Days Hao Capital released research report today to maintain Ctrip buy rating

Summary: View the latest quotes Beijing time, November 25 Morning News, the U.S. market research company Days Hao Capital released a study today, the Ctrip (NASDAQ:CTRP) stock rating maintained at the buy (purchase) unchanged, the target price of 72 U.S. dollars. The following is a summary of the report: Check the latest quotes

Beijing time November 25 Morning News, the U.S. market research company Days Hao Capital released a study today, the Ctrip (NASDAQ:CTRP) stock rating maintained in the "buy" (purchase) unchanged, the target price of 72 U.S. dollars.

The following is a summary of the contents of the report:

Investment and competition may result in a pressure on profit margins; hotel bookings and coverage are still growing steadily; maintain a "buy" rating

Ctrip's profit margins may be under pressure because the company invests in new development plans and the core hotel business faces price competition. We expect Ctrip third-quarter revenues and fourth-quarter earnings forecasts to be at least as Wall Street analysts expect, mainly due to strong business growth, particularly in hotel bookings. We maintain Ctrip's "buy" rating unchanged because we believe that Ctrip is in a good position and will be able to capture the growth of China's tourism demand.

Ctrip will report the third quarter of the 2014 fiscal year after the U.S. stock market closed in the eastern time of November 25 (Beijing time November 26 morning), followed by a financial conference call at 19 O ' 8 o'clock in the eastern United States (Beijing time November 26).

-Profitability may be under pressure due to investment activities:

November 21, 2014, Ctrip and the Royal Caribbean Cruise Company announced the formation of a joint-sea cruise company, of which Ctrip held a share of 35%, the deal is expected to be completed by December, the new cruise business will start in the middle of 2015 operation. Since the cruise market is still in its infancy, the investment is unlikely to bring positive returns soon. In addition, Ctrip also invested in the overseas tour wholesalers ' Huayuan Country Brigade in September, which could benefit their long-term growth, but in the short term will lead to a pressure on their margins.

-Price-centric competition can damage profitability and lasts for some time:

In Ctrip's core hotel business, profit margin pressure may come from where to go (NASDAQ:QUNR), because it is not only aggressively expanding low-end hotel market share, but also expanding high-end hotel market share by offering cash discounts. Where are you going? The cash discount plan was increased in 8 September, with 40% to 60% of hotels participating in the program, while Ctrip was only 25% to 30%. Although we think that this cash discount scheme may not at present lead to a sharp decline in ctrip profit margins, it will cause long-term pressure.

-Hotel bookings increased and expanded coverage:

Ctrip's hotel room night continued to grow rapidly in the third quarter. Based on our own data, Ctrip's total hotel room night may grow 62% to 67% year-on-year, compared with the company's own forecast of 50% to 60% year-on-year growth. In the past, Ctrip in the one or two-line city of 4, 5-star hotel occupies a strong position, and now its hotel coverage has been increasingly extended to lower-line cities in lower-star hotels.

According to our own data, July 4, 5 star hotels in the total hotel network in Ctrip accounted for 10.3%, compared to November of 7.1%; the July first-line city hotel has a share of 21% in its hotel network, compared to 19% in November.

-The fourth quarter revenue outlook may be expected:

We believe that Ctrip's outlook for fourth quarter results is likely to coincide with the average Wall Street analyst's expectations. Analysts on average expect Ctrip's quarterly revenue growth of 32.5% to $315.3 million trillion, and we believe that for Ctrip, the prospect of providing revenue growth of 30% to 35% per cent year-on-year may not be a challenge. From our data, Ctrip October hotel room night year-on-year growth of more than 60%, ticket booking volume of the year-on-year increase of about 35%.

-Business growth may push the third-quarter business beyond expectations:

Wall Street analysts, on average, expect Ctrip's third-quarter revenue to be $335.7 million (up 33.3% from a year earlier), at an upper limit of $322.9 million to 335.3 million-dollar range (up from 30% to 35%) in Ctrip's forecast, slightly above our expected $331.3 million trillion. Our performance is expected to assume that the volume of ticket bookings increased by 33% (including the year-on-year increase in traffic and transportation booking volume 70%) and hotel bookings increased by 60% per cent year-on-year; We believe that this assumption may be conservative because, according to our own data, Ctrip's total hotel guest room night may grow 62% to 67% year-on-year. , the number of airline bookings may increase 38% to 43% year-on-year.

Valuation：

Ctrip is in good position, will be able to seize China's leisure tourism market and mobile tourism market growth opportunities. Therefore, we maintain the "buy" rating of the Ctrip stock, while keeping its target price unchanged at 72 dollars. This 18-month target price is calculated on the basis of our latest estimate of Ctrip earnings per share in the 2016 fiscal year (not in accordance with US general accounting standards) of 2.86 US dollars multiplied by 25 times multiples.

-Key risks:

1 The competition is fierce: every business in Ctrip is facing competition from its peers. If the competition becomes more intense, the company's business growth and profitability are likely to be under pressure.

2 tourism demand is weaker than expected: our Ctrip valuation is highly dependent on the positive Chinese tourism market prospects, especially the development of China Mobile tourism market. However, the growth of tourism may be limited by external factors such as infrastructure, supply capacity of tourism resources, weather, government regulation, travel habits and even foreign relations between China and tourism destination countries. If tourism demand is growing more slowly than expected, the upside potential of Ctrip shares will be adversely affected.

3. Implementation risk: We set the Ctrip stock target price based on the expected 2014 fiscal year earnings per share (not in accordance with U.S. General accounting standards) will fall 29%, followed by the 2015 fiscal year growth of 66%. If the company management cannot achieve this level of growth through good execution, its target price may be under pressure.

-Other risks:

1) macroeconomic risks, 2 natural disasters and epidemics, 3 regulatory risks.

-Earnings and conference call information:

Ctrip will report the third quarter of the 2014 fiscal year after the U.S. stock market closed in the eastern time of November 25 (Beijing time November 26 morning), followed by a financial conference call on the same day at 19 O ' 8 o'clock (Beijing time November 26). Investors can call 800-230-3019 to listen to the teleconference live, the password is "92795298#". (Tangfeng)