Trip.com antitrust investigation concluded; Goldman Sachs maintains Buy rating
AI summary card
Trip.com antitrust investigation concluded; Goldman Sachs maintains Buy rating
SAMR imposed a one-off penalty and confiscation totaling RMB 5.179 billion on TCOM. Goldman Sachs believes the penalty can be covered by liquidity and carries no further restrictions, maintaining its 12-month target price of US$71/HK$560.
- SAMR completed a 6-month antitrust investigation, with penalties including a RMB 3.521 billion fine, confiscation of RMB 1.658 billion in illegal gains, and the return of RMB 122 million in deposits or order guarantees to hotel operators.
- The regulator identified two types of conduct: exclusive cooperation with specially branded hotels, and cross-platform lowest-price requirements for gold-tier hotels and non-branded hotels; TCOM said it fully accepts the decision and will implement rectification measures.
- Goldman Sachs believes that although the fine is higher than some precedents for platform companies, TCOM's RMB 104.0 billion liquidity as of end-1Q26 is sufficient to cover it, and regulators did not require changes to commission rates, GMV share, or the strategic cooperation arrangement with Tongcheng.
- The stock is currently trading at about 11x FY26E P/E, roughly a 30% discount to global comparable Booking.com, representing a relatively wide discount versus the past 2-3 years.
Report interpretation
Overview
This report focuses on the conclusion of Trip.com Group's antitrust investigation. China's State Administration for Market Regulation announced on July 25 that it had completed its 6-month investigation into TCOM and imposed penalties for abuse of dominance in China's online hotel booking market since 2020. Goldman Sachs believes the conclusion helps remove market uncertainty and maintains its Buy rating, earnings forecasts, and target prices unchanged.
Core views
The core view is that the penalty is large in scale but financially manageable, and regulators did not impose further restrictions. TCOM had already stopped the two practices identified by regulators in January, including exclusive cooperation with specially branded hotels and cross-platform lowest-price requirements for gold-tier/non-branded hotels. Goldman Sachs expects the market may interpret the event positively, referencing the historical share price gains of Alibaba and Meituan after their respective investigation conclusions were announced.
Analysis framework
The report uses event-driven analysis, peer regulatory case comparison, liquidity coverage assessment, business impact breakdown, and relative valuation comparison. The analysis focuses on the composition of the fine, rectification measures, potential operating impact, the contribution of the domestic hotel business to group EBIT, and the FY26E P/E discount relative to Booking.com.
Methodology notes
Sum-of-the-parts valuation
Goldman Sachs values Trip.com using the SOTP method, valuing the core travel business at 16x FY26E P/E and associates based on Goldman Sachs' 12-month target price or current market value.
Comparison of growth, financial returns, valuation multiples, and composite factor percentiles
Goldman Sachs' factor profile evaluates growth, financial returns, valuation multiples, and composite percentiles by comparing a stock's key attributes with the market and industry peers.
Potential acquisition probability score
Goldman Sachs uses a 1 to 3 M&A ranking to measure the probability of a company becoming an acquisition target, where 1 represents high probability, 2 medium probability, and 3 low probability; this report discloses the framework as a general methodology explanation.
Goldman Sachs proprietary financial database
Quantum provides historical financial statements, forecasts, and ratio data for in-depth single-company analysis or cross-industry and cross-market comparison.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- TCOM.USCore covered asset, Trip.com Group ADR
- Strengths
- Buy rating, target price of US$71, and 62.7% upside; ample liquidity, and the regulatory conclusion should help improve the risk premium.
- Weaknesses
- The antitrust penalty and confiscation amount is relatively large, and the domestic hotel business contributes significantly to group profit.
- Comparison
- Goldman Sachs compares the market reaction after the regulatory conclusion with the cases of Alibaba and Meituan, and notes that TCOM trades at about a 30% discount to Booking.com.
- Risks
- Regulatory risk, intensifying competition, and slower-than-expected recovery in outbound travel.
- 9961.HKHong Kong-listed shares of the same company
- Strengths
- Buy rating, target price of HK$560, and 63.5% upside; shares the same fundamentals and regulatory-event de-risking logic as the ADR.
- Weaknesses
- Affected by the same antitrust rectification and adjustments in the domestic hotel business.
- Comparison
- Corresponding to the TCOM ADR, Goldman Sachs provides a Hong Kong target price and current price; it is likewise within Goldman Sachs' Buy coverage.
- Risks
- Regulatory risk, intensifying competition, and slower-than-expected recovery in outbound travel.
Key data
- Total one-off penalty and confiscationRMB 5.179 billionIncludes fine, confiscation of illegal gains, and refund of deposits/guarantees.
- Fine amountRMB 3.521 billionCalculated as 7.5% of TCOM's 2025 domestic revenue.
- Confiscated gainsRMB 1.658 billionDerived from the related practices deemed non-compliant.
- Refund of deposits or order guaranteesRMB 122 millionTo be refunded in full to hotel operators.
- LiquidityRMB 104.0 billionAs of end-1Q26, which Goldman Sachs believes is sufficient to cover the penalty.
- Domestic hotel business contributionAbout 40% of group FY25 EBITGoldman Sachs estimate and the main business impact point watched by investors.
- ValuationAbout 11x FY26E P/EThe report says the current valuation is low, at about a 30% discount to Booking.com.
- 12-month target priceTCOM US$71; 9961.HK HK$560Goldman Sachs maintains target prices unchanged.
Impact & implications
The main impact of the event is lower regulatory uncertainty, but platform operating rules will change. TCOM will remove specially branded hotels, terminate gold-tier hotel cooperation arrangements, take down related repricing tools, optimize merchant tiering and traffic allocation mechanisms, and strengthen antitrust compliance. In the short term, Goldman Sachs believes the fine is one-off and manageable, and does not touch key operating constraints such as commission rates, market share, or cooperation with Tongcheng, so the view on the stock is positive; in the medium term, the impact of hotel merchant policy adjustments on domestic hotel revenue and margins needs to be monitored.
Risks
- Ongoing regulatory risk arising from dominant position in China's OTA industry.
- Competition intensity higher than expected, potentially affecting commission rates, traffic allocation, or merchant cooperation models.
- Recovery in outbound passenger traffic slower than expected, dragging on revenue and earnings growth.
- Post-rectification adjustments to the domestic hotel business model may affect profit contribution from a business that accounts for about 40% of FY25 group EBIT.
What to watch
- Management's explanation on the July 27 conference call regarding details of business model adjustments.
- Changes in GMV, revenue, and margins of the domestic hotel business after removing exclusive cooperation and lowest-price requirements.
- New rules for the merchant-tier cooperation model and traffic allocation mechanism.
- Whether further regulatory requirements emerge, especially related to commission rates, GMV market share, or arrangements related to hotel inventory cooperation with Tongcheng.
- Whether the market reprices platform regulatory risk based on the historical experience after the investigation conclusions for Alibaba and Meituan.