Incident: In 24Q2, Ctrip achieved net revenue of 12.8 billion yuan, +14% year over year; adjusted EBITDA was 4.4 billion yuan, adjusted EBITDA profit margin was 35%, up 2 pct year on year; adjusted net profit to mother was 5 billion yuan, +45% year over year.
The outbound business has returned to pre-pandemic levels, and we are optimistic that it will continue to grow rapidly in the second half of the year. The company's Q2 domestic hotel and air ticket reservations increased by about 20% year-on-year, mainly due to rapid growth in outbound and local travel. Among them, outbound hotel and air ticket reservations in Q2 have fully recovered to 100% of the same period before the 2019 pandemic, significantly exceeding the industry average international flight recovery rate of more than 70%. The number of bookings for the May Day holiday surged to more than 120% of the 2019 level, while the Dragon Boat Festival holiday surged to more than 110%.
Demand for outbound travel has further increased due to the promotion of visa-free policies and international events such as the European Cup and Olympics. Summer outbound air tickets and hotel reservations have reached 110% to 120% of the 2019 level, continuing to surpass the industry level by 20% to 30%. We are optimistic that the company's domestic business will maintain rapid growth in the second half of the year.
The international business of Trip.com has grown significantly, and the contribution of inbound tourism has further increased. The total revenue of 24Q2's international platform, Trip.com, increased by about 70% year on year, contributing about 10.5% to the total revenue of the group. Among them, revenue from the Asia-Pacific region increased significantly by 76% year on year. With the implementation of the visa-free policy, the convenience of inbound travel in China increased, and the contribution of Q2 inbound travel to Trip.com's revenue increased to more than 25% (about 20% in Q1). We continue to be optimistic that inbound tourism will drive the growth of Trip.com and bring revenue growth to the group.
Q2 Sales expenses increased slightly, and overall profit margins increased year over year. 24Q2 gross margin was 82%, which was stable year over year; sales/management/R&D expense ratios were 22%/8%/23%, respectively, and yoy+1.3pct/basically flat /-2.8pct. The overall expense ratio declined year-on-year, and the company's adjusted net profit margin Q2 reached 39%, yoy +8.5 pct. Due to seasonal factors and changes in revenue structure, we expect the company's marketing expenses ratio to rise slightly in the future, but based on improvements in overall operation and marketing efficiency, the company's profit margin is expected to continue to rise steadily.
Profit forecast and investment rating: We continue to be optimistic that the company will continue to grow better than the industry as a leader in the OTA field. Considering that the company's Q2 performance was better than our expectations, we adjusted the company's adjusted net profit for 2024-2026 from 14.04/16.18/17.9 billion yuan to 16.85/18.93/20.9 billion yuan, up 29%/12%/10% year-on-year respectively, corresponding to the current PE price of 14/12/11, maintaining a “buy” rating.
Risk warning: Cross-border business growth falls short of expectations, travel demand falls short of expectations, macroeconomic and political risks