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Trip.com: Gloomy Outlook Limits The Bulls?

Written by Larince Zhang

Trip.com Group Limited, a Chinese multinational online travel company founded in 1999, which engages in integrating a wide range of travel products, services and differentiated travel content, as well as on-the-go support to travellers around the world, is estimated  to report Earnings, Monday June 27 after the US market close.

图 1:Trip.Com  money.cnn

Despite industry fluctuations and weaker seasonality, the company delivered a solid performance in general as it remained adaptive to fast-changing conditions, continued to expand product offerings and to improve content capabilities and implemented strict control on the operational cost. Market recovery from the pandemic has also served as a stepping stone to the consistent results. According to the company’s financial report released in March 2022, net revenue and adjusted EBITDA improved by 9% and 6% respectively  for the full year 2021.

For the upcoming earnings announcement, consensus estimate for sales stood at $4.0B, up 5.26% from the previous quarter but down -32.20% from the same period last year. On the other hand, earnings per share (EPS) is expected to hit –$0.48, slightly up 11.11% from the previous quarter, but down -142.48% from the same period last year.

图 2:Air Passenger Market in Detail – March 2022IATA

Broader re-openings and loosening of travel restrictions in many countries have led to a surge in travel demand. According to latest data released by the International Air Transport Association (IATA), total traffic (namely revenue passenger kilometres, or RPK) over Europe and North America have improved significantly by 246.9% and 96.5%. RPK over Asia-Pacific is down -17.9% following Omicron-related restrictions. Trip.com has its businesses running in North America, Europe, and Asia. Thus, an increase in RPK over countries in this region shall fundamentally benefit the company. Some countries in Asia (for instance, Singapore, Malaysia, Bangkok, South Korea) which have loosened Covid restrictions may serve as another tailwind.

 3:National Index – May 2022 Ipsos

On the downside, there are undeniably travel price hikes following rising inflation, which may derail travel recovery, though, that may be “by the end of the year and for 2023”. On a wider scale, global consumer confidence remains on a downward track. According to Ipsos, a significant drop in value of a number of indicators namely National index, Investment Index and Jobs Confidence Index over various countries signalled a gloomy economic outlook – a headwind for development of companies.

Technical Analysis:  

The Daily chart displayed $TCOM share price saw its highest price this year at $30.70 (15th February), before hitting bottom later at $14.12. This is a historical new low since the outbreak of Covid-19 pandemic ($20.10 recorded on 18th March 2020). The company’s share price remains range-bound during Q2 2022 (Upper range: $25.25 – $25.97; Lower range: $18.15 – $18.55). Currently, $23.43 serves as minor resistance. A break above this level may indicate possibility for the bullish momentum to extend towards the upper range $25.25 – $25.97, followed by $29.18 – $29.63. On the other hand, $21.44 serves as the nearest minor support. A bearish break below the said support may indicate downside potential for the company share price to test the next support at $19.87, followed by the lower range $18.15 – $18.55.

About the author

Larince Zhang

长达八年的实盘操作与市场分析经验。涉足的金融产品包含外汇、大宗商品、股指、商品期货、指数期货以及股票。大学主修金融学,秉持着学以致用的心态务必把课堂上所学的知识与临场实践经验相结合。 经过多年交易经验的积累与总结,坚信“大道至简”四字箴言。价格的变动即是幕后人为交易买卖所驱使。坚信市场考验的不是技术,而是人心。唯有正确的交易认知、缜密的策略布局与严谨的资金管理,方才是成熟交易的真谛。

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