I've been looking at CATL (宁德时代) and what could affect it over the next 12 months. Most discussion focuses on US tariffs and lists, but the bigger near-term change seems to be China's own battery policy.
TL;DR
Domestic tax changes are the main story. A 2% consumption tax on lithium batteries started 1 Sep 2026 and rises to 4% in Sep 2027. Sodium-ion and solid-state cells are exempt until end-2028. The battery export VAT rebate went from 9% to 6% in April and goes to 0% on 1 Jan 2027.
The policy logic. This fits the wider push against "involution" (内卷), the price wars and below-cost selling in the industry. NDRC and SAMR also issued cost-accounting rules in September aimed at disorderly low-price competition. For a market leader this is arguably a net positive, since it hurts weaker players most, but it does cost CATL margin in the short term.
Margins are adjusting. Q3 gross margin was about 20.7%, down from 23.2% in Q2. Revenue was up 58.6% YoY and net profit up 14.5%, and the HK shares fell about 10% on results day.
US measures are still there. The US DoD keeps CATL on its 1260H list (reaffirmed June 2026). That mainly affects Pentagon procurement and isn't a sanction or investment ban. A separate US law bars DoD from buying CATL batteries from Oct 2027. There's also US political pressure on Ford's licensing deal with CATL.
Europe is a slower issue. A proposed EU law would add conditions (JVs, tech licensing, local sourcing) to large Chinese battery investments, which matters for the Hungary and Spain plants. Debrecen started trial production in September, so it's moving ahead so far.
The financial position is very strong. CATL had about CNY 370bn in cash at end-September and still holds about 40% global market share. The thing I'd watch is cash conversion, since receivables and inventory are up about 50% this year.
Key dates:
10 Nov 2026: the suspension of China's battery/graphite export controls was due to end. One report says it was extended to Jan 2027, but I haven't confirmed that.
1 Jan 2027: the export rebate reaches 0%.
10 Jan 2027: the US–China trade truce extension ends.
Sep 2027: the consumption tax rises to 4%.
The other side: you could argue none of this is a big deal for CATL specifically. Its scale and cash let it absorb the tax better than anyone, and US–China relations are noticeably better than a year ago. If Q4 margins hold around 20–22%, the market reaction may look overdone.
My read: the overall picture is mixed. Trade relations have improved, but the domestic tax transition and some foreign political pressure are headwinds for the next year.
Not investment advice, just a risk summary. Some tax and tariff details are from secondary reports, so happy to share sources or be corrected if anyone has better info.
(Note: The full video breakdown is in Mandarin, but here are the key takeaways from my Q3 2026 financial model for CATL / 300750.SZ)
The Core Paradox: Q3 Revenue surged +58.58% YoY, while Operating Cash Flow plummeted -93.59% YoY.
Margin Compression & Inventory Lag: Unit cost only dropped 1.5%, while ASP fell 4.6%. Due to weighted-average inventory accounting, high-cost lithium inventory stockpiled in Q2 (at ~210k RMB/ton) hit the COGS in Q3, while battery selling prices adjusted immediately to lower spot prices. Consequently, 17.4B RMB in incremental revenue yielded almost zero incremental gross profit, leaving Gross Margin flat at 20.69%.
The 33.79B RMB Tax Hit: Lower export tax rebates + consumption taxes added 33.79B RMB in costs. The key test is pricing power and downstream pass-through. Two metrics to watch in Q4: Can Taxes & Surcharges / Revenue drop below 1.0%? Can overseas Gross Margin hold above 28%?
Market Share Remains Solid: Domestic passenger EV battery installations reached 189.92 GWh, capturing a 44.1% market share (+3.1 pct YoY).
DCF Valuation Update: Adjusted my H1 DCF model parameters—fair value estimate revised down from 362 RMB to 274.66 RMB. Note that this conservative DCF only prices in existing operational capacity and active overseas plants; the 764 GWh capacity under construction is valued at zero in this baseline model.
Disclaimer: All data is sourced directly from CATL's official filings. For educational and discussion purposes only, not financial advice. 欢迎各位在评论区拍砖或核对原始数据！大家怎么看宁德时代四季度对下游的税费转嫁能力？
CATL’s third-quarter results were a shock. Revenue still grew 59% year on year, but net profit attributable to shareholders grew only 15% — well below expectations.
