To Keep Reading
Trip.com Group Limited (Nasdaq: TCOM) is a one-stop travel service provider consisting of Trip.com, Ctrip, Skyscanner, and Qunar. Founded in 1999 as a China-based online travel agency, it has grown to become one of the largest online travel companies in the world.
One of the things that I like to do when analysing a company is to study its track record. Though the past is no guarantee of future performance, historical information is one of the most reliable things that we can use as our basis to forecast what lies ahead.
And this brings me to the main purpose of this article, which is to share with our readers a few useful trends from Trip.com’s historical performance over the last five years.
The table below gives a snapshot of the company’s important financial metrics from FY2014 (financial year ended 31 December 2014) to FY2018 (financial year ended 31 December 2018):
Source: Trip.com’s 2018 Annual Report
With that, let’s explore the key trends from the numbers above.
Revenue and profits
First of all, revenue grew from RMB 7.3 billion (US$1.04 billion) to RMB 31.0 billion, up by 325% during the period. This translates to a compound annual growth rate (CAGR) of 44% for the period, which is an impressive number!
There’s however, one slight negative point to note from the growth number above, which is the decline in growth rates. For example, the annual growth rate for FY18 and FY17 was 16% and 40%, respectively, both below the 44% growth rates that we have seen from the above.
In other words, barring any unexpected events, investors might have to reduce their expectations of growth in the coming years.
Secondly, we can see that the company has turned from a loss-making position (based on income from operations) of RMB 151 million in 2014 to a profit position of RMB 2.6 billion in 2018. Overall, that’s a good sign.
Yet, investors should be aware of the inconsistency of the operating profits over the years. For example, after turning in an operating profit in 2015, the company fell back into an operating loss position in 2016. Also, its operating profit in 2018 is lower than that of 2017 despite reporting higher revenue.
In other words, investors need to be comfortable with such fluctuations in operating profit when investing in Trip.com’s stock.
Overall, Trip.com has demonstrated a good growth track record in the last five years. Yet, investors should also be aware of its slower growth rates lately, as well as its highly volatile profits.
4 rules in winning HK stock market
Thinking about investing in Hong Kong stocks? Discover 4 simple ways to turn it into your own “money tree”. We outline practically everything you need to know about the Hong Kong market in our latest report. Click here to see how you can grab your FREE copy of “A Foolish Guide for Hong Kong Investors” today.
#1 HK stock pick
Want to invest in Asian markets? We discovered 1 Hong Kong stock we believe will skyrocket in the years to come. Click here now to download your FREE stock report - and see how it can potentially generate massive returns for you.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.