携程集团-S(09961) - 2022 - 年度财报

Corporate Structure and Share Information - Trip.com Group has 646,066,830 issued Class A ordinary shares with a par value of $0.00125 per share as of December 31, 2022[5] - The company's Class A ordinary shares are listed on the Hong Kong Stock Exchange under the ticker symbol 9961[4] - Trip.com Group's American Depositary Shares (ADS) are traded on the NASDAQ Global Select Market under the ticker symbol TCOM[4] - The company completed a 1:8 stock split on March 18, 2021, adjusting the ratio of American Depositary Shares (ADS) to ordinary shares from 8:1 to 1:1[11] Regulatory Compliance and Filings - The company is registered as a large accelerated filer under the Securities Exchange Act[5] - Trip.com Group follows U.S. Generally Accepted Accounting Principles (GAAP) for its financial statements[6] - The company has submitted all required reports under Sections 13 or 15(d) of the Securities Exchange Act in the past 12 months[5] - The company's annual report is filed under Section 13 or 15(d) of the Securities Exchange Act for the fiscal year ended December 31, 2022[2] - The company has filed a report on the effectiveness of internal control over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act[6] - The company is not a shell company as defined in the Securities Exchange Act[6] Financial Performance and Metrics - Net revenue for 2022 was RMB 20,039 million (USD 2,907 million), showing a slight increase from RMB 20,023 million in 2021[32] - Gross profit for 2022 was RMB 15,526 million (USD 2,253 million), up from RMB 15,425 million in 2021[32] - Operating profit for 2022 was RMB 88 million (USD 15 million), a significant improvement from an operating loss of RMB 1,411 million in 2021[32] - Net profit for 2022 was RMB 1,367 million (USD 201 million), compared to a net loss of RMB 645 million in 2021[32] - Total assets as of December 31, 2022, were RMB 191,691 million (USD 27,793 million), slightly down from RMB 191,859 million in 2021[33] - Total liabilities as of December 31, 2022, were RMB 78,672 million (USD 11,407 million), a decrease from RMB 81,403 million in 2021[33] - Cash and cash equivalents as of December 31, 2022, were RMB 17,000 million (USD 2,465 million), down from RMB 19,818 million in 2021[33] - Short-term investments as of December 31, 2022, were RMB 25,545 million (USD 3,703 million), down from RMB 29,566 million in 2021[33] - Total equity attributable to Trip.com Group Limited as of December 31, 2022, was RMB 112,283 million (USD 16,279 million), up from RMB 109,677 million in 2021[33] Variable Interest Entities (VIEs) and Contractual Arrangements - The company operates through Variable Interest Entities (VIEs) in China, including entities such as Ctrip Business, Shanghai Huacheng, Chengdu Ctrip, and Qunar Beijing, which hold critical licenses and assets[9] - The company's business in China is conducted through Chinese subsidiaries and VIEs, with contractual arrangements managing the operations of these VIEs[16] - The company's Chinese subsidiaries and variable interest entities (VIEs) are governed by a series of contractual arrangements, including authorization agreements, technical consulting and service agreements, equity pledge contracts, exclusive purchase agreements, and loan contracts, which are deemed valid and enforceable under current Chinese laws[17] - The contractual arrangements grant the company effective control over the VIEs, allowing it to consolidate their operations, financial status, and cash flows into its consolidated financial statements under US GAAP[17] - Net income from VIEs accounted for 36%, 30%, and 22% of the company's total net income for the years ended December 31, 2020, 2021, and 2022, respectively[16] Risks and Challenges - The company anticipates challenges from a slowdown in China's economic growth and global recession, which could significantly impact its growth and profitability[12] - Public health crises, such as COVID-19, may have a substantial adverse effect on the company's business and operating results[12] - The company's quarterly performance may fluctuate due to seasonal factors in the Greater China travel industry[12] - The company's infrastructure or technology could be damaged, fail, or become outdated, potentially harming its business[12] - The company's business heavily relies on the continued efforts of its senior management, and losing their services could severely disrupt operations[12] - Inflation in China could disrupt the company's business and adversely affect its financial condition and operating performance[12] - The company's ownership structure through Variable Interest Entities (VIEs) and contractual arrangements may face penalties if deemed to violate Chinese laws, adversely affecting its business and operating results[13] - The VIE structure poses unique risks to investors, as the enforceability of the contractual arrangements has not been tested in Chinese courts, and potential breaches could disrupt operations and harm the company's reputation[18] - The company faces regulatory risks in China, including potential changes in laws or interpretations that could invalidate the VIE structure, leading