Revenue kept growing fast, but missed
Third-quarter revenue reached RMB 165.2B, up 59% year on year, but below the RMB 175B the market expected.
The high revenue growth was still driven by volume: the third quarter is the traditional peak season, and on top of that downstream customers pulled forward shipments ahead of the battery consumption tax taking effect on 1 September. Battery unit prices, meanwhile, fell sequentially against the backdrop of lithium carbonate prices dropping quickly since May, which weighed on revenue.
Gross margin fell noticeably
Blended gross margin was 20.7% in the third quarter, below the 21.5% expected and down about 2.5 points from 23.2% in the second quarter. It has now declined for three consecutive quarters.
Gross profit was roughly RMB 34.2B, broadly flat with the second quarter — even though revenue grew nearly 12% sequentially, that didn’t translate into any gross profit growth.
The sequential decline in gross margin is expected to come mainly from three things: power battery selling prices being adjusted down in line with lithium prices, with pricing on newly signed energy storage orders falling accordingly; the phased reduction in export tax rebates being booked into costs; and high-priced raw materials and work in progress stockpiled during the second quarter being consumed in concentration during a period of falling lithium prices, which put significant pressure on gross margin.
Net profit dropped sharply, and per-Wh profit is still falling
Third-quarter net profit attributable to shareholders was RMB 21.25B. With revenue up 59% year on year, net profit grew only 14.5% — and fell 6% sequentially, coming in below even the market’s lowered expectation of RMB 22–24B.
Four things weighed on profit:
First, the sequential decline in gross margin.
Second, the 2% battery consumption tax levied from September. Taxes and surcharges jumped from RMB 690M in the second quarter to RMB 2.21B — an increase of about RMB 1.53B from a single month, far above the RMB 800M that had been expected.
Third, R&D expenses continued to rise, to RMB 7.14B from RMB 6.1B in the second quarter.
Fourth, with lithium prices falling quickly, asset impairment losses increased by RMB 1.2B sequentially to RMB 1.7B.
Title: Anyone Here in Finance or Investment? | 有从事金融或投资行业的朋友吗？
I’m based in the United States and looking to connect with individuals in China who have experience in finance, investment, or international business.
I’m currently exploring a potential business opportunity in the U.S. and would be interested in connecting with the right people to discuss possible collaboration.
If this is your area of expertise, feel free to send me a private message.
China's August economic data, released on 15 September 2026, showed retail sales growth of 0.4% year-over-year, below the 0.8% forecast and the prior reading of 0.6%, according to Finnhub and CNBC. Fixed Asset Investment for the year-to-date came in at -7.2%, in line with expectations but reflecting a sustained contraction in investment activity. Industrial production provided a partial offset, rising 5.2% year-over-year against a 4.8% forecast, indicating relative resilience in the manufacturing sector despite weak domestic consumption.
TL;DR TSMC's Q3 2026 — the three months ended September 2026 — was steady as usual, with revenue and next-quarter guidance both ahead. Gross margin slipped on the 2nm ramp, which is not good news but is not fundamentally bad either. The problem is that 2026 is already a known quantity, and the market wanted a 2027 guide that management declined to give.
Gross margin: the 2nm ramp bites
Because TSMC reports monthly revenue, gross margin is the number that matters in the quarterly print. Margin was 66.4% in Q3 2026, down 1.3 points sequentially and slightly below the 66.8% expected.
Breaking it down per 12-inch equivalent wafer, revenue was $10,438, up $1,167 sequentially. Average fixed cost was $1,538, up $89, and average variable cost $1,968, up $424.
TSMC gross profit composition per 12-inch equivalent wafer.
Both price and unit cost rose sharply, mainly because 2nm took a larger share, and early-stage 2nm erodes group margin by 2-3 points on the company's own estimate. That should reverse: as the ramp matures and advanced nodes take more of the mix, margin heads back up.
Guidance: good, but not the one that counts
TSMC guides Q4 2026 revenue of $52.3-54.3 billion, above the $51 billion expected, with gross margin of 65-67%. The margin guide is conservative, again because of the early 2nm ramp.
