---
title: "In \"The Big Banks,\" Citigroup lowers TONGCHENGTRAVEL's target price to 20 yuan, expecting the group to need new catalysts to drive valuation"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/280407434.md"
description: "Citi Research report pointed out that TONGCHENGTRAVEL's performance in the fourth quarter of last year exceeded expectations, with revenue increasing by 14% year-on-year to RMB 4.8 billion, and adjusted net profit of RMB 780 million, with a profit margin of about 16%. Despite strong travel demand, the group needs to seek new growth points outside of its traditional OTA business. Citi has lowered TONGCHENG's target price to HKD 20, expecting the outbound tourism operating profit margin to rise to about 10% by 2026, but this may be offset by changes in hotel management and product mix, maintaining a \"Hold\" rating"
datetime: "2026-03-25T03:23:27.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/280407434.md)
  - [en](https://longbridge.com/en/news/280407434.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/280407434.md)
---

# In "The Big Banks," Citigroup lowers TONGCHENGTRAVEL's target price to 20 yuan, expecting the group to need new catalysts to drive valuation

Citi Research report indicates that TONGCHENGTRAVEL (00780.HK) exceeded expectations in its fourth-quarter performance last year, with revenue increasing by 14% year-on-year to RMB 4.8 billion (the same below), and adjusted net profit of RMB 780 million, with a profit margin of approximately 16%. Although travel demand has remained strong year-to-date, as domestic and outbound travel growth normalizes, the group needs to seek new growth engines beyond traditional OTA business, and the hotel management business also requires upfront investment.

The bank pointed out that TONGCHENG plans to accelerate the opening of new Wanda hotels, targeting to open over 100 this year (about 50 last year), with more than 300 hotels in preparation. This requires upfront investment and may reduce Wanda's operating profit margin from high double digits to low double digits over the next two years. Although this could drive other revenue to grow by 40% year-on-year, it is expected that the growth of accommodation and transportation businesses will further normalize, reaching 13% and 7% respectively by 2026, while the tourism business remains stable.

Citi also expects that the group's outbound tourism operating profit margin will increase to about 10% by 2026, but may be offset by changes in hotel management and product mix, thus Citi expects its core OTA operating profit margin to remain stable. Adjusted net profit is expected to be RMB 3.9 billion, with a gross profit margin of 18%.

Citi has lowered its adjusted net profit forecast for TONGCHENGTRAVEL for the next two years by 2% and 8%, respectively, and reduced the target price from HKD 22 to HKD 20, equivalent to a projected adjusted price-to-earnings ratio of 10 times in 2027, maintaining a "Hold" rating, believing that the group's valuation is not expensive but needs new catalysts

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