The article "Major Firms" summarizes the latest views and target prices of brokerages regarding Trip.com after the Market Supervision Administration launched an antitrust investigation

Travel platform Trip.com Group-S (09961.HK) (TCOM.US) saw its American Depositary Shares drop 17.1% to $62.78 overnight. This morning, H-shares faced selling pressure, opening nearly 15% lower and at one point dropping to 446 HKD, a decline of 22%. The latest price is 457.6 HKD, down 19.7%, with a transaction volume of 9.98 billion HKD. The State Administration for Market Regulation announced yesterday that authorities have recently launched an investigation into Trip.com Group Limited for suspected monopolistic behavior based on prior checks and in accordance with the Anti-Monopoly Law of the People's Republic of China. Trip.com stated that it has received notification from the State Administration for Market Regulation and is under investigation for suspected monopolistic behavior. The company will actively cooperate with regulatory authorities in the investigation, fully implement regulatory requirements, and work with industry stakeholders to build a sustainable market environment; currently, all business operations are running normally.

Citigroup pointed out that under relevant laws, violators could be fined 1% to 10% of the previous year's revenue, with potential fines ranging from 490 million to 4.9 billion RMB. Nomura noted that in most past cases, fines were capped at 5% of annual sales, which, based on projected revenue for the fiscal year 2025, would amount to 3.1 billion RMB. Haitong International indicated that based on the previous investigations of Alibaba and Meituan, in the worst-case scenario, Trip.com could face a fine of 4% of local business revenue, which, based on 2024 local business revenue, would amount to approximately 1.5 billion RMB, potentially dragging down the company's net profit margin by 2 percentage points in the fiscal year 2026. JP Morgan believes that due to the uncertainty of regulatory investigations in the coming months, Trip.com may enter a consolidation phase of 4 to 6 months, as incremental information is often released slowly before regulatory authorities announce penalty decisions (or case closures).

Additionally, Alibaba-W (09988.HK) announced that its Qianwen App will fully integrate with Alibaba's ecosystem businesses such as Taobao, Alipay, Taobao Flash Purchase, Fliggy, and Amap, achieving AI shopping functions for ordering takeout, shopping, and booking flights globally, and opening testing to all users, raising market concerns about the potential impact of the "AI General Assistant" on Trip.com's current business.

【Investors are concerned about whether the business model will be affected】

JP Morgan stated that it expects Trip.com's stock price to react negatively in the coming trading days, believing that the investigation into Trip.com is based on complaints and evidence-driven enforcement actions targeting specific companies, rather than a sign of a tightening regulatory stance for the overall Chinese platform. The wording in the announcement title "based on prior checks" also aligns with the usual practice of the State Administration for Market Regulation, which takes action when sufficient preliminary evidence supports the initiation of a formal investigation, rather than launching a comprehensive industry rectification action.

JP Morgan expects Trip.com's net revenue for 2025 to be 61.9 billion RMB; if calculated on a similar scale, the range of fines of 1-10% would be approximately 600 million to 6.2 billion RMB, depending on how authorities define the relevant revenue base. Besides a one-time fine, the bank believes that if found guilty, the more fundamental impact would be adjustments to the domestic monetization mechanism driven by rectification. If remedial measures restrict pricing tools, price parity mechanisms, or practices that suppliers believe are "mandatory participation" in traffic distribution, Trip.com may face: (1) a decrease in effective commission rates/increased bargaining power of suppliers; (2) The growth rate of high-margin value-added services (advertising, sorting, packages) has slowed down. However, the bank believes that the impact of the competitive landscape is limited, as remedial measures for platform cases in China have traditionally favored behavioral standardization rather than structurally redistributing market share; they compress "rule advantages" rather than create new winners.

UBS pointed out that, according to market consensus forecasts, Trip.com’s stock price has fallen back to a predicted price-to-earnings ratio of 15 to 16 times, indicating that the market's reaction to the event is more negative compared to the past performance of Alibaba (09988.HK) and Meituan (03690.HK) on the day after the announcement of investigations. The bank noted that investors are mainly concerned about whether there will be fundamental impacts beyond economic penalties, such as business models, and whether the investigation will have short-term effects on the company's profitability outlook and long-term impacts on commission rates and market share.

Citi believes that the investigation may involve exclusive terms with merchants and whether the platform has leveraged its advantages to pressure merchants. The bank noted that Trip.com was also investigated in 2021 regarding merchant exclusivity issues, which should be corrected, even if there may be follow-up investigations. The bank believes that the company can still maintain a strong competitive "moat" without exclusive agreements with merchants, based on its large business volume and long-term relationships with hotels. However, the company may need to provide more support to merchants, affecting short-term profitability. Nomura believes that the investigation is unlikely to fundamentally damage Trip.com’s monopoly position in the online travel agency market in China, but it may affect the company's control over hotel business, especially independent hotels that rely on online travel traffic, which may provide opportunities for competitors such as Tongcheng (00780.HK), Meituan, and Alibaba's Fliggy to narrow the competitive gap.

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The table below lists the latest target prices and investment ratings for Trip.com (TCOM.US) from various brokerages:

Brokerage│Investment Rating│Target Price

Daiwa│Buy│$97

Goldman Sachs│Buy│$91

JP Morgan│Overweight│$90

UBS│Buy│$90

Friedrich│Buy│$88

Citi│Buy│$86

Haitong International│Outperform│$85

Citi│Outperform│$82

Nomura│Neutral│$71

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The table below lists the latest target prices and investment ratings for Trip.com-S (09961.HK) from three brokerages:

Brokerage│Investment Rating│Target Price

Goldman Sachs│Buy│HKD 706

JP Morgan│Overweight│HKD 700

Friedrich│Buy│HKD 685

Brokerage│View

Daiwa│Regulatory uncertainty may negatively impact investment sentiment, but if rectification creates clearer buying opportunities

Goldman Sachs│Past cases show potential mid-term stock price volatility

JP Morgan│Expect short-term valuation pressure, but do not anticipate a new regulatory cycle

UBS│Investors are concerned about the impact of the investigation on the business model Futu│According to Alibaba and Meituan cases, fines are 3% to 4% of the previous year's local business revenue.

Citi│The investigation will affect sentiment towards Trip.com until its completion, but is unlikely to change its industry position.

Haitong International│Valuation remains at a high level, suggesting to avoid risks and wait for more information disclosure.

Citi│It is expected that Trip.com will lose exclusive cooperation rights with merchants, but it maintains a strong moat advantage. However, it may need to provide more support to merchants, which could impact short-term profit margins.

Nomura│It is likely that Trip.com will be ruled as violating regulations, which may affect its control over hotels and provide opportunities for competitors