Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

Tongcheng Travel Holdings  / Equity Bottom-Up

<ul>
<li>Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.</li>
<li><a href="https://www.smartkarma.com/entities/xtep-international-holdings" target="_blank" data-smartkarma-citation="entities:18118:1" rel="noopener">Xtep International (1368 HK)</a> had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK) on an improved outlook.</a></li>
<li>Goldman Sachs upgraded their rating on <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili (9626 HK)</a> , <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili (BILI US)</a> to a BUY with improving user MAU/DAU measures and the success of its newly launched game.</li>
</ul>


Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.


BUY/SELL/HOLD: Hong Kong Stock Updates (September 28)

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates; adjusted net income was RMB657mn, up 11% YoY, and was 4% better than consensus, which in our view was driven by efficient sales and marketing expense control.</li><li>Overall travel demands are likely better than feared in 3Q24, while management guided to scale back user subsidy to drive for balanced and efficient business development amid current macro environment.</li><li>Outbound travel demand remains a solid driver for long-term revenue and earnings growth for TC, in our view. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates; adjusted net income was RMB657mn, up 11% YoY, and was 4% better than consensus, which in our view was driven by efficient sales and marketing expense control.Overall travel demands are likely better than feared in 3Q24, while management guided to scale back user subsidy to drive for balanced and efficient business development amid current macro environment.Outbound travel demand remains a solid driver for long-term revenue and earnings growth for TC, in our view. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tongcheng Travel (780 HK) - Reported 2Q24 Results

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> is still suffering from cost pressure, with adjusted net profit increased by 10.9% in 2Q24, despite a 48.1% revenue growth.</li>
<li>Both GMV and MPU growth rates have slowed in 2Q24 when compared with 1Q24, and revenue may also decelerate in 2H24 given the higher base for comparison.</li>
<li>The market will need some time to see if the moderating earnings trend will sustain, negatively affecting investor interests. Potential earnings downgrade is also a challenge.</li>
</ul>



Tongcheng Travel Holdings (780 HK) is still suffering from cost pressure, with adjusted net profit increased by 10.9% in 2Q24, despite a 48.1% revenue growth.
Both GMV and MPU growth rates have slowed in 2Q24 when compared with 1Q24, and revenue may also decelerate in 2H24 given the higher base for comparison.
The market will need some time to see if the moderating earnings trend will sustain, negatively affecting investor interests. Potential earnings downgrade is also a challenge.


Tongcheng Travel (780 HK): Seems like a Cost Issue

<ul>
<li>The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> is a key beneficiary.</li>
<li>In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. </li>
<li>Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> can be reversed.</li>
</ul>


The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. Tongcheng Travel Holdings (780 HK) is a key beneficiary.
In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. 
Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against Trip.com (TCOM US) can be reversed.


<ul><li>Tongcheng Travel (“TC”) delivered a strong quarter in 1Q24, with revenue +50% YoY (3% above consensus) and adj. net profit +11% YoY (4% above consensus).</li><li>We see high visibility for TC to continuously gain share in 2Q24E, with healthy margin profile. For 2Q24E, we forecast total revenue +49% YoY, boosted by booming travel demand in multiple holidays and international business recovery.</li><li>Core OTA would grow 23.5%, in which hotel/transportation/others revenue +12%/17%/92% YoY, in our estimates. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tongcheng Travel (“TC”) delivered a strong quarter in 1Q24, with revenue +50% YoY (3% above consensus) and adj. net profit +11% YoY (4% above consensus).We see high visibility for TC to continuously gain share in 2Q24E, with healthy margin profile. For 2Q24E, we forecast total revenue +49% YoY, boosted by booming travel demand in multiple holidays and international business recovery.Core OTA would grow 23.5%, in which hotel/transportation/others revenue +12%/17%/92% YoY, in our estimates. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tongcheng Travel (780 HK) - Resilient Travel Consumption to Continue

China

Tongcheng Travel Holdings Limited operates as an online travel agency. The Company provides transportation ticketing, accommodation reservation, value added travel products sales, and other services. Tongcheng Travel Holdings provides its services throughout China.

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Tongcheng Travel Holdings (780 HK)

BUY/SELL/HOLD: Hong Kong Stock Updates (September 28)

Hong Kong market continues to re-rate on the back of PBOC stimulus. XTEP and Tongcheng benefit from improved consumer sentiment and earnings...

David Mudd

Tongcheng Travel (780 HK) - Reported 2Q24 Results

Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates

CMB International

Tongcheng Travel (780 HK): Seems like a Cost Issue

Tongcheng Travel faces cost pressure as adjusted net profit rises by 10.9% in 2Q24 despite strong revenue growth. Slowing growth and potential...

Osbert Tang, CFA

Tongcheng Travel (780 HK): We Are Back

CNY travel rush is expected to boost air passenger volume by 9.8% vs. 2019, benefiting Tongcheng. Its focus on lower-tier cities and strong EPS...

Osbert Tang, CFA

Tongcheng Travel (780 HK) - Resilient Travel Consumption to Continue

Tongcheng Travel (“TC”) delivered a strong quarter in 1Q24, with revenue +50% YoY (3% above consensus) and adj. net profit +11% YoY (4% above...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

BUY/SELL/HOLD: Hong Kong Stock Updates (September 28)

Hong Kong market continues to re-rate on the back of PBOC stimulus. XTEP and Tongcheng benefit from improved consumer sentiment and earnings...

David Mudd

Tongcheng Travel (780 HK) - Reported 2Q24 Results

Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates

CMB International

Tongcheng Travel (780 HK): Seems like a Cost Issue

​Tongcheng Travel faces cost pressure as adjusted net profit rises by 10.9% in 2Q24 despite strong revenue growth. Slowing growth and potential...

Osbert Tang, CFA

Tongcheng Travel (780 HK): We Are Back

CNY travel rush is expected to boost air passenger volume by 9.8% vs. 2019, benefiting Tongcheng. Its focus on lower-tier cities and strong EPS...

Osbert Tang, CFA

Tongcheng Travel (780 HK) - Resilient Travel Consumption to Continue

Tongcheng Travel (“TC”) delivered a strong quarter in 1Q24, with revenue +50% YoY (3% above consensus) and adj. net profit +11% YoY (4% above...

CMB International

Tongcheng Travel faces cost pressure as adjusted net profit rises by 10.9% in 2Q24 despite strong revenue growth. Slowing growth and potential...