Trip.com (TCOM US, 9961 HK) exceeded expectations in terms of revenue, net income, and EPS, with revenue increasing by 29% to RMB 11.90B ($1.6B) from the previous quarter. This growth was driven by a significant increase in both domestic and outbound travel demand in China, with inbound tourist travel increasing by 400% year over year. CEO Jane Sun highlighted a 20% increase in domestic hotel bookings and a 30% increase in air ticket bookings year-over-year. The company expects outbound tourism to reach 80% of 2019 levels, and plans to attract more users from broader Asia, which is 1.5X larger than China.
Despite Trip.com’s positive performance, Asian markets experienced a sell-off following concerns raised by Palo Alto Network’s post-close miss. Hong Kong stocks underperformed, with only 49 advancing stocks compared to 444 decliners. However, the Hang Seng and Hang Seng Tech have still outperformed key global indices year-to-date. Growth stocks were affected by Li Auto’s Q1 miss and weak guidance, leading to a sell-off in EV stocks. Xpeng, on the other hand, beat analyst expectations on all three metrics.
In Hong Kong, Tencent, Li Auto, Meituan, Alibaba HK, and JD.com were among the most heavily traded stocks. Southbound Stock Connect saw a net buy of $60mm, though there was a big outflow from HK Tracker ETF. Mainland China was relatively stable, with the financial media focusing on the recent PBOC real estate policy support. The Hang Seng and Hang Seng Tech fell, with all sectors experiencing negative movements. Mainland China’s Shanghai, Shenzhen, and STAR Board also saw declines, with the energy, financials, and utilities sectors performing better than materials, healthcare, and discretionary sectors.
In the upcoming webinar, experts will discuss the potential drivers of a sustained equity bull market in China. Additionally, a webinar on the impact of the US election on US-China relations will be held on June 11th. Readers are encouraged to register for these informative sessions. The latest article on China’s recent stock market rally is also available for reading. In terms of exchange rates and prices, CNY per USD remained stable, while yields on government bonds slightly decreased. Copper and steel prices saw minor increases.
Overall, Trip.com’s strong earnings performance reflects a growing travel demand in China, with positive outlooks for outbound tourism. Despite market sell-offs in Asia, the company remains optimistic about its future growth and plans to attract more users from broader Asia. Investors are encouraged to stay updated on upcoming webinars and informative content, as well as monitor exchange rates and commodity prices for potential investment opportunities.
