China’s reopening to boost to Trip.com outlook?
Trip.com was a preferred stock among US hedge funds in the years 2012-2017, but as China’s economy began to slow down and the friction between the US and China increased, investor interest in Chinese equities, including Trip.com, declined and for Trip.com the pandemic was a big blow to the travel business. However, China’s strict Covid policy caused investors to believe China’s policy decision was more successful than the policies in Europe and the US and Chinese equities rallied in 2020 and into early 2021. But as mRNA vaccines were rolled out in the developed world the divergence in policies became apparent and China’s economy continued to slow down as the Covid zero policies constrained the economy. Recently, and under pressure from the public, the Chinese government has chosen to move ahead with reopening the economy taking on the associated Covid risks and this could be good for the outlook for travel activity and thus Trip.com. The Chinese online travel agency platform is expected to report earnings on Wednesday with analysts expecting revenue growth of 22% y/y. Analysts expect revenue to increase 50% y/y in 2023 to CNY 29.6bn.