BofA Merrill Lynch today released research report to keep Ctrip buying rating

Focus on moving the end

Ctrip at this stage will focus on capturing market share, and investment in higher marketing expenses. The Company believes that the investment in mobile areas is very important, because: 1 The field of user stickiness is high, and can reduce the dependence on a single marketing channel; 2 When users choose Mobile applications, brand name is an important factor.

Profit

Mobile platform at this stage of the profit margin is not higher than the PC platform, mainly because the mobile platform coupons issued more than the PC platform: On average 10 yuan higher than the PC. Even with this discrepancy, Ctrip finds that mobile platforms are similar to PCs ' profit margins. The call center, which accounts for about 40% of the total bookings, has a higher ARPU (per-user average) and does not offer coupons, but the profit margin is similar to the PC and mobile platform on which the coupons are counted. In addition, if the scale expands, outbound travel business will obtain higher long-term profit margin. At the same time, Ctrip will still seek a balance between profitability and growth.

Competition

Competition remains fierce, but coupon discounts have been down from a year-on-year peak in the third quarter of 2012. Ctrip expects that the Arts Dragon will continue to invest in issuing coupons and launching brand building, including TV commercials. Ctrip will continue to carry out similar investments in marketing and coupons, so it will not emphasize margin growth.

While acknowledging where to go in the mobile arena is stronger, but Ctrip believes that the company's advantage is that it can be confirmed in real time through the mobile platform. Ctrip is also working with wholesalers through business-to-business platforms to offer similar discounts to where to go. They will also promote their own low prices. Management will avoid relying on any single channel.

Therefore, Baidu/where to go channels accounted for less than 10%. With the small travel agencies on the platform to lose their share, where to go is expanding direct contact with the hotel.

Investment and mergers and acquisitions

Ctrip will continue to look for companies that can help expand their products, niche markets or technologies to complement their existing portfolio. Most of the potential targets are not big companies. Other goals include regional enterprises, particularly in Asia.

Overseas Hotel Network

In addition to cooperating with Priceline, the company has a firm foothold in Hong Kong, China and Taiwan through its two subsidiaries. Ctrip is also building its own network, starting with South Korea and Thailand and other Asian countries.