First Read: Tongcheng Travel "1Q26 earnings review: External headwinds to..."

Research evidence excerpt

First Read: Tongcheng Travel "1Q26 earnings review: External headwinds to..."

ch Cons.

Outbound: We estimate outbound transportation/accommodation business accounts

12/26E 1.69 1.65 -2 1.67

for 7-8%/5% of overall transportation/accommodation revenue in 1Q26. We believe

12/27E 1.89 1.83 -3 1.88

this segment is less affected by higher airfare than domestic travel, given lower base, 12/28E 2.08 2.03 -2 2.05

lower user price sensitivity and Tongcheng's concentration in regional destinations.

Hotel management business: Management reiterated that hotel management is its Wei Xiong

secondary revenue growth driver, with expanding hotel network (mainly in the Elong Analyst

segment) and improving operational efficiency, while Wanda has a more mature wei.xiong@ubs.com

+86-21-3866 8883

operating model and stable profitability. Margins: Despite near-term topline

uncertainty, we expect the company to remain on track to deliver 0.5-1.0ppt adjusted Kenneth Fong

net margin expansion in 2Q26/2026, supported by better cost efficiency in service & Analyst

development and G&A expenses from improving operating leverage and AI adoption. kenneth-kc.fong@ubs.com

+852-3712 3890

Estimate changes: lower revenue and earnings in 2Q/2026E Charles Chen

Analyst

We cut 2Q26E revenue estimate by 6.8% to Rmb4.95bn (up 5.9% YoY), mainly to

S1460524020001

reflect the pressure on transportation business, and accommodation to a lesser extent.

charles-za.chen@ubs.com

We assume the weakness to sustain for the rest of the year, and cut 2026E revenue by +86-21-3866 8907

4.1%. We expect the company's cost discipline to cushion the earnings impact, thus

keep our adjusted net margin estimates largely unchanged.

Valuation: maintain Buy with a lower PT of HK$23.0 (from HK$26.5)