Jaffray maintain Ctrip Neutral rating target price reduced to 39 U.S. dollars

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Beijing time February 13 Evening News, the U.S. investment Bank Jaffray (PiperJaffray) issued an investment report today to maintain the "neutral" NASDAQ:CTRP, the target share price from 42 U.S. dollars to 39 U.S. dollars.

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

Driven by the new mobile rebate promotional campaign, Ctrip's revenue for the financial year 2013 was more than expected. But the profit margin for the first quarter of fiscal year 2014 was expected to fall below Wall Street expectations, meaning that earnings per share would fall in the future. Ctrip expects operating margins to fall to 10% in the first quarter, down 13% per cent year-on-year. Such a big drop would have overwhelmed investors ' optimism about hotel and ticket bookings, and fierce competition in the market means that Ctrip will continue to face profit margins in the 2014 and 2015 fiscal year. To this end, we continue to maintain the "neutral" rating of Ctrip.

Quarterly results: Net revenue was $238 million trillion, slightly above Wall Street's expected $230 million trillion. Based on US general accounting standards, the earnings per share is $0.28 trillion, up from Wall Street's expected $0.23 trillion. Revenue growth is mainly due to mobile rebate promotions, allowing Ctrip to attract 30 million of mobile app downloads in the fourth quarter, but it also affects operating margins. In the quarter, Ctrip's booking volume grew 55% year-on-year, compared with 40% in the third quarter. Ticket bookings increased 37% over a year earlier, compared with 31% in the third quarter. As for the first quarter of fiscal year 2014, Ctrip expected net revenue to grow 25% to 30% year-on-year.

Profit margins fall: According to non-US general accounting standards, Ctrip expects operating margins to drop to 10% in the first quarter of fiscal year 2014, compared with 20% in the fourth quarter, mainly because of the increase in the number of product developers and sales and marketing costs.

Valuation: We continue to maintain the "neutral" rating of Ctrip, which will reduce the target share price from 42 US dollars to $39.