to severe penalties or forced divestment of interests in certain businesses[19] - The company's operations in China are subject to complex and evolving legal and regulatory environments, including recent statements and regulatory measures on VIE usage, overseas listings, foreign investment approvals, antitrust regulations, and cybersecurity and data privacy oversight[19] Legal and Regulatory Environment - The company faces risks related to new regulatory measures in Hong Kong or Macau, which could impact its ability to operate, accept foreign investment, or maintain its listing status on US or Hong Kong stock exchanges[20] - The company was identified as a Commission-Identified Issuer under the HFCAA in May 2022, but PCAOB revoked this designation in December 2022, reducing the risk of delisting for the fiscal year ending December 31, 2022[21] - The company's operations in China require various permits, including for accommodation booking, transportation ticketing, and travel services, with most permits already obtained except for a minor portion of transportation ticketing services[23] - The company's subsidiaries in Hong Kong and Macau have obtained necessary permits for travel agency and insurance agency businesses[23] - The company acknowledges uncertainties in the interpretation and enforcement of Chinese laws and regulations, which may require additional permits in the future[23] - The company's ability to issue securities to investors may be severely restricted or completely hindered due to Chinese government oversight and regulatory control[20] - The company's operations and the value of its American Depositary Shares (ADS) could be adversely affected by uncertainties in the Chinese legal system and rapid regulatory developments[20] - The company's use of a China-based auditor could lead to future HFCAA designations if PCAOB is unable to inspect the auditor, potentially resulting in a trading ban on its ADS[22] - The company has not received written rejection notices for any permit applications, but there is no guarantee that necessary permits will be obtained or maintained in the future[23] - The company's ADS and ordinary shares could significantly decline in value if industry-specific regulations, such as data security or antitrust laws, are implemented[20] Tax and Financial Regulations - The company is subject to new regulations under the "Trial Measures for the Administration of Overseas Securities Offering and Listing by Domestic Companies" effective from March 31, 2023, requiring domestic companies to file with the China Securities Regulatory Commission (CSRC) for overseas securities offerings and listings[24] - The company, as an "existing issuer," is not required to file for historical securities offerings but must file within three business days for any future securities offerings or listings under the new regulations[24] - The company is not currently classified as a Critical Information Infrastructure Operator (CIIO) and has not undergone any cybersecurity reviews by the Cyberspace Administration of China (CAC)[26] - The company has completed all required foreign debt issuance registrations with the National Development and Reform Commission (NDRC) as of the report date[26] - The company's ability to pay dividends and repay debts depends on dividends from its Chinese subsidiaries and service fees from its Variable Interest Entities (VIEs)[27] - Chinese subsidiaries are restricted in paying dividends or other payments to the company due to Chinese accounting standards and regulations, including mandatory reserve funds[27] - The company's future overseas securities offerings may require approval or filing with the CSRC or other Chinese government agencies, with uncertainty around the interpretation and implementation of new regulations[26] - Non-compliance with Chinese laws and regulations, including licensing requirements, could severely impact the company's operations, financial condition, and stock value[24] - The company's subsidiaries and VIEs may face limitations in transferring funds to the parent company due to debt management tools and legal restrictions[27] - The company's operations and securities offerings are subject to significant regulatory oversight and discretion by Chinese government agencies, which could lead to adverse changes in operations and stock value[26] Cash Flow and Financial Transactions - The total restrictions on cash transfers for the company's Chinese subsidiaries and variable interest entities were RMB 7.8 billion, RMB 6.5 billion, and RMB 6.2 billion (USD 900 million) as of December 31, 2020, 2021, and 2022, respectively[28] - The company provided capital contributions to its subsidiaries of RMB 903 million, zero, and RMB 580 million as of December 31, 2020, 2021, and 2022, respectively[29] - Net cash outflows from loans provided by the company to its subsidiaries were RMB 358 million, net cash inflows of RMB 1.1 billion, and net cash outflows of RMB 758 million as of December 31, 2020, 2021, and 2022, respectively[30] - Net cash inflows from loans provided by variable interest entities to subsidiaries were RMB 817 million, net cash outflows of RMB 