand, the company actively explores cooperation. Since December of last year, users searching for travel itineraries on the Yuanbao App can directly jump to the Tongcheng WeChat mini program to complete bookings. On the other hand, the company's in-house AI travel planning tool DeepTrip has served approximately 6.8 million users. At the same time, AI covers about 80% of user inquiries. The bank believes that in the short term, it is difficult for AI to break through the barriers of OTA services and supply chains, and the company's comprehensive layout will help maintain competitiveness at all stages of development. Risk warning: Macroeconomic uncertainty, unexpected cost control, investment and acquisition risks, regulatory risks.