20250417-招银国际-同程旅行-00780.HK-Expecting_inline_1Q_results__solid_full-year_earnings_growth_outlook_unchanged_5页_947kb

Tongcheng Travel (780 HK) Summary

Core Content and Outlook

Tongcheng Travel (TC) is expected to report RMB4.35bn in revenue for 1Q25E, representing a 12% YoY increase, and RMB737mn in non-GAAP net profit, up 32% YoY, both in line with Bloomberg's consensus. The BUY recommendation remains unchanged, with the target price of HK$24.0 and an up/downside of 7.1% from the current price of HK$22.40.

The company's business growth is primarily driven by domestic demand, and it is relatively immune to the impact of tariffs and geopolitical conflicts. The 2025E forecast for core OTA OP and total non-GAAP net profit remains at 25% and 18% YoY growth, respectively.

Supporting Factors for Growth

• Resilient travel demand: The Qingming Festival 2025 saw 126mn tourists and RMB57.5bn in tourism income, a 6.3% and 6.7% YoY increase, respectively. This suggests continued strong domestic travel activity.
• Operating efficiency improvements: TC is expected to enhance its operating efficiency through refined marketing strategies and optimized user subsidies.
• International business turnaround: The international segment, which previously operated at a loss, is expected to contribute to profits and support overall growth.

Financial Forecast

Key Financial Metrics

• P/E (2025E): 18.4x
• Diluted P/E (2025E): 15.7x
• P/B (2025E): 2.1x
• P/CFPS (2025E): 13.4x

Shareholding and Stock Data

• Market Cap (HK$ mn): 51,531.0
• Average 3 mths t/o (HK$ mn): 298.7
• 52w High/Low (HK$): 22.40 / 12.70
• Total Issued Shares (mn): 2,300.5

Major Shareholders

• Tencent: 21.2%
• Trip.com: 20.7%

Share Performance

Financial Highlights

• Core OTA Business: Expected to grow 17.2% YoY in 1Q25E, with revenue growth of 17.2% and non-GAAP net profit growth of 32.0%.
• Tourism Business: Expected to see a 11% YoY decline in 1Q25E, primarily due to slower recovery in outbound tourism to Southeast Asia, but recovery is expected to be back-loaded.
• Gross Profit Margin (GPM): Expected to remain at 65.2% in 2025E.
• Operating Profit Margin (OPM): Expected to rise to 15.8% in 1Q25E.
• Adjusted Net Profit Margin (Adj. NPM): Expected to be 17.0% in 1Q25E.
• Return on Equity (ROE): Expected to be 12.2% in 2025E.

Key Risks

• More severe-than-expected macroeconomic headwinds affecting revenue growth.
• Slower-than-expected margin expansion.

Valuation and DCF Analysis

• DCF-based target price (HK$): 24.0
• WACC: 13.0%
• Terminal growth rate: 1.0%
• 2025E PE ratio: 15.6x

Analyst Certification

The analyst certifies that:

1. All views accurately reflect their personal views.
2. No compensation is directly or indirectly related to the views expressed in the report.

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.
• NOT RATED: Not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the market.
• MARKET-PERFORM: Industry expected to perform in-line with the market.
• UNDERPERFORM: Industry expected to underperform the market.

Important Disclosures

• This report is for informational purposes only.
• CMBIGM does not provide individually tailored investment advice.
• Past performance is not indicative of future results.
• The value of investments is uncertain and may fluctuate.
• CMBIGM does not assume liability for any losses or damages resulting from reliance on the report.
• The report is not an offer or solicitation to buy or sell any securities.
• The report is intended solely for major US institutional investors.

Legal and Regulatory Information

• UK Recipients: The report is only for those who fall under Article 19(5) or Article 49(2)(a) to (d) of the Financial Promotion Order.
• US Recipients: CMBIGM is not a registered broker-dealer in the US, and the report is for major US institutional investors only.
• Singapore Recipients: The report is distributed by CMBISG, an Exempt Financial Adviser regulated by the Monetary Authority of Singapore.

Conclusion

Tongcheng Travel is expected to maintain strong full-year earnings growth despite some challenges in the Tourism segment. The company's core OTA business continues to show resilience and growth potential, and the international business is on a recovery path. The target price remains unchanged, reflecting positive outlook and stable valuation.