FAST NEWS: Tongcheng Travel eyes major fintech acquisition
The latest: Tongcheng Travel Holdings Ltd. (0780.HK) announced Wednesday it has signed a letter of intent to acquire 55.14% of Guangzhou Lvjin Technology, a provider of digital financial services, for up to 1.15 billion yuan ($162 million).
Looking up: Tongcheng believes the acquisition will help its business development by providing financial technology to enhance its users’ payment experience, as well as fintech products and digital technology solutions to facilitate development of the tourism industry ecosystem.
Take Note: Tongcheng’s cash and cash equivalents at the end of last September stood at about 5.28 billion yuan, meaning the purchase price for Guangzhou Lvjin Technology could be equal to as much as 22% of Tongcheng’s cash.
Digging Deeper: Tongcheng Travel became China’s second-largest online travel agency after its merger with Elong in 2018, placing it behind only industry leader Trip.com (TCOM.US; 9961.HK). The company listed in Hong Kong later that year. Like many of its peers, the company took a major hit during the pandemic, recording a loss in 2022. But it has bounced back strongly post-pandemic, reporting its revenue rose nearly 80% in the first half of last year, as it returned to the black with a net profit of more than 730 million yuan.
Market Reaction: Tongcheng’s shares rose on Thursday, closing up 1.8% at HK$16.66 by the midday break. The stock currently trades in the middle of its 52-week price range.
Translation by A. Au
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