UOB Kay Hian has released a research report, raising the target price for Trip.com Group-S (09961) to HKD 508 while maintaining a "Buy" rating.
The bank noted that the State Administration for Market Regulation has formally imposed a total administrative penalty of RMB 5.18 billion on Trip.com, including confiscation of illegal gains of RMB 1.66 billion and a fine of RMB 3.52 billion, for alleged abuse of market dominance through exclusive partnerships and minimum pricing requirements.
UOB Kay Hian believes that the punishment decision officially concludes the antitrust investigation, removing the core regulatory uncertainty surrounding the company.
The bank stated that while compliance adjustments and related operational changes may cause short-term disruption to domestic business, leading to an annual revenue growth slowdown of 3% to 8% in the second quarter of 2026, the overall impact on core profitability is relatively limited given that overseas business still maintains a high growth rate of over 30%.
UOB Kay Hian expects that, with the regulatory probe concluded and risks released, the company's valuation discount will gradually narrow, paving the way for a re-rating. The new target price of HKD 508 corresponds to a 2027 forecasted price-to-earnings ratio of 16.7 times, which is comparable to global peers.
Management is relatively cautious in its guidance for the second quarter of 2026's performance: net revenue is expected to grow 3% to 8% year-on-year; accommodation booking revenue is anticipated to grow 8% to 13% year-on-year to RMB 6.8 billion to RMB 6.9 billion; transportation ticketing revenue is forecast to decline 0% to 5% year-on-year to RMB 5.2 billion to RMB 5.3 billion, dragged down by a 20% to 30% drop in domestic transportation revenue following policy and value-added service adjustments; and travel vacation and business travel segments are expected to grow 8% to 13% and 11% to 16% year-on-year, respectively, both showing resilience.
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