Morgan Stanley's research report predicts that Ctrip(TCOM.US) will see a year-on-year growth of 16% and 15% in total revenue in the second and third quarters of this year, respectively, in line with market expectations; as for operating profit margin, it will also record growth on a quarterly basis, higher than market expectations.

The bank lowered its earnings per share forecast for Ctrip from 2024 to 2026 by 1% to 2%, but it is still higher than the market's expected 3% to 10%. This is mainly due to the increasing outbound travel portfolio and the improved profitability of Trip.com, which drives the company's profit margin growth. The bank also lowered Ctrip's 2024 enterprise value multiple (EV/EBITDA) from 13 times to 12 times.

The bank stated that with the normalization of hotel supply growth in the second half of 2023 and the adjustment of value-added services for air tickets in September, it is expected that Ctrip's local business will accelerate again in the fourth quarter of this year and increase by 11% year-on-year. The RevPAR for each rentable room in the hotel industry may see the fastest decline narrow in August, reflecting the growth of local tourism.

Morgan Stanley also expects that Ctrip's current stock price reflects a price-to-earnings ratio of 15 times and 12 times for the 2024 and 2025 fiscal years, respectively; the average annual compound growth rate of earnings per share from 2023 to 2025 will be 20%. Taking into account the above factors, the bank lowered Ctrip's US stock target price from $64 to $59 and maintains a "shareholding" rating. (JS/CY)

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