Voyages Back From Pandemic Lows, But Lags Global Peers In Valuation


Key Takeaways:

  •’s revenue grew 27.8% in the first quarter, as its stock caught up to the company’s strong business gains from last year
  • The company’s overseas businesses, and Skyscanner, are shaping up as new growth drivers

By Bai Xinrui

Leading online travel agent Group Ltd. TCOM emerged from the Covid shadow last year with soaring demand from “revenge travelers,” even as its stock got left behind amid broader pessimism on China’s economy. But the shares have finally found new life, rising 24% in this year’s first quarter on a bigger rally for offshore-traded China stocks. Now, the company’s impressive first-quarter results are reinforcing that sentiment, showing the travel rebound continues even as demand has lost some steam with China’s slowing economy.

The company’s first-quarter results announced last week showed its net profit zoomed ahead by 27.8% year-on-year to 4.3 billion yuan ($599 million), while its adjusted EBITDA cruised higher by an even bigger 42.9% to 4 billion yuan, with adjusted EBITDA margin climbing 2 percentage points to 33%.’s quarterly revenue rose 29% to 11.9 billion yuan year-on-year, mainly driven by strong demand during a quarter that’s typically a popular travel season in China due to the Lunar New Year holiday. Transport ticketing accounted for the biggest share of the total, increasing by 20% year-on-year to 5 billion yuan. Accommodation booking revenue came in second with even stronger 29% year-on-year growth to 4.5 billion yuan.

Policy Boost

Chairman James Liang said China has seen a remarkable jump in both domestic and outbound travel lately due to a combination of factors, including the company’s own efforts to improve its products, together with strong growth of its overseas business, a more stable supply of travel products and further relaxation of visa rules for foreigners visiting China.

Despite the upbeat report, the results failed to excite investors, with’s stock falling 2% to HK$430.80 the day after the announcement. Still, investment banks are positive on the company. Minsheng Securities was full of praise, especially for the jump of more than 20% in’s hotel and air ticket booking revenue, which lifted the company’s holiday travel-related revenue above pre-pandemic levels from 2019. Outbound hotel and air ticket bookings were especially noteworthy, doubling year-on-year, with the Lunar New Year bookings also returning to 2019 pre-pandemic strength.

Minsheng also pointed out that’s overseas operation grew about 80% in the latest quarter in total revenue terms. It added it has great faith in the company’s future business prospects thanks partly to policy tailwind as China grants visa-free entry to citizens from a growing number of countries. has many competitors in China, including Alibaba’s BABA Fliggy, Tongcheng Travel (0780.HK) and Meituan (3690.HK). Still, it has a commanding lead in the sector, thanks partly to its status as one of the industry’s oldest players. The 2023 Report on the Development of China’s Outbound Travel from Fastdata showed that’s platform controlled 54.7% of China’s outbound travel market, or double Fliggy’s 27.1% and five times number-three player Tongcheng at 11.5%. has maintained its leading position in part by using a multi-brand strategy. That includes its dedicated Mainland travel platform,, with 150 million monthly active users, as well as its more youth-oriented Qunar brand with 56 million monthly active users.

The clear positioning of its brands, coupled with relative ease of use for its websites and mobile apps, have helped win strong customer loyalty, especially among big spenders in more affluent larger cities. The company said last July its users in new first-tier cities accounted for 44% of its total base, including more than 12 million platinum-level members with annual spending of more than 20,000 yuan on the platform.

By comparison, Tongcheng relies heavily on its position as the preferred travel agent for WeChat, whose owner Tencent is a major Tongcheng shareholder, and targets lower-spending consumers in smaller cites. Those differences were on display Tongcheng’s latest report, which was less upbeat than’s. Tongcheng reported a 397 million yuan profit for the quarter, up just 5% year-on-year, while its adjusted EBITDA margin fell 7.1 percentage points year-on-year to 21.2%. Its shares fell 12.8% the day after the results were announced.

Overseas Expansion is the clear king of the hill in China, and it’s trying to replicate some of that success overseas. It embarked on a global shopping spree in 2016, picking up trophy acquisitions including Skyscanner that year for 1.4 billion pounds ($1.8 billion). Founded in 2003, Skyscanner is one of the leading airfare comparison sites in Europe and the U.S. and was one of the 10 most-downloaded global online travel platforms in 2022 with 100 million monthly active users (MAUs) in 2023.

The company also acquired its English-language namesake, a U.S.-based social travel network, in November 2017, and built it into the overseas version of its business, focusing on the Asia-Pacific market. At the same time, it leveraged Skyscanner’s strong traffic to improve its competitiveness in Europe. China Merchants Securities believes that the company’s further overseas expansion, taking advantage of synergies forged between and Skyscanner, can become a new revenue driver. has also seized on the recent popularity of AI large language models (LLMs) like ChatGPT to join hands with one of China’s leading players in the space, Baidu’s BIDU Ernie Bot. The pair are now working on an “AI+ travel” strategy, aiming to use AI to empower’s travel business. Applications like using AI assistants to answer user queries could not only provide speedier service, but also help bring down human labor costs.

According to Bloomberg data, analysts expect’s adjusted earnings per share this year to rise 7.7% to 21 yuan, and grow by a further 13.9% next year to 23.9 yuan. The company’s projected price-to-earnings (P/E) ratios are relatively low at 18.7 and 16.4 times based on earnings projections for this year and next, respectively. That trails U.S. peer Booking Holdings’ BKNG comparable ratios of 21.6 times and 18.4 times, showing’s stock is by no means expensive right now and could even have some potential upside.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

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