Guozheng International released a research report maintaining a "Buy" rating on TRIP.COM-S (09961), as its Q3 2025 earnings slightly exceeded expectations. Net revenue rose 16% year-over-year (YoY) to RMB 18.4 billion, with operating profit margin stable at 30%. Outbound and international businesses showed robust growth, recovering to 140% of pre-pandemic levels and sustaining over 60% growth, respectively, while inbound travel doubled YoY.

Key highlights from Guozheng International’s analysis include:

**Q3 Earnings Slightly Beat Expectations** Net revenue reached RMB 18.4 billion (unless stated otherwise, in RMB), up 16% YoY, surpassing the bank’s/market expectations by 2%/1%. Accommodation bookings grew 14% YoY, while transportation ticketing revenue rose 9% YoY, contributing 44% and 34% of total revenue, respectively, and accounting for 51% and 27% of net revenue growth. Gross profit increased 15% YoY, with gross margin stable at 82% both YoY and quarter-over-quarter (QoQ). Operating profit rose 11% YoY to RMB 5.6 billion, exceeding the bank’s/market expectations by 4%/5%, with operating margin improving to 30%. Adjusted net profit attributable to shareholders was RMB 19.2 billion, significantly higher than the market’s RMB 5.6 billion expectation, primarily due to gains from the divestment of overseas investment in MakeMyTrip.

**Operational Data** 1) **Domestic Market**: Q3 hotel ADR and average airfare declines narrowed to low single digits YoY. In contrast, domestic tourism revenue/trips grew 5%/13% YoY (Ministry of Culture and Tourism data), while per capita spending fell 7% YoY (vs. Q1/Q2 declines of 6%/3%). 2) **Outbound Travel**: Outbound hotel and flight bookings rose 20% YoY, up 40% compared to Q3 2019, outpacing the 7% recovery in international air passenger traffic (Civil Aviation Administration data). 3) **International Business**: International OTA hotel and flight bookings maintained over 60% YoY growth, with the Asia-Pacific region remaining the largest market. 4) **Inbound Travel**: Inbound bookings more than doubled YoY. 5) **TripGenie**: Now covers over 200 countries, with user base growing over 2x YoY.

**Financial Forecasts & Valuation** During the National Day holiday, outbound hotel and flight bookings rose 30% YoY, with strong growth in Europe and increased long-haul bookings, while hotel ADR remained stable. Inbound bookings surged over 100% YoY. The bank expects Q4 total revenue to grow 16% YoY, with accommodation/transportation bookings up 15%/12% YoY. For 2026, total revenue is projected to rise 14% YoY, with adjusted net profit at RMB 20.8 billion and a 29.6% margin.

Guozheng International remains optimistic about the company’s mid-to-long-term margin sustainability above 30%, driven by supply-side advantages and improved overseas profitability. The bank adjusted its valuation base to 2026, factoring in historical and peer valuations, as well as TRIP.COM’s market leadership, assigning a 20x 2026 P/E multiple. The target price was raised to HK$693 (09961.HK) / $89 (TCOM.US) from HK$659 / $84.

The company continues to invest in AI and overseas expansion while maintaining strong ROI and financial discipline. Domestic performance hinges on consumer sentiment, though new entrants pose limited impact. International revenue growth and profitability trends remain intact. TripGenie is expected to enhance user engagement and cost efficiency.

**Risks**: Weak consumption affecting travel spending; slower-than-expected international expansion; extreme weather disruptions.

**Rating**: Maintained at "Buy."