$TRIP.COM-S(09961.HK)3Q24 first take: This quarter, Trip.com continued to deliver impressive performance,

1) Driven by the rapid recovery of inbound and outbound business (order volume restored to 120% of 2019 levels) and pure overseas business (hotel and flight bookings increased by 60% year-on-year), Trip.com’s revenue grew by 15.7% this season, accelerating from the previous quarter and exceeding the company's guidance and market expectations of about 13% to 14% growth.

2) From a profit perspective, Trip.com’s operating profit excluding SBC this season was 5.48 billion, with a profit margin of 34.5%, continuing to rise from 33% in the previous quarter. Dolphin Investment Research believes that the increasing proportion of high average transaction value, high conversion rate, and high profit overseas business should be the main contributors to the profit margin improvement. In terms of expectations, compared to the company's guidance of about 5.3 billion in profit and a 33% profit margin, it also slightly beat expectations.

Overall, driven by inbound & outbound and overseas business, revenue growth is accelerating and profit margins continue to expand, clearly still in the best "times." However, we can also see that compared to the company's guidance after the last performance, the actual performance this season did not beat expectations by a large margin.

Since the significant rebound at the end of September, Trip.com has been one of the few stocks with almost no pullback. According to Dolphin Investment Research's calculations, at that time, the market value corresponded to about 15x PE of 2025 GAAP net profit. In the medium to long term, we believe Trip.com can achieve about 10% revenue CAGR and 15% profit CAGR, which is considered a fairly good expectation, and the current valuation is at least neutral. Therefore, for the company's stock price to continue to rise, it needs significantly better performance or guidance to drive the market to continue adjusting future profit expectations. Looking solely at the 3Q performance, the effect on driving the market to adjust expectations is relatively limited, and more attention should be paid to the company's guidance for 4Q, especially for inbound & outbound and pure overseas business.