Investment Rating - The report maintains a Buy rating for Tongcheng Travel with a target price of HKD 25.8, up from the previous target of HKD 23.1 [5][8] Core Views - Revenue Growth: Tongcheng Travel reported 3Q24 revenue of RMB 5 billion, a 51% YoY increase, slightly exceeding expectations of RMB 4.9 billion [1][2] - Profitability: Adjusted net profit for 3Q24 reached RMB 910 million, a 47% YoY increase, surpassing expectations by 10.2% [1][3] - Outbound Travel: Outbound hotel bookings and air ticket sales saw triple-digit growth, with international room nights up 130% YoY and international ticket volume up 110% YoY [2] - User Value Focus: The company shifted its strategy from user growth to maximizing user value, resulting in a 53% YoY increase in ARPU to RMB 70 [4] Revenue Breakdown - Core OTA Business: Revenue from core OTA business reached RMB 4 billion, a 22% YoY increase, driven by improved commission rates and strong outbound travel demand [2] - Accommodation Business: Revenue grew 22% YoY, exceeding expectations by 3%, with international room nights up 130% YoY [2] - Transportation Business: Revenue increased 22% YoY, surpassing expectations by 1.3%, supported by a 110% YoY growth in international ticket volume [2] Profitability and Cost Control - Operating Profit: Operating profit for 3Q24 was RMB 970 million, a 63% YoY increase, exceeding expectations by 26% [3] - Cost Efficiency: The company achieved significant cost control, with total expense ratio 4 percentage points lower than expected [3] - Core OTA Profit: Core OTA platform operating profit reached RMB 1.2 billion, 8.2% above expectations [3] User Metrics - Monthly Active Paying Users: Average monthly paying users reached 46.4 million, a 5% YoY increase [4] - Annual Paying Users: Annual paying users grew to 230 million, a 3.4% YoY increase [4] - ARPU Growth: ARPU increased to RMB 70, up 53% YoY, driven by improved marketing efficiency and cross-selling strategies [4] Financial Forecasts - Revenue Forecast: Expected revenue for 2024-2026 is RMB 17.3 billion, RMB 21.9 billion, and RMB 26.5 billion, respectively [5][12] - Adjusted Net Profit Forecast: Adjusted net profit for 2024-2026 is projected at RMB 2.77 billion, RMB 3.67 billion, and RMB 4.51 billion, respectively [5][12] - Valuation: The target price of HKD 25.8 is based on a 15x PE multiple for 2025, reflecting a discount to the peer average of 19.5x [5][14] Peer Comparison - Valuation Multiples: Tongcheng Travel's 2025 PE multiple of 15x is lower than peers such as Booking (23.9x) and Airbnb (29.8x) [15]
同程旅行：3Q业绩：利润释放持续有力