Intrinsic Value Trip.com Group Limited (9961.HK)

• Previous Close: HK$481.80
• Intrinsic Value: HK$1,537.81
• Upside potential: +219%

Stock Valuation Context

Business Model And Market Position

Trip.com Group Limited operates as a comprehensive travel service platform, serving as a dominant online travel agency (OTA) in China with significant international presence. The company generates revenue primarily through commission-based models for hotel bookings, transportation ticketing, and packaged tours, while also offering corporate travel management solutions and ancillary services. Operating under multiple brands including Ctrip, Qunar, Trip.com, and Skyscanner, the company leverages its extensive supplier network and technological infrastructure to provide end-to-end travel solutions. Its market position is strengthened by deep integration with China's travel ecosystem and growing cross-border travel services, positioning it as a key beneficiary of Asia's expanding travel market. The platform's multi-brand strategy allows for targeted market segmentation, catering to both domestic Chinese travelers and international customers through localized offerings and global reach.

Revenue Profitability And Efficiency

The company reported robust financial performance with HKD 53.3 billion in revenue and HKD 17.1 billion net income, demonstrating strong operational efficiency. Operating cash flow of HKD 19.6 billion significantly exceeded capital expenditures, indicating excellent cash generation capabilities. The business maintains healthy margins through its asset-light agency model and scalable technology platform.

Earnings Power And Capital Efficiency

Trip.com exhibits substantial earnings power with diluted EPS of HKD 24.78, reflecting efficient capital allocation and operational leverage. The company's platform model enables high incremental margins on additional transactions without proportional cost increases. Strong cash conversion from operations supports continued investment in technology and market expansion.

Balance Sheet And Financial Health

The balance sheet shows financial strength with HKD 48.4 billion in cash and equivalents against HKD 40.3 billion total debt, providing ample liquidity. The conservative financial structure is supported by strong operating cash flows, positioning the company well for strategic investments and market opportunities while maintaining financial flexibility.

Growth Trends And Dividend Policy

The company demonstrates growth through market share expansion and travel industry recovery, supported by a dividend per share of HKD 2.34. This balanced approach combines shareholder returns with reinvestment in technology and global expansion, reflecting confidence in sustained cash flow generation and future growth prospects.

Valuation And Market Expectations

With a market capitalization of approximately HKD 375 billion, the market appears to value Trip.com's dominant position in China's travel market and recovery trajectory. The low beta of 0.027 suggests relative stability compared to broader market movements, reflecting investor confidence in the company's resilient business model.

Strategic Advantages And Outlook

Trip.com's strategic advantages include its multi-brand architecture, deep China market penetration, and technological capabilities in travel services. The outlook remains positive given Asia's travel market growth, digital adoption trends, and the company's ability to capture both domestic and international travel demand through its comprehensive platform offerings.

Sources

Company annual reportsHong Kong Stock Exchange filingsInvestor presentations