Investor Presentation - Tongcheng-Elong
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Investor Presentation
March 2020
Disclaimer
The materials used in this investors presentation are being furnished to you for your information only, which shall be kept in strict
confidence.
No representation or warranty, express or implied, is made by Tongcheng-Elong Holdings Limited (the “Company”) or its
connected person, or any of their respective directors, officers, employees, advisers or representatives as to, and no reliance
should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. The
information contained in the materials does not constitute any legal, regulatory, accounting or tax advice to you.
This presentation may contain the Company’s opinions on, and plans and expectation in the future. Any such prospects and
forward-looking statements are based on the current expectation or opinion of the management and a number of assumptions
and estimations about the operations of the Company, as well as factors which are beyond the Company’s control. The data
and opinion contained herein are based on the information as at 31 December 2019, which are subject to change without notice.
Such data and opinion have not been, and will not be, updated to reflect any developments which may occur after the date of
preparing this presentation materials. No reliance should be placed on the data contained herein which is based on the
information as at 31 December 2019 or the prospects and forward-looking statements which do not guarantee the future
performance of the Company. You may be liable for any unauthorized leakage of the information which may have a material
effect on the share price and the interest of the Company and the shareholders.
Certain information in the materials contains information sourced from different third parties, which has not been independently
verified by the Company.
2
Agenda
1 Q4 2019 and Full Year 2019 Review
2 Business Highlights and Updates
3 Financial Highlights
3
Section 1 Q4 2019 and Full Year 2019 Review
Q4 2019 and Full Year 2019 Review – Financial Metrics
Q4 2019 Revenue FY 2019 Revenue
RMB1.96Bn RMB7.39Bn
24.4% 21.4%
YoY Growth YoY Growth(1)
Q4 2019 Adjusted EBITDA (2) FY 2019 Adjusted EBITDA (2)
RMB415MM RMB2,019MM
47.7% 21.2% 36.2% 27.3%
YoY Growth Margin YoY Growth(1) Margin
Q4 2019 Adjusted Net Profit (3) FY 2019 Adjusted Net Profit (3)
RMB331MM RMB1,544MM
67.7% 16.9% 35.4% 20.9%
YoY Growth Margin YoY Growth(1) Margin
Notes
1. Year over year growth is on a combined basis
2. Adjusted EBITDA is calculated as operating profit adding back share-based compensation, amortization of intangible assets, depreciation of property, plant, and equipment, selling and marketing expenses in the form of newly issued preferred shares, charges
related to re-designation of ordinary shares to preferred shares in connection with the eLong Cayman Privatization, reorganization cost, issuance of ordinary shares at discount, listing expense, impairment loss on equity method investments and acquisition-
related cost
3. Calculated as profit for the period adding back share-based compensation, amortization of intangible assets from acquisitions, fair value change on redeemable convertible preferred shares measured at fair value through profit or loss, reorganization cost,
issuance of ordinary shares at discount, income tax expense related to re-organization, listing expense, impairment loss on equity method investments and acquisition-related cost
5
Q4 2019 and Full Year 2019 Review – Operating Metrics
Q4 2019 GMV FY 2019 GMV
RMB41.3Bn RMB166.1Bn
19.7 % 26.3%
YoY Growth YoY Growth(1)
Q4 2019 MAU FY 2019 MAU
205.9MM 205.2MM
18.5% 17.1%
YoY Growth YoY Growth(1)
Q4 2019 MPU FY 2019 MPU
27.1MM 26.9MM
21.5% 34.5%
YoY Growth YoY Growth(1)
FY 2019 APU
152.4MM
35.1%
YoY Growth(1)
Notes
1. Year over year growth is on a combined basis
6
Section 2 Business Highlights and Updates
Our Business and Strategic Highlights
User Base Extensive user base with improving paying ratio from diversified traffic
Lower-tier
City
Effective penetration in low-tier cities
User
Experience
Enhance user experience on one-stop shop platform
TSP
Solutions
Enhance value proposition to TSP
Data &
Technology
Transform from OTA to ITA with advanced technology
8
1 Large and Fast Growing User Base
Average MAU(2) Average MPU(3)
MM MM
10.3% 11.6% 11.4% 15.3% 11.0% 12.7% 12.8% 13.2% 11.4% 13.1%
+22.0% +15.4% +13.4% +18.5% +17.1%
YoY YoY YoY YoY YoY +36.7% +53.9% +31.9% +21.5% +34.5%
Growth Growth Growth Growth Growth
YoY YoY YoY YoY YoY
Growth Growth Growth Growth Growth
234.0
199.3 206.3 205.9 205.2
181.6 29.8
173.7 175.2 27.7
163.4 27.1 26.9
157.4
23.1 22.6 22.3
20.0
16.9 18.0
Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2018 2019 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2018 2019
2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019
Paying ratio(1)
