事件Core views
The company announced 24Q3 operating results and achieved revenue of 4.992 billion yuan in 24Q3, +51.3% year-on-year.
Adjusted net profit of 0.91 billion yuan, +46.6% YoY. Adjusted net interest rates performed well, and 24Q3 adjusted net profit reached a record high. The share of sales and marketing expenses both declined markedly from the same period last year, and accurate marketing capabilities improved. Membership stickiness and yearly paying users continue to increase steadily, international business is growing rapidly, and cross-selling rates are increasing. Innovative businesses such as breweries, vacations, and apps are growing rapidly. Focus on increasing user penetration and exploring potential.
occurrences
The company announced 24Q3 operating results and achieved revenue of 4.992 billion yuan in 24Q3, +51.3% year-on-year.
Adjusted net profit of 0.91 billion yuan, +46.6% YoY.
Brief review
The performance exceeded expectations, and the adjusted net profit margin increased significantly from month to month
The company's 24Q3 adjusted EBITDA was 1.319 billion yuan, +51.6% YoY. The 24Q3 adjusted EBITDA margin was flat at 26.4%. The adjusted net profit margin was 18.2%, -0.6 pct year on year, but considering the adjustment of the business structure during the year, the profit margin was excellent, and was +2.8 pct month-on-month over 24Q2. The improvement was obvious, and lean operation and profitability improved markedly. 24Q3's adjusted net profit reached a record high; by business, 24Q3 accommodation reservation business revenue was 1.378 billion yuan, +22.2% over the same period last year. Transportation ticketing service revenue was 2.027 billion yuan, +20.6% year over year. The growth rate of the core OTA business is in line with expectations. Revenue from other operations was $0.609 billion, +23.7% YoY. The vacation business revenue was 0.979 billion yuan, which exceeded expectations; on the cost and expense side, 24Q3 sales costs accounted for 36.6%, +1.2pct month-on-month, and +11.2pct year-on-year.
Service development costs accounted for 10.1%, -4.0pct year-on-year. Sales and marketing expenses accounted for 29.4%, -9.1 pct year on year. The month-on-month decline also reflected an increase in marketing efficiency. Administrative expenses accounted for 6.6%, +0.6pct year-on-year. The net profit margin was 15.9%, +0.4pct year on year, with excellent performance; 24Q3, the company's transaction volume was 72.8 billion yuan, +2.4% year over year.
Member stickiness and international business continued to increase, and continued to benefit from innovative business development. The company continued to promote product and business innovation during the year, such as building a blind travel box product system, strengthening the Black Whale membership system, and strengthening app construction and customer acquisition. By the end of 2024Q3, the cumulative number of service users reached 1.88 billion, an increase of 19.9% over the previous year. The average consumption frequency of users increased to 8.1 times, +15.9% over the same period last year. The average monthly paid users were 46.4 million in 24Q3, +5.0% year on year, and 0.23 billion paid users per year, +3.4% year-on-year. The number of annual service personnel is 1.88 billion, +19.9%; international business development is good; in 24Q3, international air ticket business volume increased 110% year on year, international hotel business volume increased 130% year on year, and cross-sales rate rose to 12%; on the innovative business side, the Elong Hotel Technology Platform continued to expand, opening more than 2,100 hotels, which is expected to become an important growth driver in other businesses as scale and bargaining power improve.
The vacation business focuses on increasing the value of products and services, with more than 900 travel agency stores. The company continues to focus on customer exploration in the sinking market, and at the same time carries out more sophisticated operations and marketing activities to strengthen the WeChat ecosystem. Our own apps continued to grow significantly, and the number of daily active users reached a record high before the National Day holiday. The cumulative number of 24Q3 Black Whale members increased significantly, further refined cross-selling strategies, and focused on optimizing efficiency. It is expected to grow steadily in the future as the online rate increases, innovative business development, and operational efficiency increases.
Investment advice: Net profit of 1.986 billion yuan, 2.424 billion yuan, and 2.851 billion yuan is expected to be achieved from 2024 to 2026, and adjusted net profit of 2.715 billion yuan, 3.202 billion yuan, and 3.576 billion yuan. The net profit corresponding to the current stock price is 19X, 16X, and 14X, respectively, and the PE corresponding to adjusted net profit is 14X, 12X, and 11X, respectively, maintaining the “increase in holdings” rating.
Risk analysis
1. If the subsequent restoration and sentiment of domestic and outbound travel falls short of expectations, the degree of repair will decline sequentially, which may cause the revenue side of the company's core business to still be impacted, and the pressure to control fees will increase accordingly;
2. If competition in the OTA market intensifies further after the pandemic, the leading companies continue to increase their control over core resources, while competition in private traffic, scenarios, and low-frequency customized travel transactions intensifies, or new traffic platforms increase investment competition; 3. New changes in customer acquisition methods on the core resource side may affect the drainage of OTA leaders; 4. The progress of the company's diversified scenario expansion falls short of expectations, or affects strategic choices and resource investment in business development, thus impacting both revenue and fee control;
5. If the combined vacation business fails to meet expectations in terms of revenue and profitability, it may have an impact on the overall growth rate; if the development of the outbound travel business falls short of expectations, it may have an impact.
