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<Research>JPM Expects TRIP.COM to Face Antitrust Fine of Max. RMB6.2B; Investigation Viewed as Individual Case Rather Than Tightening of Sector-wide Regulation
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JPMorgan believed that TRIP.COM-S (09961.HK) is being investigated by China's State Administration for Market Regulation (SAMR) for alleged monopoly practices based on complaints or evidence, which is an enforcement measure targeting individual companies rather than an overall tightening of industry regulation. The broker expected TRIP.COM-S' share price to react negatively in the coming days as the market is digesting the potential cash fine and the regulatory uncertainty that may persist for several months. Regarding penalties, referencing the provisions of the Anti-Monopoly Law, JPMorgan estimated that TRIP.COM-S will be fined between RMB600 million and RMB6.2 billion. Meanwhile, the Company's existing monetization mechanisms in China may need adjustment, which could have a more significant impact on fundamentals, including a potential decline in effective commission rates and increased bargaining power for suppliers. Furthermore, under tightened 'voluntary' and transparency requirements, the growth of high-profit value-added services monetization, such as advertising and placements, may slow down. Therefore, the broker now rated TRIP.COM-S at Overweight, with target prices of $700/ US$90 for TRIP.COM-S' H-shares/ US stock. AASTOCKS Financial News Website: www.aastocks.com |
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