Jingu Financial News | Guosen Securities released a research report, stating that tongchengtravel (00780) had a revenue of 4.99 billion yuan in Q3 2024, a net income attributable to the parent company of 0.79 billion yuan, and an adjusted net income of 0.91 billion yuan, with year-on-year growth of 51.3%/55.5%/46.6%, exceeding expectations (47%/24%/32% year-on-year growth). Specifically: 1) OTA platform revenue was 4.01 billion yuan, up by 21.6%, with an operating profit margin of 31.1%, a significant year-on-year increase of 6.0 percentage points, a marked improvement from -3.7%/-2.2% in Q1/Q2, driven by improved marketing efficiency and optimized structure. 2) Leisure revenue was 0.98 billion yuan, with no comparable data from the merger in December last year, and an operating profit margin of 2%.

The bank indicated that the company's platform GMV in Q3 2024 was 72.8 billion yuan, a year-on-year increase of 2.4%, mainly due to structural impact caused by industry prices, including a drop in air ticket prices, but a more than 20% year-on-year increase in air ticket volume linked to revenue; hotel ADR decreased by around 4-5%, partially offset by growth in room nights; additionally, the strategic shrinkage of ground transportation also caused disruptions. In terms of new business, as the proportion of non-first-tier city residents in the leisure vacation and outbound travel markets continues to increase, the international business is currently in the early stages of development, with Q3 international air ticket volume/international room nights growing by over 110%/130%, the company publicly stated that it expects outbound flight and hotel revenue to account for 5% of core OTA business for the full year. After the first half of the year when international investments weighed on profits, the company is striving to reduce disturbances through revenue management and refined placements.

The bank indicated that considering the company's better-than-expected performance in the third quarter and the potential boost to future profit margins from changes in the company's marketing placements, the company's adjusted net income for 2024-2026 was raised to 2.75/3.28/3.83 billion yuan (previously 2.62/3.09/3.58 billion yuan), with corresponding dynamic PEs of 14/12/10x. In the third quarter, the company's core OTA business reversed the trend of profit margins being dragged down by new business placements in the first half of the year, shifting the subsidy strategy to focus on enhancing core user value while balancing income and efficiency for harmonious development. The company is expected to continue benefiting from the low-cost traffic of the WeChat ecosystem and the dividend of penetrating the lower-tier market, while also needing to track and observe the effectiveness of new channel cultivation and the pace of expansion and profit verification of outbound travel new business, maintaining a "better than the market" rating.