Trip.com analysis: a Chinese competitor to Booking
Trip.com Group Limited, formerly known as Ctrip.com International, is one of the world's leading online travel agencies. The company was founded in 1999 in Shanghai. Its main objective is to provide a wide range of travel services, including flight bookings, hotels, car rentals, tours and other travel products and services. But does this direct competitor to Booking succeed against it?
Trip.com prides itself on offering its customers comprehensive and innovative solutions for their travel needs. Its platform is accessible through both its website and mobile apps, making travel planning easy and convenient for millions of users around the world. With a strong technology background and constant innovation, Trip.com has managed to earn and maintain the trust of its customers.
The company is actively investing in expanding its global footprint through acquisitions and partnerships. In 2017, the company changed its name to Trip.com Group Limited to better reflect its international nature. One of the most significant acquisitions was the takeover of Skyscanner, a Scottish travel agency, which significantly strengthened its position in the European market. This put it in direct competition with Booking.
Management
Jie Sun - CEO
Jane Jie Sun has served as CEO of our company and a member of the Board of Directors since November 2016. Prior to that, she was Co-President since March 2015, Chief Operating Officer since May 2012, and Chief Financial Officer between 2005 and 2012.
She has been named one of Fortune's 50 Most Powerful Women in Business for four consecutive years since 2017. In 2019, she received the Asia Society Asia Game Changer award and became a member of the Asia Society Board of Directors. Forbes named her one of Asia's Top 25 Female Entrepreneurs in 2018 and one of the most influential and powerful businesswomen in China in 2017. She was also one of FastCompany's Most Creative People in Business in 2017. During her tenure at Trip.com Group, she also won the Institutional Investor Awards for Best CEO and Best CFO.
Prior to joining Trip.com Group, Jie Sun worked at Applied Materials, Inc. since 1997. This employment lasted for 5 years. Ms. Sun received her Bachelor of Science degree from the University of Florida School of Business with honors. She also obtained an LLM degree from Peking University Law School.
Industry/Specialty of the Company
Airline Ticket Booking: Trip.com offers a wide selection of flights worldwide, partnering with thousands of airlines and providing customers with the ability to quickly and easily compare prices and select the most convenient flights.
Hotel booking: The company has an extensive database of hotels and accommodation facilities around the world. Customers can use various filters and reviews to find the ideal accommodation for their needs and preferences.
Vacation Packages and Tours.
Travel advice and support: The company provides customers with ongoing support and advice, including 24/7 customer service, ensuring their trips run smoothly.
Travel Technology and Innovation: Trip.com focuses on the continuous development and implementation of advanced technology solutions such as mobile apps, artificial intelligence and service personalization, which enhance the user experience and increase the efficiency of travel services.
Company profitability and cash
Despite the fact that the travel industry has slowed down the company's revenue and EPS very significantly over the years of Covid's operation, as we will see more on later, its stock did not take heed of this and kept rising higher. This year, the company has even come within striking distance of its 2017 absolute peak. Since that point, however, the price has already fallen 25%. The upcoming results are the last chance to change that.
The company's current market capitalization is $29.93 billion. If the company were to reach its absolute peak, which is now 37% higher, its value would be above $40 billion. Currently, $TCOM-0.3% employs over 36,000 people, including delegates.
Trip.com
TCOMEven though the company was founded in 1999, which is not that long ago, all of its ever issued shares are distributed to investors in the market. This can be said because only 19,320 shares are held privately. The company's debt is $6.63 billion. But the cash that management has is a high $9 billion and $720 million.
In 2019, the company's sales were at $5.16 billion. The operating margins were 19.66%, bringing the net profit to $1.01 billion. But in 2020 and the next two years, everything has changed. The pandemic halted all travel and it took a long time for tourism to resume. Therefore, in 2020, revenue fell to $2.65 billion and margins plunged to negative 17.73%. The loss in that year was $470 million. In 2021, revenue increased to $3.1 billion, but this was still very small compared to the years before the pandemic. Profit margin was -2.75%, leaving $TCOM-0.3% with a loss of $85 million. 2022 still suffered from the travel downturn. Revenue was $2.98 billion. But margins managed to get into the green after two years. Profit margin was 7% and the company earned $208.3 million. Last year, the business was already fully recovered. Revenues were $6.28 billion and margins jumped to 22.28%. Net income in 2023 was $1.4 billion.