Notes
1. Calculated as MPUs divided by MAUs.
2. Average MAUs in 2018 is the average MAUs of Tongcheng and eLong combined
3. Average MPUs in 2018 is the average MPUs of Tongcheng and eLong combined
9
1 Diversified Traffic Sources within Weixin Platform
We Direct Users to Our Mini Program Based Platform from Various Channels on Weixin
65.7% 21.9% 12.4%
MAU from specific channel
3 Advertisement as % of total MAU from
Mini Program Tencent-based platforms
in FY 2019
2 Drop-down 4 Sharing
Bar
Weixin Search
1 Weixin Wallet 5
Interface
Increase traffic
More user engagement
Convenience
102 Effective Penetration in Low-tier Cities
Attractive Demographic Feature of Our Users
85.6% 62.4%
of registered users of new paying
from non-first-tier Weixin users from
cities in China (1) Tier-3 or below
cities (1)
The total travel spending of residents in The market is expected to grow at a CAGR Residents in non-first-tier cities have
non-first-tier cities accounted for 89.7% of 11.7% from 2017 to 2022, outpacing increasing demands for
of total travel spending in China in 2017 that of 6.3% for first-tier cities quality travel products
Notes
1. As of December 31, 2019
113 Enhance User Experience on One-stop Shop Platform
Transit to
Information Hospitality
Destination
Value-for-
Relaxing Refreshing
money
Change of
Convenient Social
schedule
Pre-departure On the Road Arrival
Express Ticket Booking Meals Accommodation
Monitor ticket availability and automatically purchase Order ahead and have meals delivered on board directly A large and diversified offerings catering to users’ budgets
tickets at specified time slots and price ranges to seats / meal vouchers in airports and preferences
Ticket Delivery Lounge Attraction Ticketing Booking
Deliver of physical tickets with special features, such as Access to lounge at airports and train stations Book value-for-money ticket package online
Berth selection, seat selection and group tickets
Reservation Transfer Pickup Car Hire
Transfer accommodation reservations to other users Airport / train station pickup service Online taxi / car booking
Travel Solution Change of Plan for Connecting Trips Social
Cross sell accommodation, transportation and attraction Change or cancel tickets for free Share review and personal travel experience online
products
Capture More Revenue Increase User Engagement Higher Spending More Repeat
Opportunities and Stickiness Per User Purchase
124 Enhance User Experience on One-stop Shop Platform (Cont’d)
Effective Marketing Campaign Enhance User Engagement
Sponsorship for Sponsorship for Ad placement on high Black Whale CTS Hotel
“吐嘈大会” “庆余年” speed train Membership membership
(an online stand-up (an online drama cooperation
talk show) series)
134 Enhance Value Proposition to TSP
Deepen Cooperation with TSP
Business advertising Targeted-marketing for Transit routes promotion Tourist attractions Mini program
for hotels airports for airports marketing for tourist development for Air New
destinations Zealand
145 ITA Enhances User Experience Further
Intelligent Travel Assistant (ITA) “Huixing” Smart System
“Express Check-in” allows users with
enough points of Wechat payment to Provide all-in-one
check in hotel without deposit transportation planning
to allow availability,
affordability and
“Buddha” system in air ticket booking achievability
serves different customers for their
various demands
Including various
“Intelligent Hotel” system allows users transportation methods
to enjoy the benefits of advanced
technologies throughout the process of such as train, flight, bus
reservation, check-in, accommodation etc.
