Earnings First Take?4Q23 revenue surged 105%; earnings beat by 68%
- Revenue surged 105% y-o-y, surpassing 4Q19 level by 24%, in line with market expectations
- Non-GAAP net profit reached Rmb2.7bn, beating consensus by 68%, due to lower-than-expected marketing expenses
- Outbound hotel and air reservations recovered to 80% of 4Q19’s level, outpacing the industry level of 60%
4Q23 revenue in line; earnings beat. Trip.com (9961 HK / TCOM US) announced strong 4Q23 results on 22 Feb before HK market open. Revenue increased by 105% y-o-y to Rmb10.3bn, in line with market expectations, surpassing the 4Q19 level by 24%. By segment, accommodation reservation revenue surged 131% y-o-y to Rmb3.9bn, with domestic hotel bookings surging by 130% y-o-y. Transportation ticketing revenue increased by 86% y-o-y to Rmb4.1bn. Package tours increased by 329% y-o-y to Rmb704m. Corporate travel revenue surged 129% y-o-y to Rmb634m. Sales and marketing expenses increased by 103% y-o-y to Rmb2.3bn, 21% lower than market expectations due to fewer marketing promotion activities in non-peak season. The opex ratio contracted substantially by 22 ppts from 81% in 4Q22 to 59% in 4Q23. Non-GAAP net profit was Rmb2.7bn (vs 4Q19’s Rmb1.2bn and 4Q22’s Rmb498m), exceeding market expectations by 68%.
Robust CNY data supports 1Q24 results. Trip.com’s overall recovery pace is on track and in line with market expectations. Looking ahead, we expect Trip.com’s domestic revenue to grow by 14% in FY24. During Chinese New Year, the number of domestic tourist trips and domestic tourism spending in China overall tourism data increased 34% y-o-y and 47% y-o-y respectively, representing 119% and 108% of 2019 level, according to MCT Gov data. Moreover, Trip.com’s outbound hotel and air reservations both recovered to over 80% of pre-Covid level, ahead of 60% industry level in terms of international air passenger volume. Continuous flight capacity recovery will support its outbound revenue growth of 27% in FY24. The stock is trading at 17x FY24F PE, c.1.1x SD below the historical average. Maintain BUY, with TP under review.