Daiwa: Reiterates "Buy" rating on TRIP.COM-S (09961), target price HK$508

Daiwa released a research report stating that TRIP.COM-S (09961) announced its second-quarter results for this year. The firm remains constructive on the company's long-term prospects, as international business is becoming a new growth engine, and it is encouraged by management's accelerated execution of share buybacks; at 11.7x 12-month forward P/E, about 40% below the three-year average of 19.8x, the firm views the risk-reward as attractive. It reiterates a "Buy" rating and a 12-month target price of HK$508. The report noted that the company's second-quarter results showed total revenue of RMB15.663 billion, up 5.5% year on year; adjusted operating income of RMB4.365 billion, and adjusted net profit of RMB4.798 billion. On the other hand, second-quarter revenue from the international OTA platform grew more than 50% year on year, contributing about 20% of revenue, while inbound tourism revenue also recorded high double-digit year-on-year growth; management said Trip.com's contribution margin has turned positive. The firm expects third-quarter total revenue to grow 2% year on year to RMB18.8 billion, with an adjusted operating margin of 31%; it also expects the share count to continue declining in the second half, which will provide downside support for the stock price.