Antitrust investigation concluded; Goldman Sachs maintains Buy rating on Trip.com Group
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Antitrust investigation concluded; Goldman Sachs maintains Buy rating on Trip.com Group
Goldman Sachs believes that after TCOM was given a one-off Rmb5.179bn penalty by SAMR, regulatory uncertainty has declined significantly. Although the fine is large, it can be covered by Rmb104bn in liquidity, and the 12-month target price of US$71 / HK$560 is maintained.
- SAMR imposed a one-off Rmb5.179bn penalty on TCOM, including a Rmb3.521bn fine, confiscation of Rmb1.658bn in illegal gains, and return of a Rmb122mn deposit.
- Goldman Sachs believes the share price may react positively because the two relevant practices had already ceased in January, and regulators did not require adjustments to commission rates, GMV market share, or hotel inventory cooperation with Tongcheng.
- TCOM is currently valued at about 11x FY26E P/E, around a 30% discount to global peer Booking.com, representing the widest discount range in the past 2-3 years.
- The domestic hotel business is a key investor focus, and Goldman Sachs estimates it will contribute about 40% of group EBIT in FY25.
Report interpretation
Overview
This report focuses on the conclusion of Trip.com Group's antitrust investigation in China's online hotel booking market. SAMR announced the completion of its roughly six-month investigation and determined that the company had abused its dominant market position since 2020. The total penalty amounts to Rmb5.179bn, while the company is also required to stop the relevant cooperation arrangements, return deposits, and rectify platform rules. Goldman Sachs maintains its Buy rating, viewing the event more as a one-off regulatory resolution rather than a trigger for earnings forecast or target price revisions.
Core views
The core view is that the penalty amount is higher than the proportions seen in previous antitrust cases involving Alibaba and Meituan platforms, but TCOM has sufficient liquidity to absorb the one-off cost; more importantly, the regulatory conclusion did not further restrict commission rates, market share, or strategic inventory cooperation, so the market may interpret it as the removal of major uncertainty. Goldman Sachs did not revise earnings forecasts or target prices because of this news and maintains its Buy rating on TCOM/9961.HK.
Analysis framework
The report uses an event-driven analysis combined with comparable cases: first breaking down the composition of the SAMR penalty and rectification requirements, then comparing the share price performance of Alibaba and Meituan after their investigations concluded, and combining TCOM's liquidity, domestic hotel business contribution, valuation discount, and 12-month target price to assess the investment implications.
Methodology notes
Sum-of-the-parts valuation
Goldman Sachs uses the SOTP method for Trip.com's 12-month target price, valuing the core travel business at 16x FY26E P/E, while associates or related assets are included based on Goldman Sachs' 12-month target prices or current market values.
Comparison across growth, financial returns, valuation multiples, and composite factors
Goldman Sachs Factor Profile is used to compare individual stocks with the market and industry peers on growth, financial returns, valuation multiples, and composite metrics, with the relevant indicators based on analyst forecasts and converted into percentiles.
Referencing the share price reactions after the end of the Alibaba and Meituan investigations
The report notes that Alibaba and Meituan shares rose about 8% and 9%, respectively, after the conclusion of their antitrust investigations and penalty announcements, illustrating that regulatory resolution may be viewed by the market as uncertainty fading.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- TCOM.USCore covered asset
- Strengths
- Buy rating maintained, 12-month target price of US$71, implied upside of 62.7%; ample liquidity and lower regulatory uncertainty.
- Weaknesses
- The domestic hotel business is affected by antitrust rectification, and related business models and platform rules need adjustment.
- Comparison
- Compared with Booking.com, it currently trades at about a 30% valuation discount; historical cases involving Alibaba and Meituan show that share prices reacted positively after investigation conclusions.
- Risks
- Regulatory risk, intensified competition, and a slower-than-expected recovery in outbound travel.
- 9961.HKHong Kong-listed line of the same company
- Strengths
- Buy rating maintained, 12-month target price of HK$560, implied upside of 63.5%.
- Weaknesses
- Like the ADR, it is exposed to regulation in China's OTA industry and adjustments to hotel cooperation models.
- Comparison
- The target price table lists both the TCOM ADR and 9961.HK, with consistent valuation logic.
- Risks
- Execution of regulatory rectification, profitability changes in the domestic hotel business, industry competition, and the pace of outbound travel recovery.
Key data
- Total penaltyRmb5.179bnIncludes the fine, confiscated gains, and returned deposit.
- Fine amountRmb3.521bnCalculated as 7.5% of TCOM's 2025 domestic revenue.
- Confiscated illegal gainsRmb1.658bnRelates to gains generated from the practices deemed non-compliant.
- Returned depositRmb122mnReturned to hotel operators as seized deposits or order guarantee deposits.
- LiquidityRmb104bnAs of the end of 1Q26, the report believes this is sufficient to cover the one-off penalty.
- TCOM target price and upsideUS$71，62.7%Based on the current price of US$43.64.
- 9961.HK target price and upsideHK$560，63.5%Based on the current price of HK$342.60.
- Domestic hotel business contributionAbout 40% of FY25 group EBITThis is Goldman Sachs' estimate and a key focus of the investor call.
- Current valuation11x FY26E P/EThe report says this represents about a 30% discount to Booking.com.
Impact & implications
The short-term impact is skewed positive: the fine's resolution reduces antitrust investigation uncertainty, and the company has committed to 19 rectification measures, including canceling designated-brand hotels, terminating gold-tier hotel and minimum-price arrangements, optimizing platform rules, and strengthening antitrust compliance. The medium-term impact depends on changes in traffic allocation, merchant cooperation models, and pricing mechanisms in the domestic hotel business after rectification. Goldman Sachs' view is that there is currently no evidence requiring cuts to earnings forecasts or target prices.
Risks
- Regulatory risk in China's OTA industry, especially risks related to the company's market position in online hotel booking.
- Competition intensity exceeding expectations, which may affect commission rates, traffic allocation, and hotel supply cooperation.
- A slower-than-expected recovery in outbound travel traffic, which may weigh on growth in the core travel business.
- If post-rectification changes to merchant tiering, traffic mechanisms, and pricing rules affect hotel business efficiency, they may create earnings pressure.
What to watch
- Details from the company's July 27 conference call on business model adjustments.
- Changes in GMV, revenue, and EBIT of the domestic hotel business after canceling designated-brand hotels, gold-tier hotels, and minimum-price requirements.
- Progress in implementing rectification measures under follow-up SAMR supervision and public oversight.
- Whether TCOM's valuation discount relative to Booking.com narrows.
- Whether hotel inventory cooperation with Tongcheng remains stable.