Citigroup analyst released Wednesday Research Report

Citigroup analysts released a Wednesday study that said investors need not worry about where Baidu (Nasdaq:bidu) is going (NASDAQ:QUNR) will bring competitive pressure on Ctrip (NASDAQ:CTRP).

Ctrip Tuesday released its Better-than-expected third-quarter results for fiscal year 2013. The quarterly Ctrip revenue and earnings per share were $252 million and $0.51, above analysts ' previous forecasts of $242 million and $0.41 trillion. Ctrip's third-quarter revenue grew 32% per cent year-on-year, mainly due to increased bookings.

Citigroup analyst Li Muzhi, Lavis Sarat (Ravi sarathy) and Gregory Zhao (Gregory Zhao) in the report said: "The third quarter Ctrip hotel booking business revenue of 61 million yuan, an increase of 34%, mainly because of the increase in the volume of bookings 40% , while the leisure travel business continues to be better than business travel, Ctrip is expanding its open platform to conform to this trend; airline bookings are up 31% year-on-year, and according to our transport team, China's air passenger growth in the third quarter was only 11%. ”

Ctrip operating margins also bounced back in the third quarter, and improvements in operational efficiency are likely to be maintained from management's fourth-quarter performance outlook.

However, Ctrip's fourth-quarter outlook was more conservative: "Gross profit is 75%, the chain is flat; Operating profit margin is 27%, above our expected 24%." The company's management expects the fourth-quarter operating profit to be 20% to 25%. Ctrip also expects fourth-quarter revenue to rise 20% to 25% year-on-year, mainly due to seasonal factors, with Wall Street analysts averaging an average growth of 27% per cent year-on-year. ”

Investors are also worried about the competition between Ctrip and where to go, which was just listed last week and rose 89% per cent on the first day.

But Citigroup analysts point out that there is no need to worry about where to bring competitive pressure on Ctrip because:

"(1) for the time being, the relationship between the two companies is more likely to be a partner, for example in hotels and tours;

(2) The future growth areas of two companies are different. In our view, Ctrip wants to commercialize the flow of traffic for price-sensitive leisure travellers, who will make bookings through Ctrip partners, while retaining its basic high-end business travel business. Where to go, you want to have a SaaS (software as a service) for independent hotels and offline travel agencies, and a commission on where to go for ' direct sales '.

In the overall tourism industry, the current penetration rate of online business is only less than 10%, so the two companies ' future growth areas are unlikely to collide. ”