Morgan Stanley expects Trip.com to be fined up to 6.2 billion yuan for monopoly, which is an individual measure rather than a tightening of overall industry regulation

JP Morgan believes that the investigation of Trip.com-S (09961.HK) by the State Administration for Market Regulation for suspected monopoly is driven by complaints or evidence, and is an enforcement measure targeting individual companies rather than a tightening of overall industry regulation. The bank expects that Trip.com's stock price will have a negative reaction in the coming days, as the market digests potential cash fines and the regulatory uncertainty that may last for several months. Additionally, Trip.com's stock price is expected to fluctuate over the next 4 to 6 months due to the continuous release of related news during this period.

In terms of penalties, referring to the provisions of the Anti-Monopoly Law, the bank estimates that Trip.com will be fined between 600 million to 6.2 billion RMB. At the same time, the company's existing monetization mechanisms in the domestic market may need to be adjusted, which will have a greater impact on the fundamentals, potentially including a decrease in effective commission rates and an increase in supplier bargaining power, as well as a slowdown in the growth of high-margin value-added services such as advertising and display positions under tightened "voluntary" and transparency requirements.

However, the bank believes that the impact on Trip.com's competitive position is limited, as remedial measures in past cases generally tend to regulate behavior rather than structurally redistribute market share. The bank currently sets a target price of HKD 700 for Trip.com's Hong Kong stock and a target price of USD 90 for Trip.com's U.S. stock (TCOM.US), both with an "Overweight" rating