Favored by international investment banks, Jefferies gives a target price of HK$20.3 to TONGCHENGTRAVEL (00780).

Recently, TONGCHENGTRAVEL (00780) announced that it will launch a voluntary conditionally full cash takeover offer through its wholly-owned subsidiary to DIDA INC (02559), and this acquisition has been well received by investment banks. It is understood that the international investment bank Jefferies has released a research report on the acquisition titled "TONGCHENGTRAVEL Acquiring DIDA INC: Unlocking Synergy in Travel and Transportation Services." Jefferies is optimistic about this acquisition and has given a buy rating based on the discounted cash flow (DCF) model, with a target price of 20.3 Hong Kong dollars. Jefferies believes that this acquisition is significant for four reasons: first, TONGCHENGTRAVEL can quickly enter the transportation services sector without having to develop the business on its own, which is more efficient than building it independently; second, TONGCHENGTRAVEL has a large user base that can synergize with transportation services; third, DIDA INC has been deeply cultivating transportation services for many years, has long-term operational experience, and has already achieved profitability; fourth, the transaction is to be paid in cash and includes a certain acquisition premium. TONGCHENGTRAVEL intends to acquire all shares of DIDA INC at a price of 1.3875 Hong Kong dollars per share, representing a 9% premium over the closing price on the announcement date, with a maximum transaction financing scale of 1.5 billion Hong Kong dollars. According to the announcement, the five major shareholders of DIDA INC have signed irrevocable commitment letters, and the shares accepting the offer account for approximately 53.7% of the issued share capital of DIDA INC. After the transaction is completed, the company intends to maintain DIDA INC's listing status on the Hong Kong Stock Exchange. Furthermore, Jefferies also believes that TONGCHENGTRAVEL's acquisition of DIDA has three strategic purposes: First, to expand the service boundaries, by integrating DIDA's transportation service capabilities, TONGCHENGTRAVEL can quickly upgrade to a "accommodation + transportation" integrated travel service platform, creating a comprehensive travel and transportation platform. Second, to explore cross-selling opportunities between tourism and transportation businesses, the 250 million paying users of TONGCHENGTRAVEL and DIDA's transportation scenes complement each other, driving cross-category consumption. Third, to strengthen DIDA's competitive advantage in the carpooling field, DIDA has been deeply cultivating the carpooling industry for over 10 years, with over 400 million registered users, 21 million certified drivers, and mature dispatch algorithms, possessing a light-asset, high-profit business model. After the completion of the acquisition, TONGCHENGTRAVEL will retain the core operations team of DIDA, maintain the "DIDA" brand independently, and systematically upgrade DIDA in terms of driver management, algorithm optimization, business scale expansion, and operational efficiency. Jefferies has given a buy rating based on the discounted cash flow (DCF) model with a target price of 20.3 Hong Kong dollars, which is 68.9% higher than the current price.