and departure
“Huixing” system provides customers
with intelligent transportation product
combo booking system
Support voice ticket
inquiry and ticket booking
Airline Revenue Management System
The first and only OTA in China that
successfully developed such cost-
effective software for small airlines
15Section 3 Financial Highlights
Our Financial Highlights
Industry Leading Growth and Profitability 1
More Balanced Revenue Structure 2
Better Monetization and Increasing User Value 3
Efficient User Acquisition and Improving User
Conversion 4
Remarkable Operating Leverage from Technology and
Synergy 5
17Leading Industry Growth and Further Scalable Business
GMV (1)
RMB Bn
+23.8% +42.9% +21.7% +19.7% +26.3%
YoY YoY YoY YoY YoY
Growth Growth Growth Growth Growth
166.1
131.5
47.6
41.3 39.1 41.3
35.9 34.5
29.0 28.9
2018Q1 2019Q1 2018Q2 2019Q2 2018Q3 2019Q3 2018Q4 2019Q4 2018 2019
Notes
1. GMV in 2018 is the combined number of Tongcheng and eLong
18Robust Revenue Growth and More Balanced Revenue Structure
Revenue (1)
RMB MM
+17.5% +21.0% +22.3% +24.4% +21.4%
YoY YoY YoY YoY YoY
Growth Growth Growth Growth Growth
7,392.9
7.0%
6,090.8
3.6%
61.1%
66.1%
2,062.1 1,956.5
1,783.4 1,590.9 1,686.4
1,517.5 1,572.4
1,314.5
70.6% 66.5% 55.3% 60.4% 31.9%
66.0% 63.1% 58.9% 68.2% 30.3%
30.8% 27.4% 33.5% 34.8% 30.6% 33.6% 27.0% 31.8%
2018Q1 2019Q1 2018Q2 2019Q2 2018Q3 2019Q3 2018Q4 2019Q4 2018 2019
Accommodation Transportation Others
Notes
1. YoY Growth is on a combined basis
19Steadily Increasing Profitability
Adjusted EBITDA (1)(2)
RMB MM / Margin %
+34.0% +40.9% +27.7% +47.7% +36.2%
Growth Growth Growth Growth Growth
Rate Rate Rate Rate Rate
30.3% 34.5% 23.8% 27.7% 25.4% 26.5% 17.9% 21.2% 24.3% 27.3%
2,018.5
1,481.6
615.6 547.3
459.4 440.5 428.5 415.1
312.7 281.0
2018Q1 2019Q1 2018Q2 2019Q2 2018Q3 2019Q3 2018Q4 2019Q4 2018 2019
Adjusted EBITDA Margin (%)
Notes
1. Financials for Tongcheng-Elong is combined financials
2. Adjusted EBITDA is calculated as operating profit adding back share-based compensation, amortization of intangible assets, depreciation of property, plant, and equipment, selling and marketing expenses in the form of newly issued preferred shares, charges
related to re-designation of ordinary shares to preferred shares in connection with the eLong Cayman Privatization, reorganization cost, issuance of ordinary shares at discount, impairment loss on equity method investments, and acquisition-related cost
20Steadily Increasing Profitability (cont’d)
Adjusted Net Profit (1)(2)
RMB MM / Margin %
+8.7% +60.0% +33.2% +67.7% +35.4%
Growth Growth Growth Growth Growth
Rate Rate Rate Rate Rate
27.2% 25.1% 16.4% 21.7% 18.7% 20.3% 12.6% 16.9% 18.7% 20.9%
1,544.3
1,140.6
412.5 448.5 419.2
345.6 314.7 331.1
216.0 197.4
2018Q1 2019Q1 2018Q2 2019Q2 2018Q3 2019Q3 2018Q4 2019Q4 2018 2019
Adjusted Net Profit Margin (%)
Notes
1. Financials for Tongcheng-Elong is combined financials
2. Calculated as profit for the period adding back share-based compensation, amortization of intangible assets from acquisitions, fair value change on redeemable convertible preferred shares measured at fair value through profit or loss, reorganization cost,
issuance of ordinary shares at discount, income tax expense related to re-organization, impairment loss on equity method investments, acquisition-related cost
21Tongcheng-Elong Holdings Limited
Our Mission is to Make
Travel Easier and
More Joyful
22Initiatives to Fight Coronavirus Outbreak
Jan 24 Penalty-free cancellations of all domestic orders on our platform
Jan 25 Open up self-service cancellation function
Jan 27 Set up RMB200 million emergency fund for timely refund
Jan 30 Work with an online medical platform to provide medical consultation for free
Feb 01 Launch an inquiry service, allowing users to check any covid-19 diagnosed patients in same train / flight
Feb 06 Provide Covid-19 related insurance free of charge for users with travel demand
Feb 07 Initiate “Safe Riding” service to ensure the safety of drivers and passengers
