Future Asset Release research report, maintain Ctrip rating

News and technology information Beijing time March 5, the future assets released today research report, maintaining the Ctrip shares of the "holding" (Hold) rating, the target price set at 26 U.S. dollars.

The following is a summary of the report:

We think that the art Dragon Group buy discount item can not end in a short time, the reason has the following three points: 1 The original intention of the Art Dragon was to make the project different from Ctrip; 2 According to our estimate, the art dragon can increase the discount rate of the Hotel commission from the current 30% to 75%, and still profitable; 3 The Dragon's parent, Expedia, may not be concerned about the profitability of the art dragon at the moment, as it accounts for only 1.6% of Expedia's 2011 revenue.

But the agency discount project predicts more fundamental changes in the online travel service industry's shift from agent mode to merchant mode (merchant model): 1 The popularity of mobile internet devices and e-commerce platforms, creating more opportunities for online travel service bookings 2) Adequate funding is making it possible for new players to enter the market in the form of a merchant model (often under the banner of group buying); 3 Finally, leisure travel has injected vigor into these two aspects of market demand.

To address these challenges, Charlie Li Hu, CEO of Global Travel, suggested that Ctrip should take a pre-emptive approach to supporting the business model because Ctrip has the biggest advantage in achieving this growth model. However, China's industry practices and traveler's booking habits of "impunity" (no penalty) will have a negative impact on the shift to the business model of the online travel service industry.

We believe that if ctrip the first to support the business model, the accumulation of advanced risk management experience, then can regain control of the industry's absolute ownership. We still maintain a "holding" (Hold) rating of the company's shares, with the target price set at $26 trillion, before the Ctrip action.