TONGCHENGTRAVEL (00780) reported third-quarter results that slightly exceeded expectations, with revenue 1% higher than projected, driven by a 15% year-on-year growth in its core online travel agency (OTA) business. This outperformed domestic industry levels. Gross margin reached 65.7%, 1 percentage point above estimates, attributed to the higher contribution of OTA operations. Net profit surpassed forecasts by 3%, with margins improving by 1 percentage point year-on-year.

Morgan Stanley maintained its "Overweight" rating on the stock, with a target price of HK$29. For the fourth quarter, the bank expects revenue growth of 10%–15% post-acquisition, with core OTA business expanding 15%–20%. Adjusted profit guidance for Q4 stands at RMB720–780 million, reflecting unchanged full-year targets as the company plans incremental investments in emerging outbound travel services and its proprietary app.

Management anticipates organic revenue growth for the core OTA business in the low-to-mid teens for 2026. Through R&D and operational efficiency gains, margins could further improve by approximately 0.5 percentage points.