Looking Ahead to Trip.com: Clear Upside Potential in Performance and Valuation

Introduction: Trip.com is a high-quality stock representing the themes of domestic demand recovery and holiday economy elasticity for 2026.

Trip.com Group (09961.HK) delivered a strong performance in Q3 2025, driven by peak domestic demand during the summer vacation and National Day holidays, as well as the continued recovery in international travel business. Both revenue and profits achieved double-digit growth. Net profit reached RMB 19.9 billion due to a one-time gain from the sale of MakeMyTrip shares, but even excluding this factor, core profitability remains robust. AI technology has significantly improved service efficiency, with international bookings surpassing pre-pandemic levels, becoming a core growth engine for the next phase.

Looking ahead to Q1 2026, Trip.com is expected to maintain its growth momentum under the dual drivers of policy support and the recovery of outbound tourism, potentially reaching new highs early in 2026. In terms of valuation, the company's current dynamic P/E ratio is significantly lower than the industry average, making it attractive. Multiple institutions have raised their ratings. Considering operational resilience, cash flow strength, and alignment with medium- to long-term themes, we believe Trip.com is a high-quality stock worthy of close attention and long-term allocation.

3Q25 Highlights Review

Trip.Com released its Q3 2025 financial report on November 18, 2025, showing strong performance: net revenue reached RMB 18.3 billion, a year-on-year increase of 16%, primarily driven by robust domestic travel demand during the summer vacation and National Day holidays, as well as the continued recovery of international business. Adjusted EBITDA reached RMB 6.3 billion, while Non-GAAP net profit also demonstrated solid operational resilience. Notably, net profit surged to RMB 19.9 billion during the reporting period, mainly due to one-time investment disposal gains (from the sale of part of its stake in MakeMyTrip).

Core business segments performed steadily: accommodation bookings increased by 18% year-on-year, transportation ticketing grew by 12%, and international platform order volume rose by approximately 60% year-on-year.

Overall, the Q3 2025 earnings report confirmed the resilience of travel demand, with the recovery of international business providing additional growth space for the company.

1)Core business showed strong performance: accommodation bookings remained the main profit driver, with high-end hotels (market share over 40%) driving higher average ticket prices and commission rates. International business stood out, with outbound hotel/flight bookings reaching 140% of 2019 levels, and inbound bookings growing 100% year-on-year.

2)Profitability continued to improve: the proportion of high-margin businesses (accommodation and packaged tours) increased, coupled with AI applications optimizing customer service processes, driving up Non-GAAP profit margins.

3)One-time gains drove significant increases in reported profits: net profit soared to RMB 19.9 billion; excluding the impact of investment disposals, core profitability still maintained healthy growth.

4)Strong balance sheet: cash reserves exceeded RMB 100 billion, providing ample flexibility for future stock repurchases, dividends, and strategic investments.

5)Management expressed optimism about sustained travel demand, AI-driven personalized services, and global expansion prospects, emphasizing deeper cooperation with visa-free countries.

Future Outlook:Q42025+ Q12026

Policy tailwinds and seasonal benefits will continue to drive Trip.Com's growth in the coming quarters:

Q4 2025 (strong performance despite being an off-peak season)- The market consensus expects revenue of approximately RMB 11.8 billion, representing a year-over-year increase of 22%; we anticipate it could slightly exceed market expectations, reaching RMB 12.1–12.3 billion, with growth of about 2–3%. Government-issued cultural and tourism consumption vouchers (targeting seniors, teenagers, and central-western regions) along with initiatives like the 'Weekend Economy' have effectively offset seasonal declines. Outlook for all business segments remains optimistic:

· Room nights booked +22% YoY

· Packaged travel GMV +28% YoY

· International business revenue +45% YoY

· Non-GAAP net profit margin expected at 27–28%

Q1 2026 (poised to hit record highs)- The market expects revenue of approximately RMB 14.5 billion, marking a year-over-year increase of 30%; we see potential upside of 4–6%, with revenue possibly reaching RMB 15.2–15.6 billion. Key drivers include:

·Spring Festival travel, with January to February as peak travel months showing more concentration compared to previous years;

·Long-haul domestic travel GMV increased by 35% YoY driven by subsidy policies, benefiting from the implementation of the 'National Tourism Plan';

·Outbound travel bookings are expected to double YoY (popular destinations include Thailand, Japan, and Singapore);

·Room nights sold increased by 30% YoY, with high-star RevPAR (Revenue Per Available Room) growing more than 25% YoY;

Non-GAAP net profit is expected to be RMB 4.3–4.5 billion, with a profit margin of 28–29%, potentially setting a new quarterly record for the company.

Valuation and Investment View

As of mid-December 2025, Trip.Com’s stock price is around $71, with a total market cap of approximately $47 billion. Considering the one-time profit impact in Q3, the current P/E ratio is relatively low (around 11x), and the estimated 2026 P/E is 17–19x, below the global peer average and its own historical range.

The majority of analysts have set target prices between $80–85 (implying upside potential of 15–20%), with recent upgrades by investment banks (e.g., Barclays raised to $90, Citi to $86). DCF valuation suggests even higher potential (some models indicate a fair value exceeding $120), based on core assumptions of mid-teens revenue growth and profit margins rising to 28–30%.

With strong cash flow, high ROE, and significant shareholder return potential (buybacks/dividends), we believe the current valuation is attractive for long-term holding, capturing themes such as China's domestic demand recovery and tourism elasticity.

Risk Warning

·Macroeconomic or weather disruptions: A cold snap or sudden public health event in January 2026 could impact peak travel periods;

·Outbound travel policy fluctuations: Changes in visa policies, geopolitical risks, or exchange rate volatility may suppress outbound travel demand;

·Intensified industry competition: Fliggy (Alibaba) and Douyin's local life services are aggressively expanding into the high-end hotel and travel booking sectors, although Trip.Com maintains a moat in service depth and cross-border capabilities.

·Regulatory risks: Potential antitrust or data regulation pressures may exist in China and Europe, but Trip.Com’s diversified business structure ensures manageable risk.

Summary - Despite external challenges, Trip.Com has deep platform barriers, high policy alignment, and a robust asset structure, making it a top-quality choice within the domestic demand recovery and holiday economy themes for 2026.

#Internet #Technology #ChineseConceptStocks#Ctrip#Travel

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