$Trip.com(TCOM.US) As a "small but beautiful" company in the post-pandemic era of Chinese concept stocks, after the fourth quarter financial report was released, it directly plummeted by 10cm.

Dolphin Research mentioned in the financial report interpretation that this company has always had a valuation premium among Chinese concept stocks, which is actually composed of two parts:

a. After the supply-side clearing during the pandemic, in the inbound and outbound travel sector, Trip.com almost monopolizes the market, with inbound and outbound + pure overseas (Trip.com) driving revenue to achieve an alpha higher than the industry.

b. Moreover, inbound and outbound travel is a high-margin business, and its high growth will bring higher profit margin space.

In the fourth quarter financial report, the logic of the first part still holds, but the key is that the second part has collapsed. Originally, in inbound and outbound travel, it theoretically does not need to invest too much in marketing expenses, but the marketing expenses in the fourth quarter were significantly too high, with the absolute value of expenses almost no different from the peak travel season in the fourth quarter.

Therefore, the explanation for the sustainability of the high growth in marketing expenses during the conference call and callback is very important.

At this point, the guidance provided by the company is very disappointing:

In the full-year guidance for 2025,

a. Revenue and gross margin are basically within the expected range;

b. The key issue is the investment in Trip.com, as the pure overseas business enters an "aggressive" mode. The increase in hiring efforts has led to administrative expenses, which could have grown in single digits, increasing at a rate of 15%.

Marketing expenses will be between 23-24%, which is still relatively high, also due to Trip.com.

Ultimately, the adjusted operating profit guidance for 2025 is only 17 billion, while Dolphin Research initially thought an average of 5 billion per quarter would yield at least 20 billion for the year, which is similar to the market's expectation of Dolphin Research—19.5 billion.

How to understand this issue? My own feeling is that this statement indicates that during the pandemic years, Trip.com basically maintained its basic operational model and did not expand into anything new.

Therefore, the end of the pandemic does not mean the beginning of reaping rewards, but rather a return to tilling the land.

In this case, funds can only escape with a 10% drop.

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