Company Reports

We expect Tongcheng Travel’s revenue to return to growth as China relaxes its reopening policies, which should allow its citizens to travel with fewer restrictions. We expect near-term revenue to increase modestly, driven by the recovery of the travel industry. Assuming no return of lockdown headwinds in China, we expect Tongcheng’s revenue to increase 10%-15% per year in the near- to midterm.

We expect Tongcheng Travel’s revenue to return to growth as China relaxes its reopening policies, which should allow its citizens to travel with fewer restrictions. We expect near-term revenue to increase modestly, driven by the recovery of the travel industry. Assuming no return of lockdown headwinds in China, we expect Tongcheng’s revenue to increase 10%-15% per year in the near- to midterm.

Tongcheng's second-quarter 2026 revenue increased 7% year on year, and operating margin increased by 40 basis points. Growth decelerated due to softer macro conditions in China, which led to weak demand for international outbound flights and hotels.

Tongcheng offered to acquire 100% of Chinese carpooling firm Dida Chuxing on June 30. The HKD 1.42 billion deal represents a 9% premium over Dida's closing price on June 29. This creates a closed-loop platform that combines travel with Dida’s mobility services. Dida will remain publicly traded.

Tongcheng's first-quarter 2026 revenue increased 14% year on year, driven by strength in the accommodations business, which grew 15%. Other business revenue rose 60% as the newly acquired hotel management and resorts businesses were integrated.

Tongcheng's fourth-quarter 2025 revenue increased 14% year on year, driven by strength in the accommodations business that grew 17%. Fourth-quarter earnings also reflect contributions from recently acquired Wanda.

Tongcheng's third-quarter revenue increased 10% year on year, driven by strength in accommodation bookings.

We expect Tongcheng Travel’s revenue to return to growth as China relaxes its reopening policies, which should allow its citizens to travel with fewer restrictions. We expect near-term revenue to increase modestly, driven by recovery of the travel industry. Assuming no return of lockdown headwinds in China, we expect Tongcheng’s revenue to increase 10%-15% per year in the near to midterm.

Tongcheng's second-quarter 2025 revenue increased by 10% year on year, driven by strength in accommodations bookings and airline travel.

Tongcheng's first-quarter revenue increased 13% year on year, driven by continued strength in accommodation and transportation bookings.

Tongcheng is acquiring 100% of Wanda Hotel Development's hotel management arm, which includes the operation and management service business and the design and construction management business for CNY 2.5 billion, inking the all-cash deal on April 17, 2025, during after-market hours.

Tongcheng Travel Holdings' fourth-quarter 2024 revenue increased 35% year on year to CNY 4.2 billion, but more importantly, it provided 2025 revenue guidance of a 15%-20% increase year-on-year that reflects a continued demand for travel.

We expect Tongcheng Travel’s revenue to return to growth as China relaxes its reopening policies, which should allow its citizens to travel with fewer restrictions. We expect near-term revenue to increase modestly, driven by recovery of the travel industry. Assuming no return of lockdown headwinds in China, we expect Tongcheng’s revenue to increase 10%-15% per year in the near to midterm.

We raise our fair value estimate for Tongcheng by 18% to HKD 27 per share from HKD 23 after it reported third-quarter revenue of CNY 4.9 billion, which represents a 51% increase year on year and was in line with our estimate. Profitability continued to improve this quarter as operating margin for its core online travel business materially expanded by 920 basis points sequentially to 23.8% and the company indicated that it will likely have more operating leverage in the short term as its marketing expenses can be further reduced while keeping the number of staff relatively flat. Revenue was driven by a 22% and 21% year-on-year rise in accommodation and transportation ticketing, respectively, while profitability was boosted by lower-than-expected marketing expenses. In addition, Tongcheng’s international outbound business is growing robustly as its revenue grew over 50% year on year this quarter and is expected to increase 70% next quarter. The firm plans to increase its international revenue to 10%-15% of total sales in the next three years from 5% currently.

We expect Tongcheng Travel’s revenue to return to growth as China relaxes its reopening policies, which should allow its citizens to travel with fewer restrictions. We expect near-term revenue to increase modestly, driven by recovery of the travel industry. Assuming no return of lockdown headwinds in China, we expect Tongcheng’s revenue to increase 10%-15% per year in the near to midterm.

