20250321-招银国际-同程旅行-00780.HK-4Q_earnings_beat__likely_another_year_of_solid_earnings_growth_ahead_7页_1mb

Tongcheng Travel (780 HK) Summary

Core Content

Tongcheng Travel (TC) has reported its 4Q24 financial results, showing strong performance and positive outlook for 2025. The company exceeded revenue expectations and delivered better-than-expected adjusted net profit (Adj. NP), with continued improvements in operating profit margin (OPM).

Main Points

• 4Q24 Results:

  • Total revenue: RMB4.2bn, up 35% YoY, beating the Bloomberg consensus by 5%.
  • Adjusted NP: RMB660mn, up 37% YoY, beating consensus by 7%.
  • OPM of core OTA businesses improved to 28.4% in 4Q24 from 23.6% in 4Q23.

• 2024 Annual Performance:

  • Total revenue: RMB17.3bn, up 46% YoY.
  • Non-GAAP net profit: RMB2.8bn, up 27% YoY.

• 2025 Outlook:

  • Expected solid earnings growth due to improved operating efficiency.
  • Core OTA OPM is expected to expand to 28.5% in 2025.
  • Non-GAAP net profit forecast is 5% ahead of consensus for 2025.
  • Revenue growth for 2025 is in line with consensus.

• Core OTA Business:

  • Revenue in 4Q24: RMB3.5bn (82% of total revenue), up 20% YoY.
  • Transportation ticketing services revenue: up 17% YoY.
  • Accommodation reservation services revenue: up 29% YoY.
  • The cross-sell ratio between transportation ticketing and other business and products remained stable at 12% in 4Q24, with a target of increasing to 13-15% in the medium term.

• 1Q25 Outlook:

  • Expected total revenue of RMB4.4bn, up 13% YoY.
  • Core OTA revenue is expected to grow by 17% YoY.
  • Accommodation reservation is expected to be a key driver of revenue growth with 12% YoY increase in hotel room nights and improved hotel take rates due to optimized user subsidies.

• Analyst Ratings:

  • Maintained "BUY" rating.
  • Target price: HK$24.00, up from HK$23.50.
  • Price-to-earnings (P/E) ratio for 2025E is 16x (non-GAAP).

Key Information

• Shareholding Structure:

  • Tencent: 21.2%
  • Trip.com: 20.7%

• Stock Data:

  • Market Cap: HK$42,283.1 million
  • Average 3-month trading volume: HK$192.6 million
  • 52-week High/Low: HK$22.30 / HK$12.70
  • Total issued shares: 2,300.5 million

• Earnings Summary:

  • Revenue: FY23A RMB11,896mn, FY24A RMB17,341mn, FY25E RMB19,804mn, FY26E RMB22,186mn, FY27E RMB24,015mn
  • YoY growth: FY23A 80.7%, FY24A 45.8%, FY25E 14.2%, FY26E 12.0%, FY27E 8.2%
  • Adjusted net profit: FY23A RMB2,192.1mn, FY24A RMB2,785.4mn, FY25E RMB3,299.0mn, FY26E RMB3,793.0mn, FY27E RMB4,202.0mn
  • Diluted EPS: FY23A RMB0.95, FY24A RMB1.22, FY25E RMB1.43, FY26E RMB1.64, FY27E RMB1.80
  • Consensus EPS: FY25E RMB1.31, FY26E RMB1.56, FY27E RMB1.61
  • P/E (non-GAAP): FY23A 24.7x, FY24A 19.7x, FY25E 14.9x, FY26E 12.7x, FY27E 11.4x

• Valuation & Forecast Adjustments:

  • CMBI reduced 2025E/2026E revenue forecasts by 3%/4% due to short-term headwinds in the Tourism business.
  • However, non-GAAP net profit forecasts were lifted by 2%/3% due to better-than-expected operating efficiency improvements.

• DCF Valuation:

  • Terminal growth rate reduced to 1.0% (from 2.0%).
  • Valuation per share: HK$24.00 (based on DCF model with WACC of 13.0%).

• Financial Highlights:

  • Gross margin: FY24A 65.2%, FY25E 65.2%, FY26E 65.7%, FY27E 66.1%
  • Operating margin: FY24A 14.0%, FY25E 16.0%, FY26E 16.7%, FY27E 17.2%
  • Adj. net profit margin: FY24A 16.1%, FY25E 16.7%, FY26E 17.1%, FY27E 17.5%
  • ROE: FY24A 10.5%, FY25E 12.2%, FY26E 12.8%, FY27E 12.7%

• Key Financial Ratios:

  • Net debt to equity: FY24A (0.2), FY25E (0.4), FY26E (0.5), FY27E (0.5)
  • Current ratio: FY24A 1.6, FY25E 1.8, FY26E 2.0, FY27E 2.2
  • Receivable turnover days: FY24A 31.0, FY25E 34.1, FY26E 34.4, FY27E 35.0
  • Payable turnover days: FY24A 252.0, FY25E 246.1, FY26E 239.6, FY27E 236.4

• CMBIGM Ratings:

  • "BUY" rating indicates potential return of over 15% over the next 12 months.

Analyst Information

• Analysts:

  • Saiyi HE, CFA
  • Ye TAO, CFA
  • Wentao LU, CFA
  • Joanna Ma

• Contact:

  • Saiyi HE: (852) 3916 1739, hesaiyi@cmbi.com.hk
  • Ye TAO: franktao@cmbi.com.hk
  • Wentao LU: luwentao@cmbi.com.hk
  • Joanna Ma: (852) 3761 8838, joannama@cmbi.com.hk

Disclaimer

• This report is not investment advice and is for informational purposes only.
• Past performance does not guarantee future results.
• The information is based on publicly available data and is not guaranteed for accuracy or completeness.
• CMBIGM is not liable for any losses or damages arising from reliance on this information.
• The report is for the use of intended recipients only and may not be reproduced, reprinted, sold, or published without prior written consent.