During the Dragon Boat Festival, both hotel and transportation growth of Tongcheng Travel outperformed the large cap market. It is expected that the business performance in the second quarter of 2024 will be better, and the company remains optimistic about the financial guidance for the whole year.
According to the news from the Zhongtong Financial APP, CMB International released a research report stating that it maintained Tongcheng Travel's (00780) "buy" rating with a target price of HKD 26.1. Hotel and transportation growth of the group during the Dragon Boat Festival outperformed the large cap market. It is expected that the business performance in the second quarter of 2024 will be better, and the company remains optimistic about the financial guidance for the whole year. Investors generally recognize the logic of the company's business growth and market share improvement, with the core concern being potential profit dilution.
The bank believes that the market has overreacted to the profit margin trend, and the bank reaffirms its optimistic view of Tongcheng Travel in the long term, anticipating that the accelerated income growth and profit margin recovery in the second half of 2024 will boost the valuation, with potential catalysts being summer travel and the holidays in September and October. The bank now predicts that the adjusted net income in 2024 will be RMB 26.068 billion, rising to RMB 30.4 billion in 2025.