"Big Banks" Bank of America Securities lowers Trip.com target price to 612 yuan, expects last quarter's adjusted net profit to rise 7% year-on-year

Bank of America Securities published a research report indicating that Trip.com (09961.HK) will announce its fourth-quarter results for last year in March. The bank predicts that the company's net revenue for the last quarter will grow by 16% year-on-year to RMB 14.9 billion, exceeding market expectations. Revenue from hotel accommodations and transportation ticketing is expected to grow by 21% and 12% year-on-year, respectively, with a slight increase in growth rate quarter-on-quarter. Under non-GAAP, operating profit is expected to grow by 18% year-on-year to RMB 3.3 billion, while net profit is expected to grow by 7% year-on-year to RMB 3.3 billion, in line with market expectations.

Regarding the earlier investigation by the State Administration for Market Regulation into the group, Bank of America Securities pointed out that based on records of other companies in the past, it is believed that the authorities' investigation into Trip.com is unlikely to conclude before the March earnings announcement. It is anticipated that regulatory uncertainty may bring changes to the group's operations and finances, leading to a belief that management will provide more conservative business guidance. Assuming that domestic tourism business profits will be impacted by 9% to 10%, the bank has lowered its forecast for Trip.com's non-GAAP operating profit margin for this year and next from the original expectation of 29% to 30% down to 25%. The non-GAAP net profit forecast has been reduced by 10% to 12%, and the target price for the Hong Kong stock has been lowered from HKD 667 to HKD 612. The target price for Trip.com (TCOM.US) in the US stock market has been correspondingly reduced from USD 85 to USD 78, reiterating a "Buy" rating