According to Guosheng Securities, with the recovery of tourism, Trip.com's valuation is expected to return to the market's average level.
Culture and tourism industry
The shock of COVID-19 negatively affected tourism and travel leaders such as trip.com took a serious hammering. However, before the third quarter of 2020, most of China's major business segments returned to their pre-COVID levels, especially in the food and travel industry. Although there are many uncertainties for global tourism during these (hopefully) later periods of the pandemic, the emergence of vaccines will help global markets resume travel activities.
Trip.com's financial statements showed a massive improvement compared with the last quarter, even if it did not fully return to the previous year's performances. Specifically, its net revenue increased by 73% to CNY 5.5 billion in the third quarter of 2020.
When looking deeply into components of its revenues, accommodation and transportation ticketing are two main sectors. As for accommodation, it accounted for 45.45% of the whole revenue, a 98% rise from the previous quarter. The transportation ticketing share occupied 34.54%, showing a 66% increase compared with the last quarter. This was the result of the recovery of the Chinese domestic market.
As the winter is coming, a negative impact from COVID-19 will still resonate. Trip.com's revenues are expected to drop around 37% to 42% in the fourth quarter of 2020. Watchers of the industry hope the coming of vaccines will help to improve it.