1. Performance review: 24Q2 domestic nighttime volume increased 10% compared with 23Q2, and adjusted net profit of 0.657 billion yuan

Revenue: The company's 24Q2 revenue was 4.245 billion yuan/yoy +48%, of which the core OTA business revenue was 3.526 billion yuan/yoy +23%, and the vacation business achieved revenue of 0.72 billion yuan. In the core OTA business: 1) Accommodation reservation revenue of 1.191 billion yuan/yoy +13% in 2024Q2, mainly due to continued growth in lodging demand and deepening cross-sales. 24Q2 companies' domestic hotel night volume increased by +10%, international hotel night volume increased by nearly 140%, and the company's cross-sales rate increased to nearly 12%. 2) 2024Q2 ticket revenue was 1.743 billion yuan/yoy +17%, domestic ticket volume increased by nearly 20%, international ticket volume also increased by more than 160%, and average daily ticket volume reached a record high. 3) 2024Q2's other business revenue was 0.592 billion yuan/yoy +87%. By the end of June '24, the number of hotel stores operated by the Elong Hotel Technology Platform had increased to nearly 1,900, with more than 1,000 stores in preparation. 4) The 24Q2 vacation business segment focuses on increasing product supply, expanding offline stores, and reconnecting with overseas suppliers. By the end of 24Q2, the number of offline vacation business stores had climbed to over 800.

Performance: 2024Q2 achieved an adjusted net profit of 0.657 billion yuan/yoy +10.9%, an adjusted net interest rate of 15.5%, an increase of 1.1 pp over 14.4% in 24Q1, and a decrease of 20.7% in 23Q2 due to business restructuring. In 24Q2, the company adjusted gross profit margin of 47.8%, -28pp; adjusted service development fee/sales and marketing fee/administrative expenses ratio of 11.0%/35.1%/4.9% year-on-year, -3.3/-0.5pp, also mainly affected the vacation business.

2. Customer acquisition: The number of paying users reached 42.5 million in 24Q2, an increase of 0.7% over the previous year

2024Q2: MPU increased 0.7% year over year to 42.5 million, annual paying users 0.23 billions/yoy +4.8%, and quarterly GMV increased 4.4% to 62.3 billion yuan. At the same time, the company's strategic results in increasing user value were 1.86 billion/yoy +29.9% of 24Q2's 12-month service users, corresponding to 8.1 per year of single user consumption. Furthermore, the company's 12-month ARPU increased to close to 64 yuan, an increase of 31% over 2019.

Profit forecast and investment suggestions: The company has the advantage of low-cost customer acquisition and asset-light operation. It has demonstrated resilience in performance during the pandemic, and the dividends will remain deep after the pandemic. Considering the company's acquisition of Beijing Tongcheng Travel Group, the estimated revenue for 24-26 will be 17.1/21.3/24.8 billion yuan, up 44%/25%/16% year on year, and net profit of 1.8/2.3/2.8 billion yuan, up 17%/26%/21% year on year, adjusted net profit of 2.7/3.1/ 3.6 billion yuan, a year-on-year increase of 22%/17%/17%, maintaining the “recommended” rating.

Risk warning: risk of macroeconomic fluctuations, risk of outbound travel recovery falling short of expectations, risk of new business growth falling short of expectations.