Tongcheng Travel announced its 2023 results. Focusing on the company's performance, the company's 23-year revenue was 11.896 billion yuan/year over year, adjusted net profit of 2,199 billion yuan/year over year +240.3%; 23 gross profit margin of 73.5% /year over year +0.7 pcts, adjusted net profit margin of 18.5% /year over year +8.8 pcts. Focusing on the company's paying users and transaction volume, the transaction volume was 241.5 billion yuan/+96.8%; looking at the split business, the company's accommodation reservation service revenue in '23 was 3.90 billion yuan/+32.8%, transportation ticketing service revenue was 6.030 billion yuan/+50.7% YoY, and other business revenue was 1,967 billion yuan/YoY +16.5%. Judging from 23Q4 performance alone, in 23Q4, the company's revenue was 3.145 billion yuan/year on year +109.6%, and adjusted net profit was 483 million yuan/year on year +1188.3%.
Deepen strategic cooperation, develop offline customer acquisition channels, improve the membership system, and strengthen the platform's customer acquisition, customer acquisition effectiveness and payment conversion capabilities. In 23 years, the company 1) deepened strategic cooperation with Tencent through multiple channels such as WeChat Mini Program, WeChat Search, QQ Browser, etc., and 80% of the average monthly active users came from the WeChat Mini Program; 2) Promoting its own apps, increasing the operation of Alipay Mini Programs, cooperating with mobile phone suppliers, and insisting on developing offline customer acquisition channels. The 23Q4 offline customer acquisition business provides effective support for increasing monthly paying users; 3) Improve Black Whale membership plans through increased benefits (such as price guarantee and free cancellation) to provide customized travel consulting and Black Whale member customer service optimization experience. 23Q4 The cumulative number of Black Whale members increased dramatically. The company had 235 million annual paid users/year over year +25.2%, with an average of 41 million monthly paying users/year over year +39.1%; 23Q4 average monthly paying users/year on year +54.3%. We believe that the company 23Q2 officially launched an offline store franchise program after integrating China Travel and Tourism. Thanks to this, in addition to online strategic cooperation, currently, in addition to online strategic cooperation, it is also exploring offline customer acquisition channels to expand the platform's customer acquisition capacity, which is expected to be further improved in the future; in addition, the company is also strengthening the ability to convert existing customers into paying customers through the improvement of the Black Whale membership system. Online and offline channels have been deepened and the conversion capacity of paying users has increased. A two-pronged approach has promoted a rise in 23 year paying users, average monthly paying users, and transaction volume.
The strategic direction of sinking has not changed; users in non-first-tier cities are the core. The company is still the core of its strategy to open up the sink market. By the end of '23, registered users in non-first-tier cities accounted for 86.9% of the total number of users, +0.4 pcts year over year; in '23, new paying users on the WeChat platform and users in non-first-tier cities accounted for 72.7% of the total number of users. The sinking market is the company's basic market. It continues to attract users and young users in the sinking market through the operation of the “Travel+” model and rural tourism projects. It is expected that the customer acquisition capacity of the sinking market will further improve in the future.
Dividends were paid for the first time in '23, and the 23Q4 acquisition of Beijing Tongcheng Travel Industry strengthened the supply chain. In FY23, the company plans to pay HK$0.15 per share, excluding the net date of June 28, 24. As of March 15, 24, the company's total share capital was 2,263 million shares, with an estimated dividend amount of HK$339 million. The company completed the acquisition of Beijing Tongcheng Travel Investment Group Co., Ltd. in 23Q4. The company consists of more than 10 leading regional travel agencies, with the intention of strengthening the company's market position and influence in the travel industry supply chain.
Investment advice: Tongcheng continues to cultivate the sinking market and WeChat traffic. Through excellent operation, service and innovation capabilities, Tongcheng continues to attract new users and increase payment rates to provide impetus for the company's development. At the same time, Tongcheng has penetrated the industrial chain through mergers and acquisitions to improve the layout of sectors such as accommodation, vacation and outbound travel, thereby deepening the company's competitive advantage and voice. Considering the new business consolidation and future growth potential, the company's net profit for 2024-2026 is estimated to be $2,062 billion, $2,723 billion, and $3.369 billion respectively. The corresponding PE is 19x/15x/12x, respectively, maintaining the “recommended” rating.
Risk warning: industry competition risk, policy risk, risk of macroeconomic recovery falling short of expectations.