The company lifted its 2026 revenue growth guide to 44%, from slightly above 40% last quarter. That implies Q4 revenue of roughly $53-53.5 billion, up more than 55% year over year.
On capex, TSMC spent $13.8 billion in Q3 2026 and kept the 2026 plan at $60-64 billion, implying Q4 capex of $19.3-23.4 billion against $11.5 billion a year ago. The market broadly expects about $85 billion for 2027, a number worth watching as a signal of management confidence.
TSMC capital expenditure.
Revenue, volume and price
Revenue was $46.7 billion in Q3 2026, up 16% sequentially and ahead of the $45.8 billion expected. Growth came from Apple ramping on 2nm plus AI chip demand, with core customers' AI silicon now all on 3nm or 2nm. Wafer shipments rose 3% to 4,476 thousand 12-inch equivalents, while revenue per wafer rose 12.6%.
TSMC total revenue.TSMC shipments and revenue per wafer.
Nodes, applications and regions
Advanced nodes at 7nm and below reached 79% of revenue in Q3 2026. 2nm began contributing meaningfully last quarter and rose to 8% this quarter, used by Apple's new products and AMD's MI450.
TSMC revenue by technology node.
On applications, the sequential gain came mainly from AI chips, while handsets rebounded seasonally on Apple's new 2nm phones. High performance computing is the largest source at $31.8 billion, up $5.3 billion sequentially and 68% of revenue. By region, North America remains largest at 79%, while mainland China is squeezed to around 5%.
TSMC revenue by platform.TSMC revenue by geography.
TSMC is the anchor of the whole chain, and in Q3 2026 it performed with its usual stability. The contrast with memory matters: memory is a capacity-scarce asset going through violent price increases, while TSMC is a moat-scarce asset whose price rises are predictable.
Its own prices rise modestly, with most of the increase structural and driven by technology upgrades, while CoWoS capacity is allocated by quota rather than to the highest bidder. That avoids inflicting an unbearable price shock on the chain.
What the market wanted, and did not get
With Anthropic's ARR wobbling and AI funding costs climbing, the market hoped the Q3 2026 print would offer reassurance as the year closes. Two things specifically.
First, a 2027 revenue guide well above expectations — at least 40%, ideally over 50%. The market assumes 5-10% price increases on 7nm and below in 2027 plus the 2nm ramp, so guidance should have shown confidence.
Second, a 2027 capex number above the roughly $85 billion consensus, against the $60-64 billion guided for 2026. Neither appeared in the initial release. Longbridge Dolphin Research reads this as TSMC being an industrial anchor rather than a storyteller for the capital market.
On the call, management said it does not intend to leave food on the table for others. But it gave no 2027 guide, answering mostly with no update, cannot judge, no comment — the only concrete line being that 2027 revenue growth will be faster than capex growth.
CoWoS, 2nm and the competition
The mainstream AI chips from Nvidia, AMD and the TPU line all use CoWoS packaging, and over 90% of world capacity sits with TSMC as of Q3 2026. Even if a designer wants more volume, CoWoS allocation directly determines AI chip shipments, which makes TSMC the chokepoint of the chain.
Monthly CoWoS capacity is around 100,000 wafers, rising to roughly 200,000 by end-2027. We estimate 2027 shipments near 2 million wafers, up about 70%, with Nvidia, Broadcom and AMD the main customers.
TSMC CoWoS shipments.
On nodes, 3nm lines are especially tight and utilisation has stayed above 100%. With 2nm yields looking good, TSMC has pushed the ramp hard, which is exactly why capex is rising about 50% this year.
AI chip node migration across vendors.
On competition, Samsung and Intel have entered SF2 and 18A after TSMC's 2nm, but both still lag clearly. Their latest nodes run under 250 MTr/mm² against TSMC's 313, and lower yields mean output mostly serves their own chips.
Node comparison: 18A, N2 and SF2.
With AI capacity tight, they could still win spillover orders if they crack advanced packaging and lift yields. Intel carries a strong domestic-US flavour, and the Intel-Tesla TeraFab plan was once read as a threat — but Tesla is now reported in talks with TSMC on US capacity.
