Chinese travel site charts course out of virus fog

Tongcheng Travel Holdings

19/03/2020 02:06

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own. Refiles to change Trip.com to "Trip" upon
second reference.)
    By Robyn Mak
    HONG KONG, March 19 (Reuters Breakingviews) - Visibility is
improving for China’s Trip.com  TCOM.O . As most of the world
hunkers down in place, the $12 billion online booking site
reckons it could be through the worst of the virus.
First-quarter sales are expected to halve, but boss Jane Sun
also sees a rebound coming at home, where the epidemic may be
ebbing. It offers a glimmer of hope in a sea of economic gloom.
    Travel has been one of the industries hit hardest by
Covid-19. In China, the start of the outbreak coincided with the
weeklong Lunar New Year festival, a peak time for taking trips.
As a result of quarantines and contagion fears, some $4.4
billion of Trip orders were cancelled. Weak demand, along with
the company’s generous refund policies, will hurt the bottom
line. Its adjusted operating loss may be as much as about $260
million in the first quarter.
    Sun is starting to see light through the fog, though. Even
as international flights are grounded and countries close their
borders, the People’s Republic is gradually lifting curbs. Trip
says hotels and airlines across the country are resuming
business and it anticipates a quick recovery in domestic
tourism. Likewise, smaller peer Tongcheng-Elong  0780.HK 
earlier this month reported a surge in hotel and flight
reservations at the end of February; notably, airline ticket
sales for June also have ticked up as travellers look ahead.
    Despite the serious risk of a resurgence in cases in China,
Trip’s clearer outlook is a far cry from peers such as Expedia
 EXPE.O  and Booking  BKNG.O . Both have recently withdrawn
financial guidance, citing the pandemic. Moreover, Sun and other
executives have gone out of their way to reassure investors and
customers, including taking voluntary pay cuts of up to half
their salaries and guaranteeing cancellations.
    Nasdaq-listed Trip shares were already faring slightly
better for its sector before its latest outlook. After falling
by more than a third since the start of the year, they are
trading at some 17 times forward earnings, according to
Refinitiv data, more than twice as high as Expedia’s valuation.
That’s at least one small encouraging sign for those only
starting their coronavirus journey.
    On Twitter https://twitter.com/mak_robyn
https://twitter.com/mak_robyn,
    
    CONTEXT NEWS
    - Chinese online travel agent Trip.com on March 18 reported
a 10% increase in fourth-quarter revenue, to 8.3 billion yuan
(1.2 billion), from a year earlier, but expects a decrease of
45%-50% in the first quarter.
    - Earnings for the three months ending Dec. 31 were 2
billion yuan, compared to a net loss of 1.2 billion yuan over
the same span in 2018.
    - Following the results, Trip.com’s Nasdaq-listed shares
gained 10.7% to $23.95 in after-hours trading. 
    - For previous columns by the author, Reuters customers can
click on  MAK/ 
    - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Earnings results    https://investors.trip.com/news-releases/news-release-details/tripcom-group-limited-reports-unaudited-fourth-quarter-and-full
Trip.Com Group Sees Q1 2020 Rev Down About 45-50%     
 urn:newsml:reuters.com:*:nASA00I8T
BREAKINGVIEWS-Baidu's Ctrip sale leaves room for risky wandering
    urn:newsml:reuters.com:*:nL3N26I09G
BREAKINGVIEWS - Jaunts abroad offer useful cover for China's
Ctrip     urn:newsml:reuters.com:*:nL4N22W1PP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Edited by Jeffrey Goldfarb and Jamie Lo, Research by Sharon
Lam)
 ((robyn.mak@thomsonreuters.com; Reuters Messaging:
robyn.mak.thomsonreuters.com@reuters.net))