Ctrip's quarterly results exceed expectations

Goldman Sachs today released its investment report, maintaining the "neutral" rating of Ctrip (NASDAQ:CTRP), which lowered its target share price from $44.5 to $35.

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

The quarterly results: Ctrip's performance in fiscal year 2013 exceeded expectations, but the margin forecast for the first quarter of fiscal year 2014 was relatively weak. In the quarter, the Cheng was 1.44 billion yuan, an increase of 31%, 5% higher than our forecast, and 4% higher than the average estimate of analysts surveyed by Bloomberg. Based on non-US GAAP, the earnings per share of $0.39 trillion, 7% higher than our forecast, is 11% higher than the average forecast for analysts surveyed by Bloomberg. Ctrip estimates that the first quarter of the fiscal year 2014 revenue will reach RMB 1.451 billion to 1.509 billion yuan, the year-on-year growth of 25% to 30%, higher than our expectations of 2%, compared to the Bloomberg survey analyst's average expectations higher than 3%. But Ctrip estimated operating profit margin of 10%, down 14% year-on-year.

Profit margin: We believe that the expected decline in profit margin in the first quarter mainly reflects: 1 increase hotel booking back to the current activities, aimed at competition with the Arts Dragon, 2, the increase in product research and development, as well as the number of researchers, 3 brand promotion, including inviting Chao as a mobile application spokesperson.

Proactive measures: We believe that Ctrip investment and the past to respond to competitors, this time is based on the evolution of the tourism market to take proactive measures. In the hotel reservation business, the mobile platform contributed 35% in the fourth quarter of last year. We believe that not only the traditional online agencies will cater to this trend, leading local business providers will also be included, such as the public comment network, the United States and 58 of the same city. Therefore, Ctrip chooses to invest heavily in the early stages to gain market share, although this may affect short-term profits.

Reduce performance expectations: We will be Ctrip 2014 to 2016 fiscal year of diluted earnings per share expected to be lowered 12% to 15%.

Valuation: We continue to maintain the "neutral" rating of Ctrip, which will reduce the target share price from 44.5 US dollars to $35.