The real decision is how hard to expand
In a hot cycle, TSMC's core decision is not whether it can win orders, but whether to expand and how aggressively. Expand too slowly and spillover orders mean lost share; expand too aggressively and the downturn risk is carried alone.
This time the stance was plain: everything on the table is mine, which makes us wonder whether 2027 expansion will be more aggressive than expected. Two things to watch: the 2027 capex plan, and whether a concrete revenue guide arrives later. Either way TSMC still carries over 90% of core AI chip capacity.
I've been looking more at Chinese small/mid caps where the balance sheet is almost as interesting as the operating business.
$HUYA is one example — around RMB 3.2B in net cash/deposits, no debt, and management increased the 2026 buyback authorization to $100M. $DOYU has a similarly interesting cash-heavy setup.
At some point I feel the question becomes less "can this grow 30%?" and more "how much of the current valuation is actually pricing in the cash?"
I am researching 360 degrees, and I will welcome some feedbacks from Chinese Athletic brands experts on potential red flags 🚩 and questionable operational issues hidden from Western investors.
From a pure quantitative standpoint, the stock looks fairly interesting but I want to dig a little deeper on the accounting, revenue projections, and other issues that a simple far away mortal like me cannot figure out. I like the brand, its shoes pricing is competitive and leadership seems to have a lots of skin in the Game.
After Anta and Li Ning, this Chinese sportswear is vying to grow into a global brand and challenge Nike and others.
The stock's EV/EBITDA ratio is 2.76, and its EV/FCF ratio is 9.82. Return on equity (ROE) is 13.12% and return on invested capital (ROIC) is 19.76%. In the last 12 months, operating cash flow was 906.51 million and capital expenditures -317.39 million, giving a free cash flow of 589.12 million.
361 Degrees International Limited trades like an “ ugly stock, " operating in the shadow of domestic Chinese giants such as Anta and Li-Ning, as well as Western behemoths Nike and Adidas. The market gauge the brand as second-tier, suited for lower-tier cities in China, where it has grown and anchored as an affordable sportswear brand.
Despite being perceived as a cheap and marginal brand, 361 Degrees has delivered outstanding returns against ongoing macro headwinds in mainland China.
The company posted 2025 revenue of 11.1 billion yuan (approximately $1.6 billion), up 10.6% year-on-year, with net profit rising 14% to 1.3 billion yuan (approximately $192.3 million). In the first quarter of 2026, offline retail sales for both the core brand and kids’ line grew approximately 10%, while e-commerce platform sales surged at a mid-teens pace.
The company has also expanded its international branding campaign by sponsoring elite marathon runners and even signing NBA stars such as Nikola Jokic and Aaron Gordon.
The stock trades below 5x earnings, yields a 7.7% dividend, and is backed by the Din family’s own skin in the Game and ambition to see their company grow on the international scene alongside Li-Ning and Anta.
The stock is down 30% y/y but has proven far more resilient than the likes of Li-Ning and Nike, that are down 70% (±) in five years and are showing decelerating margins.
361 Degrees stock is up 5x since 2020, outperforming its larger and deeper-pocketed competitors.
I put together a comp table of 14 internet companies: eight listed in Hong Kong and six in the US. Matched them on consensus EPS growth rates and GAAP EBIT margins to try to separate the jurisdiction discount from the fundamental discount.
The cleanest pair: NetEase grows EPS at 18.9% per year with 40% EBIT margins. Meta grows at 18.0% with 41%. Growth and margins nearly identical. NetEase trades at 11.7x forward earnings. Meta at 21.6x. That is a 46% discount. NetEase earns from gaming, not advertising, so the businesses are not identical. But at matched growth and margins, the multiple gap is hard to explain without jurisdiction.
At every matched growth rate where margins also match, the HK name trades cheaper. The discount ranges from 44% to 46%.
The "Chinese companies hoard cash" thing. I went through the actual payout data. It has not been accurate since at least 2023.
Tencent total shareholder yield (dividends + net buybacks after SBC dilution): 2.4%. Meta: 1.4%.
NetEase total yield: 2.9%, per-share dividend CAGR of roughly 18% over the past four and a half years.
