Strong recovery expected in 2H22F

■ Trip.com reported 3Q21 revenue of Rmb5.3bn, down 2.2% yoy, recovering to 50.9% of 3Q19 revenue, slightly below our expectation; and non-GAAP net profit of Rmb523m, down 62.6% yoy, below our expectation because of lower margins.
■ Management expects the government to gradually relax inbound and outbound travel restrictions in 2H22F.
■ It is likely that the government will open the mainland–HK border for travel gradually in FY22F, so we expect Trip.com’s Hong Kong outbound tourism business to recover to 40–50% of the FY19 level, and its domestic and international business to recover to 80–90% and 40–50% of the FY19 level.
■ Reiterate ADD with a new DCF-based TP of HK$253.