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<Research>JPM: TRIP.COM-S Has Limited Structural Risks, Currently Undervalued but Not Significantly
Recommend 29 Positive 42 Negative 24 |
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China's State Administration for Market Regulation (SAMR) has initiated an antitrust investigation into TRIP.COM-S (09961.HK), but hasn't yet disclosed the specific behaviors under review, according to a JPMorgan research report. The broker's basic assumption is that the review focuses on TRIP.COM-S' reported "price adjustment tool", an automatic repricing mechanism that resets certain hotel room rates on TRIP.COM-S' platform to the lowest available online price, resulting in outcomes similar to most-favored-nation treatment or price parity clauses. JPMorgan's conclusion is constructive. Even if the SAMR requires TRIP.COM-S to stop automatic repricing (or otherwise restricts price parity-like outcomes), the broker expects this will not materially disrupt TRIP.COM-S' domestic hotel distribution model. Considering TRIP.COM-S' dominant position in the online travel agency market (about 70-80%), hotels have a strong incentive to maintain competitive prices on the TRIP.COM-S platform to protect their exposure and booking volumes, limiting the likelihood of significant system-wide repricing away from the TRIP.COM-S platform. Trip.com (TCOM.US) closed at a price corresponding to a 15x 2026 forecasted P/E ratio on January 16, 2026. JPMorgan believes this isn't a significantly undervalued level because: 1) a 15x P/E ratio is at the low end of the valuation range for China's leading internet stocks (i.e., attractive but not an absolute mispricing); and 2) current market consensus expectations haven't yet reflected the possibility that the company may intentionally suppress its earnings during the investigation and/or rectification period. JPMorgan set its target prices for Trip.com (TCOM.US) at USD90 and for TRIP.COM-S (09961.HK) at HKD700, with a rating of Overweight. AAStocks Financial News |
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