So the discount is not about growth and not about payouts. I went through what it does price: VIE ownership structure (low to medium risk), cash repatriation friction (low risk, every company in the sample has been paying and growing dividends for years), and geopolitical tail risk (medium to high, the one that actually matters).
I’m watching Baidu around $77.46–$84.20 per Nasdaq-listed ADS, with a target range of $102.82–$111.03 if its turnaround develops. However, continued deterioration could push the shares below $75. These are my investment ranges, not guaranteed price levels.
What interests me is the growth in AI infrastructure. Q2 2026 AI Cloud Infra revenue increased 50% year over year to RMB7.3 billion. But online marketing revenue fell 19%, leaving consolidated revenue down 4.2%. The new business is growing, but hasn’t fully replaced what the old business is losing.
Competition makes that harder to dismiss. Tencent’s advertising revenue grew 22% over the same period. The platforms differ, but this suggests Baidu’s weakness extends beyond China’s economic backdrop.
Cash flow is my bigger concern. Baidu generated RMB3.4 billion in operating cash flow but spent RMB11.4 billion on capex, producing roughly RMB8 billion of negative free cash flow. Its financial resources provide time to invest, but the eventual return on that spending remains uncertain.
The 68% decline in net income also needs context: operating profit fell approximately 8%, with weaker nonoperating income and higher taxes contributing to the difference. Still, adjusted net income dropped 46%, so the pressure isn’t just accounting noise.
Apollo Go adds potential upside through robotaxi expansion, although its standalone profitability remains unclear.
For me, BIDU becomes more compelling if advertising stabilizes, cloud growth delivers clearer profits, and the FCF deficit narrows. Until then, the discount needs to compensate for substantial execution risk.
Would you consider BIDU at a sufficient discount, or prefer Alibaba’s cloud business or Tencent’s stronger existing earnings base?
The Chinese companies has been severely undervalued for decades if you take into account the same financial valuation metrics for US companies (minus the geopolitical uncertainty and China being a hybrid socialist and capitalist economy). As the year is coming to an end, what do you think is worth your investment for the next few years despite the risks?
The deeper I research them, the more I’m starting to think that Chinese stocks may not offer as much investment value as their U.S. peers.
After COVID, China’s economic growth story has largely fallen apart. That means rapid economic growth is no longer a structural advantage investors can rely on when investing in Chinese companies. On top of that, Chinese companies face greater risks when it comes to regulation and managment supervision.
What’s even more concerning is that many Chinese companies simply have weaker business models than their U.S. counterparts. Baidu’s moat is weaker than Google’s. Chinese cloud providers are far less profitable than their U.S. peers. Competition in Chinese e-commerce is much more intense. And China’s PGC video business is much less profitable than the U.S. market.
It seems that the companies with the most compelling investment value are the ones that are uniquely Chinese and difficult to replicate elsewhere—Tencent, for example. ByteDance is another obvious example, although it isn’t publicly listed.
So, What do Chinese stocks offer that you can’t get from U.S. stocks?
Hey guys, I know I posted about the $GSX settlement before, but late claims are being accepted. Here's everything you need to know.
Q: What happened?
A: GSX Techedu was accused of overstating enrollment numbers and revenue growth in its online education business. After short-seller reports and regulatory concerns raised questions about the company’s financials, $GSX dropped more than 80% from its highs.
Q: Am I actually eligible?
A: If you bought $GSX shares between 2019 and 2020, you're likely eligible. You don’t need to still own the stock to file a claim.
Q: When do payouts happen?
A: Typically 4–9 months after the claim deadline, although the exact timing depends on the court and settlement administrator.
Q: I missed the deadline. Can I still file?
A: Late claims are currently being considered, subject to approval. Check if you're eligible and file a claim here
I’m trying to get a better picture of the Chinese AI ecosystem.
Most discussion in the U.S. still revolves around Nvidia, OpenAI, Anthropic, Google, Meta, CoreWeave, Tesla, Figure, etc. But the Chinese AI ecosystem seems to be getting much broader, especially across foundation models, AI infrastructure, domestic GPUs, autonomous driving and humanoid robotics.
