Incidents:
On February 22, 2024, the company announced its 2023Q4 financial report, achieving overall net revenue of 10.3 billion yuan (YoY +105%), net profit to mother 1.3 billion yuan (2.1 billion yuan for the same period in 2022), and non-GAAP net profit of 2.7 billion yuan (YoY +437%). Among them, transportation ticketing achieved net revenue of 4.1 billion yuan (YoY +86%), accommodation reservations achieved net revenue of 3.9 billion yuan (YoY +131%), travel and vacation net revenue of 704 million yuan (YoY +329%), and business travel management achieved net revenue of 634 million yuan (YoY +129%). 2023.9 As of the 2024.2.22 announcement date, the company has repurchased approximately 6.8 million American depository shares, totaling approximately US$224 million, and in February 2024, the board of directors approved and authorized the company to implement strategic capital return plans totaling no more than US$300 million from time to time. The capital return plan may include annual stock repurchases, annual cash dividend declarations, or a combination of the two.
Our point of view:
Overall performance: The company's 2023Q4 net revenue and profit both showed rapid growth, mainly due to high travel sentiment driving the growth of the travel industry, supply constraints continued to be mitigated, domestic and international travel showed a strong rebound trend, and the company's continued optimization on the cost side. The long-term restoration of outbound travel, the company's continuous layout on global OTA platforms, and the combined application of AIGC in cultural tourism are expected to drive continued growth.
Domestic business: Hotel bookings are growing strongly, and domestic travel continues to grow strongly. There is no sign of slowing down in winter travel demand. The number of visitors to popular tourist destinations such as Harbin surged, 2023Q4 domestic hotel reservations increased by more than 130% year on year, and more than 60% over the same period before the 2019 pandemic. As the platform continues to deeply integrate product integration, content generation, and marketing work, the number of users aged 50 and over increased by more than 90% in the fourth quarter.
Outbound business: Continuing to lead the recovery of the industry, which is expected to drive long-term growth along with the resumption of visa applications and the supply of international flights. 2023Q4's outbound hotel and air ticket reservations have recovered to more than 80% of the same period before the 2019 pandemic. Compared with the international aviation industry, passenger traffic volume has recovered to about 60%, and continues to lead the market with an advantage of about 20 pcts. Since February 9, 2024 (New Year's Eve), China and Singapore have mutually opened visa-free entry for no more than 30 days. Since then, the three “New Matai” countries on the Southeast Asian Golden Tourist Route have all been visa-free for Chinese tourists, further driving the development of outbound business. According to flight manager statistics, during the 2024 Spring Festival, the number of international passenger flights of civil aviation was 6051, returning to an average of 70.8% per day during the 2019 Spring Festival.
We expect that in 2024, the company's outbound hotels and air tickets will continue to lead the recovery of the market, and will further drive outbound business performance growth along with the resumption of supply of visa applications and international flights.
Global OTA business: Trip.com's contribution increased, driving medium- to long-term performance growth. Total bookings on 2023Q4's international OTA platform increased by more than 70% year over year, and increased by more than 100% compared with the same period in 2019. Currently, more than 60% of global bookings are made directly through Trip.com. According to the company's estimate, Trip.com will contribute 15% to 20% of the Group's total revenue within the next 3-5 years, and the compound annual growth rate will reach medium to high double-digit levels.
As a leader in the OTA industry, profit forecasting and investment rating companies continue to benefit from the release of domestic travel demand, the recovery of outbound travel, and the in-depth layout of the global OTA business. We introduced 2026 expectations. The company's net revenue for 2024-2026 is estimated to be 526/604/66.7 billion yuan, respectively, and net profit to mother is 114/134/15 billion yuan, corresponding diluted EPS is 17.5/20.5/23.0 yuan, and the corresponding P/E is 19/16/15 times; we gave Ctrip Group 2024 The target market value is RMB 275.3 billion, corresponding to the target price of HK$438, maintaining the “buy” rating.
Risks suggest that immigration recovery and overseas layout fall short of expectations; domestic consumption recovery falls short of expectations; market competition intensifies, industry growth falls short of expectations; performance in cost reduction and efficiency falls short of expectations, etc.