Feb 11 Establish “Ark Alliance” to help promote tourist attractions free of charge via online marketing tools for members within the alliance
Feb 13 Extend validity period of membership for all members
Feb 19 Launch “Safe Room” to ensure the safety of guests
Feb 20 Initiate “Return to Work Platform” to provide customized bus transport services for enterprises
Feb 21 Give Black Whale membership for free to medical workers across Mainland China to pay tribute to their contribution and sacrifices
Upgrade the “Hit The Road” initiative, with successive safety measures, in an effort to relieve users’ anxiety of going out after the
Mar 17 epidemic, meanwhile work with partners to help revitalize the travel industry
23Appendix
Corporate Milestones
Included in Hang Seng
Composite LargeCap &
Weixin Wallet
MidCap Index, Hang Seng
Founding of Became the sole operator of “Rail & Stock Connect Hong
Listed on the Main
Tongcheng Tencent Ctrip Flight” portals on Weixin’s and Mobile Tongcheng Completed the Board of the Hong Kong Kong Index, and Hang
Network investment investment QQ’s mobile payment interface spin-off merger Seng SCHK New
Stock Exchange
Economy Index
2004 2012 2014 2017
2018 2019
1999 2004 2011 2015 2016
Founding Listing on Tencent Ctrip Delisting from Became the sole operator of Rank #1 among Weixin Awarded “Best Mini-
of eLong NASDAQ investment investment NASDAQ “Hotel” portal on Weixin’s and mini-programs(1) program of the Year” (2)
Mobile QQ’s mobile payment
interface
Weixin Wallet
Notes
1. According to the Aladdin Index
2. At the Aladdin Annual Conference
25Corporate Structure(1)
City Legend Other
Tencent Ctrip Huafan Runhe(2)
International(3) Shareholders
22.39% 21.84% 7.52% 4.99% 43.26%
Tongcheng-Elong Holdings Limited
Offshore
Onshore
100% 100%
E-dragon Beijing WFOE Longyue Tiancheng WFOE
50% VIE 50% VIE 100%VIE
50% WFOE 50% WFOE
Beijing Other Tongcheng Suzhou Other
E-dragon entities Network Chengyi entities
Notes
1. This is a simplified structure and for illustrative purpose only. The diagram illustrates the corporate structure as at December 31, 2019 base on information from Hong Kong Share Registrar
2. Huafan Runhe is 20% owned by each of the Tongcheng Network Founders
3. City Legend International Limited is wholly-owned by Overseas Chinese Town (Asia) Holdings Limited
26China’s Travel Market Presents Vast Growth Potential
Supply Demand
Improving transportation infrastructure Rising consumption power
Increasing quality TSPs Increasing urbanization ratio
More product variety Demand for high quality travel
… and is Continuously Moving Online
China’s online travel market size by GMV, 2015-2022E
Online travel total GMV (RMB billion) +16.0%
% online penetration rate in travel market 2017-2022E
CAGR
+35.9%
2,462
2015-2017
2,028
2,252
CAGR 1,775
1,481
1,173
635 901 45.0% 45.7%
36.9% 40.9% 43.4%
31.5%
19.7% 25.8%
2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
China’s online travel market has been growing rapidly with strong growth potential,
with 31.5% online penetration rate vs. 45.0% in US in 2017
Source: iResearch
27Online Travel Market in China is Rapidly Evolving
1 2 3 4
Technology Enables Smart Travel
Entered into “Super App” Era Demand for Quality Products OTAs Becoming One-Stop Shop
Solutions
Super apps with multi-functions Online travel platforms
attract majority of user traffic Allow for intelligent booking
Weixin and Mobile QQ are the Create innovative solutions
Booking experience Speed
two largest Super Apps in China
(1)
Build comprehensive user
profile
Super Apps provide access to
Personalize travel products
OTA’s comprehensive service
offerings without having to Authenticity Accuracy Travel service providers
download additional apps Better sourcing, distribution
and inventory management
capabilities
Ancillary Social
Mobile value-added services
Payment Unlock an amazing travel
experience with one click
Search
Social
Engines
Network Customer service Transparency
E-commerce
Source: iResearch
Notes
1. In terms of user base, according to iResearch
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