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Economic Moat


Capital Allocation

PREMIUM Delivered Domestic Recovery in Third Quarter, Eyes on International Businesses

Dan Baker Senior Equity Analyst

Analyst Note

| Dan Baker |

Unsurprisingly, narrow-moat reflected a strong domestic recovery in the third quarter, with the support of the October Golden Week holiday. While net revenue guidance for the fourth quarter is between a decline of 37% and 42%, in line with our estimate, we believe the near-term story of domestic recovery is now largely priced in, after a 33% run in the stock price since the end of June. The quarter-to-date run-rate in domestic hotel and air ticketing reservation displayed single-digit growth, representing a complete recovery while we expect some price pressure to remain. We see limited further upside from the domestic businesses. We expect the focus going into 2021 to be a recovery in international business. The company expects the international business to pick up in the second half of 2021 given the lead time of a mass rollout of vaccines, which aligns with our base-case assumptions. We slightly increase our fair value estimate from to USD 40 from USD 38 after updating the Chinese yuan currency assumption while a faster-than-expected recovery of the coronavirus situation worldwide could catalyze the share price.

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Company Profile

Business Description is the largest online travel agency in China. The company generated about 77% of sales from accommodation reservations and transportation ticketing in 2019. The rest of's revenue comes from package tours and corporate travel. Most of its sales come through websites and mobile platforms, while the rest come from call centers. The company was founded in 1999 and listed on the Nasdaq in December 2003.

968 Jin Zhong Road
Shanghai, 200335, Cayman Islands
T +86 2134064880
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 44,300