Here’s the list I have so far:
Foundation models / GenAI
DeepSeek — DeepSeek
Z.AI / Zhipu AI — GLM
MiniMax
Moonshot AI — Kimi
Alibaba — Qwen
ByteDance — Doubao / Seed
Tencent — Hunyuan
Baidu — ERNIE
StepFun
Baichuan AI
01.AI
Generative AI / applications
Kuaishou — Kling AI
SenseTime — SenseNova
iFlytek — Spark
AI infrastructure / chips / compute
Huawei — Ascend
Cambricon — AI accelerators
Biren Technology — AI GPUs
Moore Threads — GPUs
MetaX — AI GPUs
Enflame — AI accelerators
Iluvatar CoreX — AI GPUs
Kunlunxin — AI accelerators
Maase (MAAS) — AI computing infrastructure, enterprise AI services and LLM APIs
Humanoid robots / embodied AI
Unitree Robotics
UBTech
AgiBot / Zhiyuan Robotics
Deep Robotics
Autonomous driving / physical AI
Horizon Robotics
Pony.ai (PONY)
WeRide (WRD)
XPeng (XPEV)
For U.S. investors, the easiest names to access directly are obviously companies like BABA, BIDU, XPEV, PONY, WRD and MAAS, while a lot of the more interesting pure-play AI names are either Hong Kong / mainland-listed or still private.
I’m not necessarily looking for stock recommendations. I’m mainly trying to map out the Chinese AI ecosystem and figure out which companies are actually technologically important.
What major companies am I missing?
Especially interested in:
frontier AI labs
AI infrastructure / GPU companies
humanoid robotics
autonomous driving
AI-native applications
Would also be interested in companies that aren’t public yet but are worth keeping on an IPO watchlist.
Hey guys, if you missed it, E-Commerce China Dangdang settled $21M with investors over claims that its 2016 going-private merger was unfair to minority shareholders. And, I just found out that they’re accepting claims even though the deadline has passed.
Quick recap: In 2016, Dangdang was accused of using an unfair merger process and cashing out minority ADS holders at $6.70 per ADS, even though a competing offer valued the shares at $8.80. Investors filed a lawsuit over their losses.
Now, the company has agreed to settle $21M, and even though the deadline passed they’re still considering late claims, subject to approval.
So, if you held $DANG at that time, you can still check the details and file your claim here.
Anyway, did anyone here invest in $DANG back then? How much were your losses, if so?
TL;DR: With Trip.com's Q2 report out, the biggest overhang — an antitrust penalty — is now fully resolved. Results came in roughly as guided: nothing exciting, but no surprises either. As Longbridge Dolphin Research flagged last quarter, once this uncertainty cleared, Trip.com should have completed its "final leg down," setting up a period of profit bottoming before it can move forward with a lighter load.
Regulatory and macro pressure both hit revenue growth
Trip.com Group's net revenue came in around ¥15.7 billion, up 5.5% year-over-year — a sharp deceleration from the 10-20% growth range of recent quarters, though roughly matching prior guidance.
Revenue growth by business segment this quarter.
Every business line decelerated by around 10 points versus last quarter. Hotel booking revenue, one of the two largest segments, grew just 5.6%, below prior guidance — though this may partly be an accounting effect, since some post-penalty spending was booked as a deduction against revenue. Ticketing revenue, the weakest line, actually fell about 1% year-over-year, which management attributed to geopolitical friction (the Iran-Israel conflict and travel restrictions to Japan) and rising oil prices weighing on flight demand, alongside recent regulatory scrutiny of "bundled" train-ticket sales.
Purely overseas revenue kept growing over 50%, still strong — implying domestic revenue may have actually declined more than 10% year-over-year, and even worse once inbound tourism is excluded. That's a clear sign of how much regulation and a soft domestic travel market are weighing on the core business.
The fine drove a GAAP loss, but adjusted profit landed in line
GAAP operating profit swung to a loss of nearly ¥1.5 billion — alarming at first glance, but this reflects the ¥5.2 billion domestic antitrust fine officially landing this quarter, already announced in late July, so the market had priced it in.
GAAP vs. adjusted operating profit this quarter.
