Ctrip stock (NASDAQ:CTRP) Neutral rating, while maintaining a 56 dollar target share price unchanged

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

Ctrip's third-quarter results exceeded Wall Street's expectations in the 2013 fiscal year, but the expected rise in revenue for the fourth quarter fell sharply. We believe that Ctrip's fourth-quarter revenue from 20% to 25% per cent year-on-year gains were below market expectations, while Wall Street was accustomed to the conservative expectations of Ctrip. Third quarter, based on non-US general accounting standards, Ctrip operating profit margin of 26.5%, higher than the second quarter of 24.7%, and our expected 24.9%. We continue to maintain the "neutral" rating of Ctrip, while maintaining a 56 dollar target share price unchanged.

Third-quarter results: Revenue of 252 million U.S. dollars, higher than Wall Street expected 241.7 million dollars. Based on US general accounting standards, the earnings per share is $0.40 trillion, up from Wall Street's expected $0.27 trillion. Ctrip estimates that the fourth-quarter revenue increase will reach 20% to 25%, and our forecast is 22%. Based on historical records, Ctrip has more than a quarter of the limit of the guidance expected. To this end, we anticipate that Ctrip's revenue rise could reach 25% in the quarter.

Mobile trading continues to grow: in the third quarter, 30% of the hotels in Ctrip were scheduled to come from mobile devices, compared with 25% in the previous quarter, 10% to 15% for the same period last year. We believe that this will give Ctrip a great market competitiveness. We anticipate that Ctrip will continue to invest in the mobile sector, which could affect recent operating margins.

Operating margins are down: Ctrip expects operating margins in the fourth quarter to fall to 20% to 25% from 27% in the third quarter, based on non-US GAAP, mainly due to seasonal downturns and investment in areas such as mobile.

Valuation: We continue to maintain the "neutral" rating of Ctrip, while maintaining a 56 dollar target share price unchanged.