We keep our fair value estimate at HKD 23 per share for Tongcheng after it reported second-quarter revenue of CNY 4.2 billion, representing a 48% year-on-year increase that met the lower end of its guidance of 48%-52%. However, profitability improved significantly as the operating margin for its core online travel business increased by 160 basis points sequentially to 14.6%. Better profitability was driven by a combination of lower marketing expenses and likely outperformance in air ticketing, where revenue rose 20% year on year, compared with a low-single-digit decline in flight volume during the quarter. Tongcheng also continues to build its international platform as outbound air ticketing volume has increased by over 160% year on year.

We maintain our fair value estimate of HKD 23 for Tongcheng after it reported first-quarter revenue of CNY 3.86 billion, which is 2% higher than our estimate and guided to second-quarter 2024 revenue that was in line with our forecast. Tongcheng guided to 48%-52% revenue growth year on year next quarter, but this includes its newly acquired offline tourism business. Otherwise, guidance is driven by strength in its legacy core business, which includes airplane ticketing revenue, which was guided to increase by 20%-25%. We note that its operating margin declined by 420 basis points year on year due to dilutive impact from the new tourism business, which has a 2%-5% operating margin. Tongcheng acknowledged that margins could be lower next quarter and possibly for the rest of the year due to its new dilutive business, given seasonality is the strongest for it. However, expectations for its core travel segment in accommodations and transportation remain the same. Given the same 2024 revenue guidance as its previous 15%-20% expectations for the core business, we believe the 10% stock price decline today is an overreaction to its margin dilution. The pullback presents an attractive entry point for gaining exposure to China’s long-term travel industry tailwinds.

We increase our fair value estimate by 35% to HKD 23 from HKD 17 after Tongcheng Travel reported revenue of CNY 3.14 billion, which is in line with our estimate, but more importantly, guided to 2024 revenue that was better than our forecast. The strong guidance can be attributed to an expected 20%-25% year-on-year revenue increase for each transportation and accommodation business, which is faster than peers. The guidance is driven by higher average room rates and greater international demand. Tongcheng had about 5% revenue exposure to international travel prepandemic, but expects a 10%-15% increase year on year in 2024 given recent approval for visa-free travel to Southeast Asia and it forecasts international travel to account for 10% of revenue in three years. The firm isn't seeing a consumption downgrade currently and domestic and international travel has recovered to 80% and 70% of prepandemic levels, respectively, with further momentum expected. We're also encouraged by management’s more upbeat tone this quarter than previously due to greater visibility for 2024 demand. It is also guiding for a 30%-40% increase in other revenue, which includes hotel management services and business travel demand. Given the lack of a consumption downgrade by China’s travelers, we see companies such as Tongcheng or Trip.com as bright spots among China's macroeconomic headwinds.

We maintain our fair value estimate of HKD 17 for Tongcheng Travel after third-quarter revenue of CNY 3.3 billion was 5% above our estimate and represented a 60% increase year on year, but was offset by demand uncertainty and lack of visibility into 2024 amid commentary from Tongcheng’s peers. Hotel bookings increased 70% while transportation saw 47% revenue growth, compared with same-period 2019 levels. Tongcheng expects next quarter's revenue to increase 45% compared with fourth-quarter 2019—we forecast this to be driven by a 66% increase in hotel bookings compared with the same period in 2019. However, we expect air and ground transportation gross merchandise volume, or GMV, to only grow 10%-15% and flat, respectively, compared with the fourth quarter of 2019. We are slightly concerned as to whether moderation in GMV growth represents an inflection point where pent-up demand is fizzling out.

We are lowering our fair value estimate for Tongcheng Travel by 19%, to HKD 17 per share from HKD 21, to reflect our view that the recovery in travel demand may be fizzling out. We estimate that ground and air transportation is at significantly lower-than-expected levels and believe weakness during Golden Week 2023 is likely an inflection point for the deceleration of travel demand. There appears to be a significant decline in the number of travelers compared with 2019, which could signal weakness for the fourth quarter. Therefore, we have lowered our 2024 revenue forecast by 5% to CNY 13.6 billion based on the reduction of accommodation revenue estimates by 2% and transportation estimates by 6% next year. While we expect long-term revenue to still gradually grow, we take a much less bullish stance in the near term on Tongcheng's growth trajectory, given recent Golden Week data.