Trip.com Earnings: International Outbound Travel Is Main Revenue Driver in 2024 As Demand Moderates

We maintain our fair value estimate of USD 36 (HKD 290) for Trip.com after it reported third-quarter 2023 revenue of CNY 13.74 billion, which was in line with Refinitiv consensus estimates. Operating margin of 29% was 100-200 basis points better than guidance due to seasonality, but should revert to the midteens next quarter as Trip.com expects operating margin to moderate at mid-20% for the long term. Trip.com guided to a fourth-quarter 20%-26% increase on fourth-quarter 2019 revenue, suggesting that there is further travel demand. However, its revenue outlook of above 10% increase year on year in 2024 supports our view that travel demand has moderated since the beginning of the year—given disappointing Golden Week results that showed only a 10% increase over the 2019 level in air travelers. We still believe that Trip.com should see long-term revenue growth, but believe shares are fairly priced currently given both demand and operating margin moderation.