CICC has issued a research report maintaining its revenue and profit forecasts for TONGCHENGTRAVEL (00780) for 2025/26, reiterating an Outperform rating and a target price of HK$28 (implying 18x/15x 2025e/2026e Non-IFRS P/E). This represents a potential upside of 30%, as the stock currently trades at 14x/12x 2025e/2026e Non-IFRS P/E. Key highlights from CICC's analysis include:

**3Q25 Results Slightly Beat Expectations** TONGCHENGTRAVEL's 3Q25 revenue rose 10% YoY to RMB 5.51 billion, marginally exceeding market expectations by 0.5%, driven by stronger-than-expected hotel and other income. Non-IFRS net profit attributable to shareholders reached RMB 1.05 billion, surpassing estimates by 1.1%, with a Non-IFRS net margin of 19.1%, reflecting effective cost control in service development and administrative expenses.

**Domestic Hotel Segment Sees Upscale Growth** 1) **Accommodation**: Domestic hotel room nights grew 10-15% YoY in 3Q25, in line with expectations, while ADR saw low single-digit growth due to shifting consumer preferences toward higher-tier hotels. Upscale segments, such as 3-star hotels, recorded a 20% YoY increase in room nights. CICC projects 15% YoY growth in hotel revenue for 4Q25, with domestic room nights up ~10% and ADR maintaining low single-digit growth, alongside a slight YoY rise in commission rates.

2) **Transportation**: Domestic air ticket volume growth in 3Q25 mirrored industry trends, with the company focusing on improving monetization rates—a trend expected to continue into the next quarter. CICC forecasts 8% YoY growth in transportation revenue for 4Q25.

**Outbound Business Sustains Rapid Expansion; Completes Wanda Hotels Acquisition** 1) **Outbound Business**: Outbound air ticket revenue accounted for 6% of total transportation revenue in 3Q25, up 2 percentage points YoY, with the segment achieving profitability. TONGCHENGTRAVEL aims to enhance outbound travel offerings and service capabilities while exploring cross-selling opportunities from air tickets to accommodations to sustain growth and profitability.

2) **Hotel Management**: As of end-September 2025, the company’s hotel management platform operated nearly 3,000 hotels, with another 1,500 in the pipeline, driving other income above expectations in 3Q25. The acquisition of Wanda Hotels Management, finalized on October 16, 2025, bolsters TONGCHENGTRAVEL’s portfolio with premium brands and strengthens its presence in lower-tier Chinese cities.

**Core OTA Margins Remain Stable** Core OTA operating profit stood at RMB 1.44 billion in 3Q25, with an OPM of 31.2%, broadly flat YoY despite higher marketing spend during the peak summer season, offset by disciplined fixed cost control. CICC expects 4Q25 Non-IFRS net profit attributable to shareholders at RMB 740 million.