4Q23: Earnings Beat; Strong 1Q24 Expected
TCOM delivered a strong earnings beat for 4Q23. 4Q23 net revenue soared 105.5% yoy to Rmb10.3b and was 24% above the 2019 level, in line with consensus estimates. Non GAAP net profit was Rmb2.7b with a margin of 26%, beating our and consensus estimates. TCOM guided for 1Q24 revenue growth of 26% yoy, 9% above consensus estimates. TCOM upsized its Capital Return Program by US$300m and currently has US$581m remaining in the program. Maintain BUY. Target price: HK$433.00 (US$53.00).
RESULTS
• Top-line growth momentum remains intact. Trip.com’s (TCOM) core business segments, namely accommodation/transportation ticketing/packaged tour/corporate travel, saw 131%/86%/329%/129% yoy growth, which was 32%/18%/-12%/70% vs pre-COVID-19 levels (4Q19). In 4Q23, domestic hotel bookings soared by 130% yoy, 60% above preCOVID-19 levels. Transportation ticketing revenue surged by 86% yoy and was 18% above pre-COVID-19 levels. In 4Q23, air ticket bookings on the company’s global online travel agency (OTA) platform surged by over 70% yoy. Outbound hotel and air reservations recovered to 80% vs pre-COVID-19 levels, compared to the industry-wide recovery rate of over 60% in terms of international air passenger volume for the same period.
• 1Q24 anchored by stellar performance during Spring Festival. During the Spring Festival, TCOM’s domestic hotel and air ticket bookings surged by 60% and 50% yoy, while its outbound hotel and air ticketing bookings surpassed 2019 levels, outpacing the industry’s recovery in flight capacity to 70% of 2019 levels, mainly facilitated by visa-free policies offered to Chinese travellers. TCOM anticipates a stronger yoy growth in the first half of 1Q24 given the low base and a softer second half of 1Q24 due to the high base effect in 2023. Given robust demand for long-haul international travel during the Spring Festival, Skyscanner maintains teens yoy growth while Trip.com is expected to deliver mid-doubledigit yoy growth in 1Q24. According to TCOM, its consumption per capita in the travel segment has maintained the growing momentum since 1Q23 (when tracking started).