434 million, and net cash inflows of RMB 4 billion as of December 31, 2020, 2021, and 2022, respectively[30] - Net cash outflows from loans received by variable interest entities from subsidiaries were RMB 2.2 billion, RMB 3.8 billion, and RMB 7.8 billion as of December 31, 2020, 2021, and 2022, respectively[30] - The company did not declare or pay any cash dividends as of December 31, 2020, 2021, and 2022, and has no plans to pay cash dividends for its ordinary shares in the foreseeable future[30] Investments and Acquisitions - The company consolidated the financial statements of Qunar starting from December 31, 2015, excluding Qunar's comparable operating data in certain metrics[10] - The company's expected growth strategies include future business development, operating performance, and financial conditions[12] - The company has recorded significant goodwill and indefinite-lived intangible assets from strategic acquisitions and investments, and a substantial reduction in the recoverability of these assets could result in significant impairment charges[55] - The company's strategic acquisitions and investments in complementary businesses and assets involve significant risks and uncertainties, which could adversely affect its business, reputation, financial condition, and operating results[54] - The company's inability to compete effectively with new and existing competitors could result in a loss of market share and have a material adverse effect on its business[56] - Strategic acquisitions in the Greater China region and overseas tourism industry may dilute equity securities and impact financial performance[73] - Integration of newly acquired businesses may require significant management effort and resources, potentially affecting existing operations[73] - Strategic investments in complementary businesses and assets involve risks such as high acquisition and financing costs, and potential failure to achieve expected goals[74] - Investments in competitive businesses may be adversely affected by uncertainties in the implementation and enforcement of China's Anti-Monopoly Law[74] - Fair value changes in equity investments may negatively impact the company's financial performance if stock prices fall below purchase prices[74] - The company may face liabilities, third-party claims, or litigation related to invested or acquired businesses[74] Market and Competitive Risks - The company faces increasing competition from new and existing competitors, including domestic and international travel agencies, hotels, airlines, and content platforms[80] - The company's competitive position may be affected by the growing importance of international travelers and the lack of exclusive arrangements with ecosystem partners[80] - Increased marketing and R&D investments have negatively impacted the company's operating profit margin due to intense competition[81] - The company has launched promotional plans offering selected transportation tickets, hotel rooms, travel destination activities, and e-coupons to respond to competitors' campaigns[81] - Significant resources have been allocated to enhance AI and cloud technologies to attract and retain users[81] - The company faces risks from competitors with larger active user bases, financial resources, and technological capabilities[81] - Failure to maintain or enhance brand awareness could hinder the ability to retain existing users and acquire new ones[82] - Negative publicity, whether justified or not, could harm the company's reputation and business performance[83] - The company relies on performance and brand marketing channels to generate significant traffic and business growth[83] - The company employs brand ambassadors to promote its brands and services, but their effectiveness and popularity cannot be guaranteed[83] - Negative publicity could lead to increased costs and divert management's focus from core business operations[84] Operational and Technological Risks - The company's infrastructure, including mobile platforms, websites, and systems, is critical to its success, and any system interruptions could reduce business volume and user satisfaction[85] - The company experienced a network shutdown in May 2015 and a hotel booking failure in October 2019, both of which temporarily disrupted services but did not result in data breaches[85] - The company relies on internally developed booking software systems, and failure to upgrade these systems to handle future traffic could lead to system interruptions, slower response times, and loss of users and ecosystem partners[86] - The company's future success depends on its ability to adapt products and services to changes in technology and internet user behavior, particularly with the increasing use of mobile devices and the adoption of 5G technology[87] - The company's services must be compatible with various mobile operating systems and devices, and failure to develop widely recognized and used products could hinder its penetration into the mobile internet market[87] - The company's business heavily relies on the continued efforts of its senior management, and the loss of key executives could severely disrupt operations[88] - The