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<Research> CICC Cuts TONGCHENGTRAVEL (00780.HK) TP to HKD22 on Oil Price Surge Pressuring Transport and Lodging Booking Biz
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CICC published a report stating that TONGCHENGTRAVEL (00780.HK) delivered 1Q results exceeding market expectations. Revenue rose 14% YoY to RMB5.01 billion, 2% above market forecasts, mainly driven by better-than-expected performance in the accommodation and hotel management businesses. Non-IFRS net profit reached RMB936 million, 2.8% above market expectations, implying a Non-IFRS net margin of 18.7%. The report noted that rising oil prices have pressured the transportation and accommodation booking businesses. In 1Q, transportation revenue increased 6% YoY, 1.3% below market expectations, primarily due to geopolitical volatility and higher oil prices leading to reduced flight capacity, while higher fuel surcharges suppressed demand. The impact persisted into 2Q, with transportation revenue projected to decline 3% YoY in the quarter. In 1Q, revenue from the companys accommodation booking business grew 15% YoY, with steady YoY growth in room nights and ADR. The proportion of room nights from three-star and above hotels increased by 4 ppts YoY. Accommodation booking revenue is expected to rise 8% YoY in 2Q, with domestic hotel room nights up 5% YoY and ADR recording low single-digit YoY growth, while take rates remain stable YoY. Weakness in transportation has also affected accommodation booking revenue to some extent due to reduced cross-selling and fewer long-haul trips. Considering the impact of higher oil prices on business growth, CICC lowered its 2026/2027 revenue forecasts by 3% and 4% to RMB21 billion and RMB22.8 billion, respectively, and cut its 2026/2027 Non-IFRS net profit forecasts by 2% and 5% to RMB3.85 billion and RMB4.27 billion, respectively. The broker maintained its Outperform rating. Given macro volatility, it lowered its valuation basis and, based on a projected 12x PE for 2026, reduced the TP by 21% to HKD22. (ha/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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