Ctrip shares the target price from 54 dollars to 58 dollars

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

Revenue exceeded expectations: 2014 in the first quarter of the fiscal year, Ctrip total revenue for the RMB 1.58 billion yuan, the chain growth of 10%, year-on-year growth of 36%, higher than the company's guiding expectations of the upper limit, than Wall Street and our expected high 4%, mainly thanks to the hotel and ticket booking business promotion. Operating margins of 12%, based on non-US general accounting standards, are 2% higher than corporate guidance expectations and Wall Street's expectations. Based on non-US GAAP, each share of the revenue is diluted at $0.24 trillion, in line with Wall Street expectations. In our view, this series of performance is mainly benefited from the company's effective investment (to promote market share growth). We expect that Ctrip's profit margins will rebound sharply as market share grows.

Mobile services: Mobile platform has become the main driving force to promote the volume of Ctrip. In the first quarter, mobile hotel booking business grew 350% year-on-year, mobile ticket bookings grew 300%, mainly thanks to Ctrip in the previous quarters in research and development and brand promotion investment. In order to promote the growth of mobile market share, Ctrip will continue to maintain a high level of revenue in the short-term operating expenses. We expect the operating profit margin to be flat in the second quarter and a rebound in the second half.

Tourism holiday business resumed growth in the second half: the first quarter, ctrip tourism business revenue growth of only 10% year-on-year. We believe that this is mainly affected by the unfavourable tourism market environment since the beginning of the year. We expect outbound travel and holiday business to rebound in the second half of this year. In addition, Ctrip recently several mergers and acquisitions (such as a stake in the bull) will become the long-term driving force of tourism business.

Adjustment of performance expectations: We will carry Ctrip 2014 and 2015 fiscal year revenue forecast to increase 5% and 9% to 7.4 billion yuan to 9.8 billion yuan respectively, the fiscal year 2014 per share of diluted earnings expected to be lowered 5%.

Valuation: We continue to maintain the "buy" rating of Ctrip, which will increase the target share price from 54 US dollars to 58 dollars.