Trip.com Group opens down 3.85% as Q1 net profit falls 41.6%

Trip.com Group reported a 41.6% drop in Q1 net profit to RMB2.5 billion, despite revenue rising 17.2%.

"The China internet sector will remain volatile in the short term," UBS analysts said in a note, naming Tencent, Alibaba, JD.com and NetEase as top picks while flagging margin pressures across the space.

Net revenue reached RMB16.2 billion in the first quarter, up 17.2% from a year earlier. Adjusted EBITDA rose 13.7% to RMB4.83 billion, though the margin contracted one percentage point to 30%. Non-GAAP net profit fell 6.8% to RMB3.91 billion. Basic earnings per share came in at RMB3.85.

The profit decline despite top-line growth shows rising cost pressures in China's travel recovery. Shares opened at HKD340 in Hong Kong, down 3.85%, with 91,800 shares traded in pre-market negotiated transactions worth RMB31.2 million. In US after-hours trading, Trip.com Group (TCOM.US) fell 3.5% to $44.68.

The results highlight the challenge facing Chinese travel platforms as competition intensifies and consumer spending remains uneven. Revenue growth of 17.2% marked a deceleration from prior quarters, while the EBITDA margin slipped to 30% from 31% a year earlier. Short selling data showed HK$136.8 million in Trip.com shares shorted on June 24, representing 15.3% of total turnover.

The company did not disclose forward guidance or a dividend for the quarter. Consensus estimates were not immediately available for comparison.

The margin compression shows that Trip.com's post-pandemic travel recovery is giving way to a more competitive environment where cost control will be key. The next catalyst for the stock is the summer travel season in China, which will test whether demand can outpace rising costs.

This article is for informational purposes only and does not constitute investment advice.