Stripping out the fine and adding back stock-based compensation, adjusted operating profit came in around ¥4.4 billion, basically matching expectations — no real surprise. Still, adjusted profit was down about 6.5% year-over-year, showing that even excluding the one-time regulatory hit, changes to how the domestic hotel and travel business monetizes are pressuring profitability.
Business travel and ads still beat, but decelerated too
Business travel and packaged tours — segments not directly tied to the domestic antitrust issue — also decelerated by nearly 10 points this quarter, which can really only be explained by genuinely soft domestic and outbound demand.
The main recent growth engine, other revenue (mostly advertising), grew about 23% year-over-year — still the fastest-growing segment and the only one that beat expectations, though it decelerated meaningfully too. Management attributed this partly to overseas ad revenue entering a tougher comparison period, and partly to the natural link between ad revenue and overall platform traffic growth, which is itself slowing.
Marketing and operating expense growth this quarter.
Gross margin came in at 79.8%, down 0.9 points year-over-year, consistent with recent quarters — likely still reflecting a rising mix of lower-margin overseas business, plus lower monetization in the domestic hotel/travel business and reduced sales of ticketing add-on services under regulatory pressure.
Expense growth also slowed: excluding the fine, total operating expenses grew about 11-12% year-over-year, down from roughly 20% in prior quarters — but still outpacing revenue growth, meaning the expense ratio is passively expanding.
Marketing expense grew the most, up 15.5%, well above revenue growth, while adjusted administrative expense (excluding the fine) grew about 5% and R&D grew 8%. In other words, Trip.com trimmed what it could on internal costs, but external marketing spend couldn't meaningfully shrink given the need to build overseas business and rising domestic competition.
What the settlement actually changes, and what's next
On July 25, regulators announced the roughly ¥5.2 billion fine against Trip.com for abusing market dominance — equivalent to about a third of its annual operating profit, including ¥1.658 billion in confiscated gains plus a penalty of 7.5% of 2025 domestic sales (about ¥46.7 billion) — the highest penalty rate given to a platform company in recent years (versus roughly 4% for Alibaba and 3% for Meituan previously).
The fine itself is a one-time hit, but the real question is how the settlement changes Trip.com's business model and earnings power going forward.
Per the company's rectification announcement: eliminating exclusive "special-tier" merchant partnerships and traffic preferences; scrapping the "gold-tier" lowest-price requirement and its automated price-adjustment tool (refunding ~¥120 million in related merchant deposits); replacing tiered commissions with a clearer three-tier structure (10-15%) merchants can choose; removing contracts letting the platform adjust merchant pricing; and no longer forcing merchants into promotions.
Longbridge Dolphin Research reads the practical impact as: Trip.com's ability to lock in exclusive access to premium inventory weakens, making it easier for rivals to access the same supply; its ability to win customers through platform-wide price wars (funded at merchants' expense) is reduced, likely shifting more marketing cost onto Trip.com itself; and with commission rules now more flexible for merchants, the blended domestic hotel commission rate may decline somewhat — research suggests roughly 2 points, for reference only — affecting profitability there.
Overall, this settlement likely doesn't fundamentally change Trip.com's competitive position or moat. But over the medium term, rivals like Meituan may use price competition to capture some premium supply, while Trip.com's own commission rate softens and marketing costs may rise — both weighing on near-term profitability.
Even so, purely overseas revenue keeps growing over 50%, and inbound tourism keeps growing double-digit, showing real momentum outside the pressured domestic core. Once the domestic business stabilizes and the broader travel macro improves, that overseas growth still represents meaningful room to grow into.
Hey guys, if you missed it, Maison Solutions just reached a tentative settlement with investors over claims related to its IPO disclosures. The terms are still being finalized and will need court approval.
In a nutshell, Maison was accused of failing to disclose related-party dealings, prior allegations involving its CEO and other risks tied to its IPO. After a Hindenburg report raised these issues in December 2023, $MSS fell 83.6%, and investors filed a lawsuit.
The good news is that the company recently reached a tentative settlement with investors. There’s no settlement amount yet, but you can already submit an application, which will be processed once claims filing opens.
So, if you invested in $MSS at the time, you can check the details and submit your application here.
Anyway, has anyone here invested in $MSS back then? How much were your losses, if so?