company may face challenges in attracting, training, and retaining key personnel and skilled employees, which could negatively impact user experience and business performance[89] International Operations and Risks - The company faces international operational risks including compliance, reputational, and operational risks, which could increase costs and impact business growth[90] - International trade tensions, particularly between the US and China, may adversely affect the company's business, financial condition, and operating results[91] - The company may struggle to protect its intellectual property globally, potentially leading to legal disputes and increased costs[92] - Reliance on third-party services for product delivery and operations could disrupt service quality and harm user retention[93] - Potential violations of foreign laws and regulations could result in fines, sanctions, and reputational damage, impacting the company's ability to operate internationally[90] - Political tensions between the US and China, including trade disputes and sanctions, may negatively impact global economic conditions and the company's performance[91] - The company's international expansion efforts may be hindered by challenges in enforcing intellectual property rights in certain foreign jurisdictions[92] - Third-party service disruptions or quality issues could lead to user dissatisfaction, reputational damage, and loss of market share[93] - Compliance with foreign laws and regulations requires significant management effort and resources, potentially diverting focus from business growth[90] - The company's reliance on third-party providers for critical services exposes it to risks of service interruptions and negative publicity[93] Payment Processing and Financial Risks - The company faces risks related to payment processing, including potential increases in fees, regulatory changes, and security vulnerabilities, which could negatively impact revenue and operational performance[96] - The company relies on hotel partners and users to provide accurate information for calculating commissions, and any false data could lead to revenue loss and inaccurate business forecasts[96] - During peak holiday seasons in China, the company faces inventory risks due to purchasing hotel rooms and transportation tickets in advance, which could result in financial losses if demand is mispredicted[97] - The company's subsidiaries in China benefit from a preferential corporate income tax rate of 15% under the "High-Tech Enterprise" status, but this status is subject to periodic review and potential revocation[98] - Several of the company's subsidiaries, including Ctrip Computer Technology and Qunar Beijing, have their High-Tech Enterprise status expiring in 2023, requiring reapplication to maintain the 15% tax rate[98] - The company's subsidiaries, such as Ctrip Business Travel Information Services and Shanghai Ctrip Information, were newly recognized as High-Tech Enterprises in 2021, enjoying the 15% tax rate until 2023[98] - The company may face reputational damage and financial losses due to third-party actions, such as anonymous complaints or regulatory investigations, which could impact market share and stock price[94] - The company is exposed to risks from fraudulent activities and regulatory non-compliance in payment processing, which could lead to fines, higher transaction fees, and loss of payment capabilities[96] - The company's ability to maintain its High-Tech Enterprise status for subsidiaries is uncertain, as it depends on periodic government reviews and potential policy changes[98] - The company's financial performance could be adversely affected if tax incentives for its Chinese subsidiaries are reduced or revoked[98] Cybersecurity and Data Protection - Trip.com Group is subject to China's Cybersecurity Law, which mandates strict data protection measures and imposes penalties for non-compliance, including fines, license revocation, or criminal liability[101] - A past security incident in 2014 exposed credit card information of 93 users, highlighting vulnerabilities in the company's data protection systems[102] - The company invests significant resources in complying with data protection laws and addressing potential security breaches to maintain user trust and avoid legal liabilities[102] - The company's business may be adversely affected if it fails to obtain or maintain necessary licenses and approvals, particularly in industries such as airline ticketing, travel agencies, and internet-related activities[104] - The company's ticketing revenue could be negatively impacted by restrictive policies adopted by regulatory bodies such as the Civil Aviation Administration of China and the National Development and Reform Commission[104] - The company must comply with the "E-Commerce Law of the People's Republic of China," which imposes joint liability on e-commerce platform operators for violations by merchants on their platforms[105] - The company is subject to the "Interim Provisions on the Administration of Online Tourism Business Services," which requires accurate information disclosure, verification of merchant credentials,