20220323-招银国际-同程旅行-00780.HK-Looking_beyond_3M22E_epidemic_4页_899kb

Tongcheng-Elong (780 HK) Company Update Summary

Core Content Overview

This document presents an equity research update on Tongcheng-Elong (780 HK), a company in the China internet sector, focusing on its financial performance, earnings guidance, and market outlook for the coming quarters and years. The report highlights the impact of the March 2022 epidemic on the company's performance and suggests that the company is expected to recover in the second half of 2022. The report also provides key financial metrics, including revenue, net profit, and valuation ratios, and maintains a "BUY" rating with a target price of HK$20.

Key Financial Highlights

• 4Q21 Performance: Revenue and adjusted net profit were $+2%$ and $-19%$ YoY, respectively, beating consensus by $3%$ and $7%$.
• 1Q22E Guidance: Revenue is expected to grow $+0%$ to $+5%$ YoY, with adjusted net profit at RMB200-250mn, midpoint $8%$ below consensus.
• Full-Year 2022E Forecast: Revenue and adjusted net profit are estimated to grow $+16%$ and $+12%$ YoY, respectively, with an adjusted net margin of $16.5%$.
• Earnings Revision: Earnings for FY22-23E were trimmed by $9-11%$ to account for the impact of the resurgence of the epidemic.
• Valuation Metrics:
  • Target Price (TP): HK$20
  • P/E Ratio: 25x (FY22E)
  • P/B Ratio: 1.3x (FY22E)
  • Dividend Yield: 0.0%
  • ROE: 4.0% (FY22E)
  • Net Debt/Equity: Net cash

Revenue Breakdown

• Accommodation Reservation: Revenue is expected to grow steadily, with a sales mix of $34.4%$ in FY22E.
• Transportation Ticketing: Revenue is projected to increase, with a sales mix of $55.8%$ in FY22E.
• Others: Revenue is expected to grow further, with a sales mix of $9.7%$ in FY22E.

Market and Share Information

• Market Cap: HK$29,587 million
• Average 3-Month Trading Volume: HK$100.05 million
• 52-Week High/Low: HK$21.35 / HK$9.00
• Total Issued Shares: 2,218 million
• Major Shareholders:
  • Tencent: 21.47%
  • Trip.com: 20.95%
  • T Rowe Price: 5.04%

Share Performance

• 1-Month Return: -22.6%
• 3-Month Return: -9.0%
• 6-Month Return: -23.0%
• Relative Performance: -12.0% / -3.4% / -13.4%

Outlook and Recommendations

• Short-Term Outlook: 1Q22E is expected to be weak due to the impact of the March epidemic, but the company is anticipated to rebound in 2H22E with the relaxation of travel restrictions.
• Long-Term Outlook: Long-term fundamentals are considered intact despite the short-term challenges.
• Recommendation: Maintain a "BUY" rating with a target price of HK$20, indicating a potential return of over $15%$ over the next 12 months.

Key Ratios and Performance Metrics

• Gross Margin: 74.9% (FY22E)
• Operating Margin: 8.6% (FY22E)
• Adj. Net Margin: 16.5% (FY22E)
• Current Ratio: 2.4x (FY22E)
• Debtors Turnover Days: 54.8 (FY22E)
• Creditors Turnover Days: 1824.7 (FY22E)
• ROE: 4.0% (FY22E)
• ROA: 3.0% (FY22E)
• BVPS: RMB7.3 (FY22E)

Analyst Certification and Disclaimer

• The analyst certifies that the views expressed in the report reflect personal opinions and are not influenced by compensation.
• The analyst confirms no trading activity in the stock within 30 days prior to the report's release and will not trade within 3 business days after.
• The report is not an offer to buy or sell securities and is not liable for any losses incurred from reliance on its information.
• The report is based on publicly available information and is provided "as is" without guarantees of accuracy or completeness.
• CMBIGM may have conflicts of interest and does not assume responsibility for any potential impact on the report's objectivity.

CMBIGM Ratings

• BUY: Potential return of over $15%$ over next 12 months
• HOLD: Potential return of $+15%$ to $-10%$ over next 12 months
• SELL: Potential loss of over $10%$ over next 12 months
• OUTPERFORM: Industry expected to outperform the market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the market benchmark
• UNDERPERFORM: Industry expected to underperform the market benchmark

Important Disclosures

• The report is intended for distribution to specific investors and should not be reproduced or distributed without prior written consent.
• CMBIGM is not a registered broker-dealer in the United States, Singapore, or the United Kingdom.
• The report may be subject to local laws and regulations, and recipients are advised to consult with a financial advisor for investment decisions.