Goldman keeps Ctrip's neutral rating up to 45 dollars

Sina Science and technology news Beijing time of August 2, Goldman Sachs released its research report today, maintaining a "neutral" rating on Ctrip (NASDAQ:CTRP) shares and raising its target share price to $45 trillion.

The following is the full report:

Ctrip 2012-year performance is mainly driven by price strategy, revenue and coupons are closely related to the intensity, while profit margins are affected by market competition. We believe that the 2013 Ctrip performance will be driven by technology, because the second-quarter mobile booking volume has exceeded the total order of 18%, and has a positive impact on profitability. This will ease investors ' concerns about Ctrip's competitiveness and increase the predictability of Ctrip's profitability.

In the second half of 2012, Ctrip increased research and development spending, strengthening the company's mobile business. In the first half of 2013, Ctrip's product development expenditure exceeded the revenue of 21%, an increase of 49%, while the year-on-year revenue growth rate is only 28%. Meanwhile, at the end of the second quarter, the cumulative volume of Ctrip's mobile apps grew to 50 million, up from 20 million in early 2013. Sales and marketing costs accounted for revenue from 24% in the fourth quarter to 21% in the second quarter of this year, indicating that the increase in application downloads was mainly due to the advantages of the product itself, which led to a positive user experience.

We expect that by the end of 2013, mobile revenue will account for 30% of Ctrip's total revenue, and will reach 50% by 2015. We expect mobile operations to operate at a 3% higher profit margins than desktop operations, mainly because of the lower cost of traffic from leading market share and sticky user groups. Last year, Ctrip's advertising expenditure reached 7% of its revenue, and we believe that the mobile business will be able to save half of this expenditure.

We will increase the return of Ctrip from 2013 to 2015 by 6%, 15% and 20% respectively to reflect the development of mobile business, as well as sales management and administrative cost savings. Therefore, we will be Ctrip 12-month target share price from 29 U.S. dollars to 45 U.S. dollars, the market surplus growth ratio (PEG) is still 0.9 times times. We maintain a "neutral" rating on Ctrip because of the limited space available for stock prices. (D-Gold)