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Jin Yoon
  • Jin Yoon

TCOM 4Q24 Preview: Estimates Remain Intact

What’s New: We maintain our 4Q24 estimates as overall business could remain largely in-line with our expectations. In this note, we highlight the latest updates to the business including travel demand and margin outlook. Analysts: Jin Yoon

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: 1H25 outlook shaped by implications of fiscal stimuli ...

We saw largely in-line top-line growth across companies in 3Q24, mainly pressured by a lukewarm macro environment, but with earnings beat thanks to enhanced efficiency from AI integration. Alongside pending visibility on further domestic supportive policies, we believe the key 2025 highlights are: a) re-acceleration of e-commerce GMV growth, b) potential upside in ad take rate monetisation, c) rejuvenation of online games grossing, and d) sustained travel enthusiasm. Maintain MARKET WEIGHT.

Greater China Research Team ... (+2)
  • Greater China Research Team
  • Tham Mun Hon

Greater China Market Strategy: 2025 Year Ahead - De-risking And De-cou...

Expect increased market volatility in 1H25 as the US embarks on another round of trade rebalancing with China via higher tariffs. We expect China to roll out growth supportive policies on top of the de-risking measures that have been announced. Hence, we prefer a domestic orientation and policy beneficiaries for 1H25. Our MSCI China Index target is at 68pt, based on 7% EPS growth and 10.5x PE. The downside target is 51pt in the event of a full-fledged trade war.  China is focusing on de-riskin...

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

Trip.com (9961 HK): 3Q24: Solid earnings beat; stepped up investment f...

TCOM delivered a strong earnings beat for 3Q24. Net revenue rose 15.6% yoy to Rmb15.9b in the quarter, in line with consensus estimates. Non-GAAP net profit grew 21.8% yoy to Rmb6b, beating consensus estimates by 25%. Net margin expanded 2ppt yoy to 37.6%, beating our and consensus estimates. TCOM guided 4Q24 revenue growth of 17-22% yoy to Rmb12.1b-12.6b, in line with consensus estimates. Maintain BUY with a higher target price of HK$640.00 (US$81.00).

Bella Lu Yifei ... (+5)
  • Bella Lu Yifei
  • Greater China Research Team
  • Julia Pan Mengyao
  • Ken Lee
  • Ming San Soong

Greater China Daily: Wednesday, November 20, 2024

KEY HIGHLIGHTS Results Kingsoft Corp (3888 HK/BUY/HK$29.20/Target: HK$40.00) Kingsoft delivered strong 3Q24 results, beating estimates. Revenue grew 17.8% yoy to Rmb2.9b, exceeding consensus estimate. Gross margin grew 3ppt yoy to 84.2%, in line with consensus expectation. Non-IFRS operating profit came in at Rmb1.2b while operating margin jumped 20ppt yoy to 41% on robust revenue growth. Net profit came in at Rmb413m, with net margin expanding 14ppt yoy to 18.4%. Maintain BUY with a slightly ...

Jin Yoon
  • Jin Yoon

TCOM 3Q24 Results: Travel Demand Remains Resilient

What’s new: Trip.com’s reported 3Q24 revs that were largely in-line with consensus and our expectations. Travel demand could remain resilient where TCOM could continue to gain market share in both domestic and international markets in 4Q. We up our PT from US$65 to US$75 on resilient travel demand. Our revised PT implies an 18.5x FY25E P/E. We maintain our BUY rating. Analysts: Jin Yoon

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: Key takeaways from marketing trip.

The key concerns of investors include the sustainability of the recent rally and potential fundamental changes upon policy rollout. We think a valuation repair is underway with the upcoming 11.11 campaign and 3Q/4Q24 results release as a critical juncture. Investors are also becoming increasingly optimistic on mega-cap names such as Tencent, Meituan, Alibaba and JD in view of a favourable regulatory backdrop and stabilised competitive environment. Maintain MARKET WEIGHT.

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: Government policy rollout to boost consumption and dri...

In view of a stronger-than-expected government policy rollout, we reckon that the improved consumption sentiment will benefit e-commerce, local life services and OTA companies. In 2H24, we expect the undemanding valuations of internet companies to be repaired by shareholder returns, cross-border expansion and easing competition. Meanwhile, we believe monetisation momentum will be fuelled by AIGC development and adtech upgrades. Maintain MARKET WEIGHT.

Greater China Research Team
  • Greater China Research Team

Greater China Strategy Alpha Picks: October Conviction Calls

The HSI and MSCI China surged 17.5% and 23.1% mom respectively in September, buoyed by the PBOC’s policy easing and supportive statements from the Politburo meeting. Looking ahead, we are keeping beneficiaries of an improved domestic consumption outlook in our stock picks and adding CATL, Geely and Plover Bay.

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: 2Q24 results wrap-up: Overall earnings beat; 2H24 outl...

2Q24 revenue growth was lukewarm, hampered by a subdued macro backdrop, but most earnings beats were delivered by internet companies. We expect consumers to continue switching to service- and experience-oriented, which will benefit OTA, local life services and online games amid the summer holiday period. Key catalysts in 2H24 that will drive internet companies’ valuation repair include shareholder returns, cross-border expansion, easing competition and more, in our view. Maintain MARKET WEIGHT.

