Tongcheng Travel Shares Rise After Posting Higher Profit

Dow Jones
21 Mar
 

By Kimberley Kao

 

Tongcheng Travel shares rose sharply after the company reported higher profit and as investors turned more upbeat on its outlook.

The Chinese travel company's shares rose 9.1% to 20.05 Hong Kong dollars, equivalent to US$2.58, early Friday, outperforming the benchmark Hang Seng Index, which was 0.7% lower.

The surge came after Tongcheng Travel said late Thursday that fourth-quarter net profit jumped on greater "operational efficiency and optimized marketing strategies."

Analysts said the company's margins continued to show improvement and the latest results beat market consensus.

"We take further comfort in the management's confidence in improving its market shares and margins this year" and outgrowing the travel market by two- or three-fold, analysts at J.P. Morgan Securities said in a note. The stock still trades at a discount that appears "too cheap to ignore" as Tongcheng will likely have better earnings growth this year from improving margins, J.P. Morgan said.

Its outbound business could break even this year, as the company optimizes spending, Citi Research analysts said in a note. Strong growth for its Tongcheng travel app will also help with margins, which still has room for user growth, Citi's Brian Gong and Alicia Yap said.

Tongcheng Travel's fourth-quarter net profit rose 13% from the same period a year earlier, to 350.85 million yuan, equivalent to US$48.4 million. Revenue rose 35% to 4.24 billion yuan.

Jefferies analysts said the company looks set to continue gaining market share this year.

 

Write to Kimberley Kao at kimberley.kao@wsj.com

 

(END) Dow Jones Newswires

March 20, 2025 23:08 ET (03:08 GMT)

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