Introduction

The latest equity research report from OCBC Investment Research provides an in-depth analysis of Trip.com and its competitors in the global travel industry. This report highlights the key financial metrics, strategies, and market positions of these companies, offering investors valuable insights into their potential performance and growth prospects.

Trip.com: Leading the Travel Industry Recovery

Trip.com has emerged as a formidable player in the global travel industry, particularly in the Asia-Pacific region. Founded in 1999, the company has built a robust, one-stop travel platform that integrates a comprehensive suite of travel products and services. This strategic positioning has enabled Trip.com to capitalize on the increasing demand for travel and the recovery of outbound travel demand, particularly in China.

In the third quarter of 2024, Trip.com reported a significant year-on-year net revenue increase of 15.5% to CNY15.9 billion, driven by strong domestic and international travel demand. The company’s accommodation, transportation, package tour, and corporate travel segments all demonstrated healthy growth, with non-GAAP operating margins improving to 34.4% from 32.2% in the previous year. Notably, non-GAAP net income rose by 21.8% year-on-year to CNY6.0 billion, surpassing consensus estimates.

The company’s strategic focus on expanding its international platform and improving operational efficiencies has paid off, with its international business experiencing more than 50% revenue growth in the fourth quarter of 2024. The management remains optimistic about its long-term growth prospects, driven by market share gains and comprehensive product offerings.

Trip.com’s stock is currently rated as a “BUY” with a fair value estimate of HKD 677.00, reflecting its strong performance and positive growth outlook.

Expedia Group Inc: Competitive Landscape

Expedia Group Inc, a prominent competitor in the online travel industry, is also covered in the report. Despite facing challenges, Expedia has continued to strengthen its market position by leveraging its extensive network and technological capabilities. The report highlights Expedia’s valuation metrics, showing a Price/Earnings ratio of 15.1 for FY24E, indicative of its competitive pricing strategy.

The company’s focus on enhancing customer experiences and expanding its global reach is expected to drive future growth. However, the report underscores the importance of monitoring competitive pressures that could impact margins over the long term.

Booking Holdings Inc: Market Leader with Strong Margins

Booking Holdings Inc, another key player in the travel industry, is recognized for its strong performance and market leadership. The company boasts impressive margins, with a Price/Earnings ratio of 27.3 for FY24E, reflecting its robust financial health.

Booking Holdings’ strategic focus on innovation and expanding its service offerings has enabled it to maintain a competitive edge. The company’s valuation metrics suggest a stable growth trajectory, although the report advises vigilance regarding potential regulatory risks.

Tongcheng Travel Holdings Ltd: Emerging Market Contender

Tongcheng Travel Holdings Ltd is highlighted as an emerging contender in the travel market. With a Price/Earnings ratio of 14.3 for FY24E, the company is positioned for significant growth, driven by its focus on technology and customer-centric services.

The report emphasizes Tongcheng’s potential to penetrate lower-tier cities and expand its market share. However, investors are cautioned about the competitive landscape and the need for strategic differentiation.

Meituan: Diversified Services and Strong Growth Potential

Meituan, known for its diversified services, is analyzed for its growth potential and market strategy. With a Price/Earnings ratio of 23.7 for FY24E, Meituan’s focus on leveraging its platform to offer comprehensive travel services is highlighted as a key growth driver.

The company’s efforts to enhance user experiences and expand its offerings are expected to bolster its market position. However, the report notes the importance of monitoring regulatory developments that could impact its operations.

Conclusion

The equity research report by OCBC Investment Research provides comprehensive insights into the competitive dynamics of the travel industry, offering a detailed analysis of Trip.com and its peers. The report’s recommendations and in-depth examination of each company’s strategies, financials, and market positions serve as a valuable resource for investors seeking to navigate the travel sector’s evolving landscape.