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Sina Science and Technology News in the afternoon of September 10 Beijing timeTRIP COM GRP LTD(Nasdaq:CTRP) Today releases unaudited financial results for the second quarter ended June 30, 2019. According to the financial report, TRIP COM GRP LTD's net income in the second quarter was 8.7 billion yuan ($1.3 billion), an increase of 19% over the same period last year and 6% over the previous quarter. The net loss attributable to the company's shareholders was 403 million yuan ($59 million), compared with 2.4 billion yuan in the same period last year, and 4.6 billion yuan in the previous quarter. Not in accordance with US general accounting standards, TRIP COM GRP LTD's net profit attributed to the company's shareholders in the second quarter was 1.3 billion yuan ($193 million), compared with 1.1 billion yuan in the same period last year. The net profit attributed to the company's shareholders in the previous quarter was 1.8 billion yuan.
After the release of the results, Trip.com Chairman Liang Jianzhang, CEO Sun Jie and CFO Wang Xiaofeng and other executives attended the subsequent earnings conference call to interpret the main points of the results and answer analysts' questions.
Jeffery analyst Thomas Cheung: what are the macroeconomic challenges and market headwinds facing the company's business in the short and long term? How does Trip.com deal with these influences?
Liang Jianzhang:Because of geopolitical problems, there are indeed some adverse factors affecting business development in parts of Asia, and travelers have to change their itinerary and may travel or take a holiday later this year. In the long run, the outlook for Asian business is very optimistic, as China will remain one of the fastest growing countries among the world's major economies, and Asia will also be one of the fastest growing regions in the world. Trip.com 's position in the Asian market can help the company benefit from it, and in the long run, we have a positive attitude towards the company's growth and profits in both domestic and international business.
Wang Xiaoxing:These short-term industry disadvantages will have an impact on the company's growth rate of 400 to 500 basis points in the next quarter. The disadvantages I am talking about are mainly the slowdown in business in Hong Kong and Taiwan, as well as the corresponding drop in air ticket prices. The outbound travel business of Hong Kong and Taiwan accounted for 1/3 of the outbound travel business of domestic tourists in the first half of the year, and the outlook for the third quarter takes into account this part of the disadvantage. Outbound ticket prices fell 750 basis points in July compared with the same month last year due to weak demand and uncertain macro conditions, according to China Aviation letter. In the medium to long term, Trip.com has the widest product coverage, the most complete services, and constantly entering new foreign markets, all of which can help the company reduce or even offset the uncertainty in some markets. the company will continue to invest in products and services to maintain its leading position in the market.
HSBC analyst Benny Wang: is outbound travel becoming more and more important for the company's business development? Is the company's strategy to compete with local companies in terms of price or to invest more in the business? How does this affect the change in the company's profit margin? The company's operating profit margin in this quarter has improved from the same period last year and month-on-month, reaching 20%. Do high-end outbound travel products contribute? What is the trend in the future?
Sun Jie:The company's growth is twice the industry average, and it has gained more market share, and high-end users continue to contribute a lot of revenue from outbound travel. In the third quarter, there was some uncertainty in some areas, but the company's products are so diverse that users have other options to travel to other parts of the world. For the company's business outside Asia, trip.com mainly provides international air tickets. The website has seen triple-digit growth in the past two years. It is believed that outbound travel and international air tickets will be the drivers of the company's future growth.
Wang Xiaoxing:By improving the operating efficiency, the company will continue to improve its operating profit margin. Outbound travel is a part of it, the target customers are mainly high-end customers, and the average price of products is much higher than that of domestic travel products. At the same time, the operational efficiency of domestic travel products is also improving.
Goldman Sachs GroupAnalyst Ronald Keung: my question is also about the profit margin. According to the company's outlook for the third quarter, the profit margin is estimated to be between 20% and 25%. How does the company predict the profit margin in the fourth quarter?
Wang Xiaoxing:The outlook for the fourth quarter may not be available until the release of the third-quarter results. Generally speaking, although the macroeconomic slowdown will have an impact on the company's revenue growth, our goal is still to be higher than the industry average growth rate. The company's operating efficiency in all business lines is constantly improving. In the medium term, the company is confident of achieving an operating margin target of more than 20%, not in accordance with GAAP.
(Tian Heng)