23Q4 results
The company released 23Q4 and full-year results. Against the backdrop of a strong recovery in the travel market, the company recorded significant growth in both revenue and profit. 1) 23Q4 single quarter: The company obtained net revenue of 10.3 billion yuan, +105% year-on-year. Among them, lodging reservation revenue was 3.9 billion yuan, +131% year over year; transportation ticketing revenue was 4.1 billion yuan, +86% year over year; travel and vacation business revenue was 704 million yuan, +329% year over year; business travel management business revenue was 634 million yuan, +129% year over year; 2) 23 years: the company achieved net revenue of 44.5 billion yuan, +122% year over year. Among them, lodging reservation revenue was 17.3 billion yuan, +133% year over year; transportation ticketing revenue was 18.4 billion yuan, +123% year over year, up 32% from year 19; revenue from travel and vacation business was 3.1 billion yuan, +294% year over year, recovering to 69% in 2019; and business travel management business revenue was 2.3 billion yuan, +109% year on year, up 80% from '19. 3) Profit side: 23Q4EBITDA was 2.9 billion yuan, with an adjusted EBITDA margin of 28%, compared with 6% in the same period in 2022; 23q4 non-IFRS net profit was 2.7 billion yuan, +437% year over year. The company's non-IFRS net profit for the full year of 2023 was 13.071 billion yuan, +910% year-on-year.
Demand for international travel is high, and the pace of recovery in the travel market is accelerating
From the business side, the domestic travel sector has maintained high growth, and international travel is in strong demand due to favorable policies.
In the fourth quarter, the company's domestic hotel bookings increased by more than 130% year over year. In terms of international travel, due to the recent favorable visa-free policy, demand for international travel continued to rise. The company's outbound hotel and air ticket reservations in the fourth quarter returned to more than 80% of the same period before the 2019 pandemic, and total bookings on the company's international OTA platform increased by more than 70% year-on-year.
From the supply side, international flight capacity is currently recovering in an orderly manner. According to the US Department of Transportation's announcement, starting March 31, the number of flights allowed to operate between China and the US will be increased from 35 to 50. Coupled with China's visa-free access to foreign countries and the introduction of a series of immigration facilitation policies and measures, the international passenger transport market will recover at an accelerated pace. According to the Civil Aviation Administration's forecast, international flights are expected to reach about 6,000 weekly flights by the end of 2024, returning to about 80% of what it was before the epidemic.
Currently, international air passenger traffic is still low compared to '19 (passenger traffic in the international aviation industry has just recovered to 60% in '19), and the company's international hotels and airline tickets have achieved a much higher rate of recovery than the industry. From this perspective, the international travel sector still has broad room for growth. The company's performance is expected to maintain rapid growth in 24 years, driven by international hotels and transportation, and trip.com will also become the driving force for the company's long-term performance growth.
The travel consumer market had a good start during the Spring Festival holiday, setting a good tone for 24 years. It is recommended to pay attention to subsequent travel consumption stimulus policies
The year 24 was designated as the “Year of Consumption Promotion” by the Ministry of Commerce. It followed “Harbin”, triggering a wave of cultural tourism outcry and tourism boom all over the country. The scale of travel and tourism during the Spring Festival in '24 also ushered in a good start, and I am optimistic about the emergence of subsequent travel consumption stimulus policies. The 2024 Spring Festival in the Year of the Dragon became the most popular Spring Festival holiday in history. Domestic travel bookings surpassed the same period in 2019, medium- and long-term travel increased more than 3 times over the same period last year, and outbound travel peaked in nearly 4 years. According to statistics from the Ministry of Culture and Tourism, there were 474 million domestic travel trips during the 8-day Spring Festival holiday, up 34.3% year on year, up 19.0% from the same period in 2019; the total travel expenses of domestic tourists were 632,687 billion yuan, up 47.3% year on year, up 7.7% from the same period in 2019.
Investment advice
With the strong growth of the domestic travel market and the rapid recovery of international travel, outbound travel will provide a fulcrum for the company's performance growth this year. In the long run, trip.com will also become an important driving force for the company's revenue growth. We expect the company's revenue in 2024/2025/2026 to be 533.66/616.96/70.79 billion yuan, achieve adjusted net profit to mother of 138.91/155.66/18.119 billion yuan, and maintain the “buy” rating.
Risk warning
The recovery in tourism demand fell short of expectations; the recovery in air capacity fell short of expectations; macroeconomic risks.