24Q2 performance
1) Overall performance: Revenue for the second quarter recorded 12.788 billion yuan (yoy +13.56%, qoq +7.28%), slightly higher than Bloomberg's agreed forecast of 0.30%; operating profit recorded 3.555 billion yuan (yoy +19.42%), higher than Bloomberg's agreed forecast of 2.18%; GAAP net profit recorded 3.888 billion yuan (0.648 billion yuan in the same period last year), significantly higher than Bloomberg's agreed forecast of 27.4%; non-GAAP net profit recorded 4.985 billion yuan (yoy +45.2%), significantly higher than Bloomberg's agreed estimate of 39.5%.
2) By business: accommodation booking revenue of 5.136 billion yuan (yoy +19.86%), higher than Bloomberg's agreed estimate of 3.6%; transportation ticketing revenue of 4.871 billion yuan (yoy +1.2%), slightly lower than Bloomberg's agreed estimate of 2.03%; travel and vacation business revenue of 1.025 billion yuan (yoy +41.97%), slightly higher than Bloomberg's agreed estimate of 0.05%; business travel management revenue of 0.635 billion yuan (yoy +8.4%), slightly lower than Peng Bo agreed to expect 0.24%; other business revenue of 1.169 billion yuan (yoy +31%) was slightly lower than Bloomberg's agreed forecast of 3.91%.
Outbound & overseas business is the driving force, and Trip.com maintains rapid growth 1) Outbound business: International flight capacity returned to about 75% of pre-pandemic levels. In the second quarter, the company's outbound hotel and air ticket reservations returned to 100% compared to 2019, exceeding the industry average of 20% to 30%. During the Labor Day holiday in May, outbound ticket bookings soared to over 120% in 2019, and over 110% during the Dragon Boat Festival. The APAC region remains the top choice for Chinese tourists, and visa-free travel destinations such as Singapore, Thailand, and Malaysia are recovering strongly. In addition, hotel bookings on the company's Chinese site increased by about 20% year over year, mainly due to rapid growth in outbound and local travel. 2) Overseas business: The total revenue of the company's international OTA platform (trip.com) increased by about 70% year-on-year in the current quarter, with a significant 76% increase in revenue from the APAC region. In the second quarter, trip.com accounted for 10.5% of the group's total revenue. Cross-selling capabilities from transportation to hotels continued to improve, and the share of hotel revenue increased to the 35%-40% range.
Due to the favorable visa-free policy, inbound travel led to an increase in overseas station performance
In the first half of 2024, there was also a significant increase in the number of inbound tourists to China, up 150% year over year. Visitors from visa-free countries surged 190% during the same period. In the second quarter, inbound hotel and air ticket reservations on the Trip.com platform increased by about 200% year-on-year. Inbound travel currently contributes more than 25% to the overall business of Trip.com.
Investment advice
We expect the company's revenue to be 52.152/59.965/68.289 billion yuan in 2024/2025/2026, achieving +17.0%/+15.0%/+13.9% year over year; adjusted net profit of 164.0 /19.88/22.15 billion yuan, achieving +25.5%/+21.2%/+11.4% YoY, maintaining 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.