Financial performance

In the second quarter of 2025, the company achieved total revenue of RMB 149 billion, a year-on-year increase of 16.2%, primarily driven by strong travel demand. In terms of profitability, net profit reached RMB 49 billion, up 25.5% year-on-year, with a corresponding net profit margin of 32.9%, an increase of 2 percentage points compared to the same period last year.

By segment revenue, accommodation reservation revenue amounted to RMB 62 billion, a year-on-year increase of 21.2%, mainly due to strong growth in domestic and outbound hotel businesses. Transportation ticketing revenue reached RMB 54 billion, up 10.8% year-on-year, driven primarily by outbound and international ticketing. Tourism vacation revenue totaled RMB 11 billion, a year-on-year increase of 5.3%, mainly attributed to heightened travel demand during holidays. Business travel management revenue was RMB 7 billion, up 9.3% year-on-year, largely due to increased demand for corporate travel management services.

In terms of expenses, the company's total operating expenses for the quarter were RMB 79 billion, a year-on-year increase of 14.7%, which is generally in line with the fluctuations in total revenue during the period. The company's R&D expense ratio, sales expense ratio, and administrative expense ratio for 2Q25 were 23.6%, 22.4%, and 7.4%, respectively, representing year-on-year changes of +0.1 pct, +0.2 pct, and -1.0 pct. The company continues to intensify its efforts in international business expansion and promotion.

Performance Summary

Inbound tourism market demonstrated significant growth, driven by supportive policies
In the first half of the year, the number of inbound visitors in China increased by approximately 30% year-on-year, while the booking volume for inbound travel on the Ctrip platform surged by over 100% year-on-year. With further relaxation of visa policies, the continuous enhancement of China's tourism appeal, and the improvement of related service systems, inbound tourism is expected to consistently contribute to the growth of domestic business.

Meanwhile, the structure of domestic travel demand is also evolving. According to management, the "silver-haired generation" is emerging as a key growth driver. As of the second quarter of 2025, both the user base and gross merchandise volume of the "Friends of Seniors" program have more than doubled compared to the end of 2024. At the same time, younger travelers are showing a stronger preference for integrated "entertainment + tourism" experiences, such as music festivals, themed tours, and immersive destination activities. In the second quarter of 2025, revenue from such businesses grew by over 100% year-on-year, indicating that younger users' travel consumption is rapidly shifting toward experiential and themed offerings.

International business maintains rapid growth, with user acquisition efficiency exceeding expectations
In the second quarter of 2025, overall cross-border flight capacity in the industry recovered to 84% of pre-pandemic levels. The company's outbound hotel and flight booking volumes have fully surpassed 120% of the same period in 2019, consistently outperforming the industry by 30-40 percentage points.

Entering the summer season, as capacity further recovers, airfare prices have decreased year-on-year but remain higher than pre-pandemic levels. Hotel prices, on the other hand, have remained stable. It is anticipated that outbound travel revenue will continue to achieve relatively fast year-on-year growth in the third quarter. Meanwhile, total bookings on the Trip.com platform grew by over 60% year-on-year in the second quarter. The Asia-Pacific region remains the focal point of business, while emerging markets such as the Middle East have also demonstrated strong growth momentum.

Investment thesis

We forecast the company's operating revenue for 2025-2027 to be RMB 61.8/68.5/78.5 billion, with net profit attributable to shareholders of RMB 18.0/20.4/23.0 billion. The corresponding diluted EPS is projected to be RMB 25/29/32, and the current stock price implies a P/E ratio of 21.6x/19.1x/16.9x. We have selected domestic and international OTA companies—Booking, Expedia, Airbnb, and Tongcheng Travel—as comparable firms. Applying a 22x P/E multiple based on the 2025 forecast, we have accordingly raised our target price to HKD 610 and maintain a "Neutral" rating.

Risk factors

1) Domestic consumption demand is weaker than expected;
2) International business expansion is slower than anticipated;
3) Hotel ADR and airfare pricing pressures are greater than expected.

Financials

(Current Price as of: Sep 29 2025)
Exchange rate: HKD/RMB = 0.91
Source： PSHK Est.

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