Trip.com needs a spark from China’s first post-pandemic ‘golden week’ to recharge US$16 billion stock rally
- Shares of Shanghai-based Trip.com have been flattish lately despite having added US$16 billion in market value since November
- Initial data showed travel bookings, searches for hotels and flights have surpassed levels seen in 2019 before the Covid-19 outbreak
The first post-pandemic “golden week” could not have come soon enough to test the strength of China’s economic rebound. After a mixed bag of economic data, investors will be banking on a spending binge to light up the struggling equity market.
The early signs are encouraging. Air ticket bookings through Wednesday were 37 per cent above the level during the same May Day holiday in 2019, before the Covid-19 outbreak, according to Shenwan Hongyuan, a Shanghai-based brokerage. The average ticket price rose 41 per cent to 1,137 yuan (U$164.4).
Data generated by Trip.com, China’s biggest onshore travel operator, also painted a rosy scenario. First-day bookings in Zibo city in eastern Shandong province, for example, grew 40-fold from a year earlier, while hotel bookings surged 800 per cent versus 2019.
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That could give Trip.com, one of the market’s top picks in China’s recovery play, a much-needed spark after recent doubts about the economic outlook. Despite adding 50 per cent or US$16 billion in combined market value in Hong Kong and New York since November, the stock has gone stale in the past month.
“The good reading from travel bookings suggests the recovery in consumption has more legs, at least for this quarter,” said Chris Liu, a portfolio manager in Hong Kong at Invesco. “The market focus will gradually shift to economic data and corporate earnings as China’s growth has returned to pre-pandemic trajectory.”
That makes its first-quarter earnings report on May 15 a key event to watch. The Shanghai-based group is forecast to make 818.6 million yuan of profit based on global accounting standards, according to Bloomberg data. It lost 989 million yuan a year earlier.
Trip.com posted a 1.4 billion yuan profit in 2022 to end two years of losses. The company survived by cutting operating costs before China lifted a ban on international travel and fuelled demand for its services.