The company continues to expand its business and reach, but China is still its primary market. While the company has been successful in penetrating other continents, especially Europe, revenue from countries other than China accounted for only 13.42% of all revenue last year. The remaining $5.46 billion came from China.
The company earned most of its revenue from operating online whole-trip and ticketing operations. This segment earned it $2.6 billion last year. Another 38.77% or 2.44 billion of the company's total revenue came from accommodation bookings. Corporate tours then added $318 million, and $443 million came from trips at final destinations, which $TCOM-0.3% also arranges through delegates.
Earnings per share were 62 cents in 2016. Even this, low by today's standards, was well above the market consensus. Analyst estimates were beaten by 60.02%. That has stayed with the company until today. Analysts have always been beaten since then, and they have done so with ease. In 2017, at $1.06 EPS, by 9.52%, and in 2018, when earnings per share were $1.43, by 19.52%. In 2019, EPS has again moved higher than a year ago. At that time, they were $1.54. But the next 3 years were absolutely disastrous. Earnings per share were negative 23 cents in the 2020 covid year. Despite this, a higher decline was expected and the company beat estimates by 48%. In the next two years, EPS came in at 33 and 29 cents. They beat consensus first by 95.99% and then by 100.97%. The year 2023 brought significant earnings per share growth. These came in at $2.74. This was above estimates by 15.15%. This growth mood is expected to continue in the coming years. Thus, by 2027, current forecasts suggest that earnings per share could reach $4.49.
For earnings, the trend was very similar, but not as harsh. In 2016, revenue was $2.77 billion. It was the only year since then that the company has underperformed the market consensus. It was down 0.48%. In fact, the next three years delivered very nice revenue growth. By 2019, they were up to $5.12 billion. In 2020 and 2022, revenues were between $2.8 billion and $3.15 billion. It was a big jump down. The company also went into a loss due to missing money. Last year, however, it was already doing well. Revenue was $6.27 billion. Until 2027, where current estimates go, revenue should continue to increase. By 2027, it could easily double in value.
Since 2017, the tour and ticketing segment has grown from $1.81 billion to $2.6 billion. The lodging-related bookings business has grown from $1.41 billion over the same time period to $2.44 billion in 2023. Revenue from tour sales at final destinations has barely budged. It generated $439 million in 2917 compared to $443 million last year.
Operating expenses
The company's operating costs have only increased from 2010 to 2017. In those 7 years, their quarterly value went from $76 million to $397 million. From this point on ,$TCOM-0.3%management became more concerned about its expenses and started to slowly reduce their value. While maintaining investment in expansion and employee salary increases. By 2020, costs had fallen to a low of $197 million for one quarter. Since that ork, costs have started to rise again. They hit a record high of $469 million in mid-2023. In the last quarter, the company spent $410 million.
Dividend
The company has paid only four dividends in its time on the stock market. These were in 2005, 2006, 2007 and 2008. The dividends were in the range of $0.018 and $0.056. We have not seen any dividend since then.
Valuation/Comparison with peers
The company's valuation has historically been quite high. In 2012, the company's P/E stood at 27 points. This value continued to increase until 2017, when it was a high 75 points. Still, it was nothing compared to what was to come. In 2018 ,$TCOM-0.3%'s P/E hit zero, and quickly rose to 284 when the company started earning again. The P/E ratio has stayed rather lower ever since it just as quickly returned below 50. It was at zero in 2020-2022 thanks to negative EPS. But at the end of 2023, when the company started to do well again, it rose to 307 and is now 111. This is standard practice, so we can almost certainly expect the P/E to fall steadily in the months ahead as earnings per share increase.
