20221123-招银国际-同程旅行-00780.HK-Factoring_in_4Q22E_epidemic_resurgence_5页_880kb

Tongcheng Travel (780 HK) Company Update Summary

Core Content

This report provides an equity research update on Tongcheng Travel (780 HK), focusing on its 3Q22 financial performance and outlook for 4Q22E and beyond. It also includes financial forecasts, key ratios, and a stock recommendation.

Main Points

3Q22 Financial Performance

• Revenue: In-line with expectations (+6% YoY), reaching RMB2,048 million.
• Adjusted Net Profit (Adj. NP): Reached RMB252 million, exceeding the estimate of RMB239 million.
• Net Profit Margin (NPM): 12.3%, higher than the estimated 11%.
• Margin Improvement: Stronger than expected bottom line due to better operating cost control.

4Q22E Outlook

• Revenue Forecast: Revised down to -24% YoY (previously -10% YoY).
• Segment Performance:
  • Hotel: Expected to decline by -13% YoY, with room nights down by -22% and ADR down by single-digit.
  • Transportation: Projected to fall by -34% YoY.
• Net Loss: Estimated at RMB51 million for 4Q22E, marking the first net loss in the quarter.
• Earnings Revision: FY22E earnings cut by 31%, FY23E and FY24E by 9.7% and 7.7% respectively, to reflect the impact of the epidemic resurgence.

Long-Term Fundamentals

• Despite short-term challenges, the long-term fundamentals remain intact.
• The company is expected to benefit from potential policy relaxation and recovery in travel demand.
• Strategic initiatives include deeper penetration into lower-tier cities and leveraging Tencent traffic.

Stock Recommendation

• Recommendation: Maintain BUY.
• Target Price (TP): HK$17.1 (down from HK$18.2).
• P/E Ratio: Implies 26.7x for FY23E.
• Short-Term Pressure: The stock may face downward pressure due to weak 4Q22E and 1Q23E guidance.
• Recovery Expectation: Expected to rebound over the next 1-2 quarters as the epidemic stabilizes.

Key Financial Forecasts

Key Ratios

Shareholding and Performance

• Shareholding Structure:

  • Tencent: 21.38%
  • Trip.com: 20.85%
  • T Rowe Price: 5.94%

• Share Performance:

  • 1-Month: +12.3%
  • 3-Months: +1.1%
  • 6-Months: +20.1%

• Relative Performance:

  • 1-Month: +3.0%
  • 3-Months: +11.1%
  • 6-Months: +34.4%

Analyst Certification

• The research analyst certifies that the views expressed in the report accurately reflect their personal views.
• No compensation was directly or indirectly related to the views expressed.

Important Disclosures

• The report is not an offer or solicitation to buy or sell any security.
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Regulatory Notes

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• In the UK, it is only provided to persons falling within specific regulatory categories.
• In Singapore, it is distributed by CMBISG, an exempt financial adviser, and legal responsibility is accepted only to the extent required by law.