"Big Banks" UBS: Trip.com’s resilient demand during the Spring Festival supports growth, but the ongoing antitrust investigation remains a shadow

UBS published a report indicating that Trip.com (09961.HK) exceeded expectations in revenue and non-GAAP operating profit in the fourth quarter of last year. Looking ahead to the first quarter of 2026, the bank believes that the resilient travel demand during the Spring Festival will support domestic hotel revenue to achieve low double-digit year-on-year growth, while the average daily room rate and occupancy rate will remain roughly in line with last year.

The bank expects Trip.com's outbound business to also remain robust, recording mid-double-digit year-on-year growth, as users shift to other destinations and long-distance travel increases, helping to offset the impact from the Japanese market. The bank anticipates that Trip.com's international business will maintain over 50% year-on-year revenue growth in the first quarter of 2026 and for the entire fiscal year.

UBS raised its forecast for Trip.com's hotel revenue in the first quarter of 2026 by 1.7% to reflect strong domestic and outbound travel demand during the Spring Festival. Additionally, it raised its net income forecasts for the first quarter and the entire year by 1.1% and 0.6%, respectively, while lowering the non-GAAP operating profit margin by about 1 percentage point to approximately 28%, due to the increased share of overseas business currently in a loss position. However, the bank did not explicitly account for the potential impact of the antitrust investigation.

Despite Trip.com's strong business momentum in the first quarter, the bank emphasized that the antitrust investigation remains a current unresolved negative factor, with limited visibility on the investigation results at this stage, which is believed to continue to suppress investor sentiment in the short term. UBS maintains a "Buy" rating on Trip.com (TCOM.US) in the U.S. stock market, with a target price lowered from $90 to $80