Greater China Research Team
  • Greater China Research Team

Greater China Strategy Alpha Picks: September conviction calls.

The MSCI China rose 0.8% in August, trailing the HSI’s 3.7%, as the former was weighed by the weaker performance of utilities, materials and consumer staples. Looking ahead, we opine that the Fed rate cut in Sep 24 should be priced in and we do not expect ratesensitive sectors to outperform. We are adding AIA, COLI, Desay SV, Galaxy Entertainment, Meituan, Ping An and The United Laboratories to our BUY list. We remain cautious on the EV sector, adding Li Auto to our SELL list.

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

Trip.com (9961 HK): 2Q24: Strong earnings beat; outbound and internati...

TCOM delivered a strong 2Q24 earnings beat. 2Q24 net revenue rose 13.5% yoy to Rmb12.8b and was 47% above 2019 levels, in line with consensus estimates. Non-GAAP net profit was Rmb5b, with net margin expanding 8.5ppt yoy to 39%, beating our and consensus estimates. TCOM guided for 3Q24 revenue growth of 11-16% yoy to Rmb15.3b-16b, in line with consensus estimates. Maintain BUY with a lower target price of HK$534.00 (US$68.00).

Jin Yoon
  • Jin Yoon

TCOM 2Q24 Results: Travel Demand Remains Resilient

What’s new: Trip.com’s reported 2Q24 revs that were in-line with consensus but below our expectations. Travel demand remains resilient where total rev growth could be similar (or potentially better) in 3Q than 2Q. We maintain our PT at USD65. Analysts: Jin Yoon

Greater China Research Team
  • Greater China Research Team

Greater China Strategy Alpha Picks: August Conviction Calls

Chinese equities fell more than 2% in July, losing initial gains after the Third Plenum did not lead to new stimulus policies. For August, 1H24 results would be the catalyst for most stocks, and we expect earnings of EV names to be under pressure given the intense price competition. We add Cosco Shipping Ports, Haier Smart Home, and KE Holdings to our BUY list and SELL on WuXi Bio and XPeng to diversify away our market risk exposure.

Jin Yoon
  • Jin Yoon

TCOM 2Q24 Preview: Estimates Remain Intact

What’s New: We maintain our 2Q24 estimates as overall business could remain largely in-line with our expectations. In this note, we highlight the latest updates to the business including travel demand and margin outlook. Analysts: Jin Yoon

Greater China Research Team
  • Greater China Research Team

Greater China Alpha Picks: July conviction call.

The HSI and MSCI China fell 2.0% and 2.8% mom respectively in June, as investors locked in profits amid weaker-than-expected macro data. A continuation of the rally that began in January hinges on the policy announcements from the Third Plenum. Looking ahead, we remain sellers of BYD due to intense competition in the EV segment and are adding ASMPT, Innovent, Poly Property Services, TAL Education and Trip.com.

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: Online Travel Agencies -- Encouraging travel enthusias...

We expect travel enthusiasm to be fuelled by various catalysts moving into 2H24, such as: a) continuous robust overseas travel demand boosted by the upcoming summer holidays, Euro 2024 and Paris Olympics; b) the implementation of visa-free policies that will unlock demand for both inbound and bound travel; and c) travel consumption upgrade. We expect the travel growth to soften slightly in 2Q/3Q24 and reaccelerate in 4Q24 due to the base effect. Maintain MARKET WEIGHT.

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

China Internet: Strategic revamp to foster re-accelerating growth and ...

We believe efforts in user-focused and overseas expansion strategies will continue to help e-commerce companies regain GMV growth momentum and potentially improve take rates. We expect consumption behaviour to become service- and experienceoriented, which will benefit OTA players. With increasing shareholder returns and the recent ADR convertible issuance, the market will continue to focus on stock yields, companies’ cash positions and domestic regulations. Maintain MARKET WEIGHT.

Greater China Research Team ... (+2)
  • Greater China Research Team
  • Tham Mun Hon

Greater China Market Strategy 2H24: Building blocks in place.

 Rebound on policy clarity. The MSCI China index has made impressive gains of 23.3% since bottoming out in late-Jan 24, bringing ytd performance to 8.2%. This is a remarkable turnaround, as Asia ex-Japan is only up 6.9% ytd. This comes after the government gave clear indications that it remains firmly behind the healthy development of capital markets and efforts to revive the property market will no longer be clouded by concerns of re-igniting the bubble.  Further re-rating hinges on real est...

Julia Pan Mengyao ... (+2)
  • Julia Pan Mengyao
  • Ming San Soong

Trip.com (9961 HK): 1Q24: Strong earnings beat; international travel r...

TCOM delivered a strong earnings beat for 1Q24. 1Q24 net revenue elevated 29.4% yoy to Rmb11.9b and was 46% above 2019’s level, in line with consensus estimates. Non- GAAP net profit was Rmb4.1b, with net margin expanding 11.6 ppt yoy to 34%, beating our and consensus estimates. TCOM guided for 2Q24 revenue growth of 11-16% yoy to hit Rmb12.5-13b, in line with consensus estimate. Maintain BUY with a higher target price of HK$556.00 (US$71.00).

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