Jaffray maintain Ctrip Neutral rating target price reduced to 42 U.S. dollars

Beijing time January 13 Evening News, the U.S. investment Bank Jaffray (PiperJaffray) issued an investment report today to maintain the "neutral" NASDAQ:CTRP, the target share price from 56 U.S. dollars to 42 U.S. dollars.

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

China's online tourism market competition is fierce, and service providers scramble to launch promotional activities, for this we continue to maintain the "neutral" rating of Ctrip. From where the competition is going January 3 announced its leading position in the mobile application market for air ticket bookings, Ctrip has fallen more than 20% since the beginning of the year. Where to go the statement intensified the market's concern about the market competition for Ctrip, and it is expected that Ctrip will spend a lot of money this year to maintain its current market share. In view of the margin pressure we are facing, we will lower our 2014 operating profit margin forecast from 29% to 24%. It also lowered its target share price from 56 to $42.

China's online tourism market competition: 2012, China's online tourism market competition is very fierce. In the first half of 2013, the market competition eased, leading to the price of Ctrip rose. But where to go. Recent statements have once again raised concerns about the outlook for 2014. We expect that, as in 2013, Ctrip will face operating margin pressures in 2014. Based on historical records, Ctrip pays more attention to revenue growth and maintains stock prices rather than margin expansion. We anticipate that Ctrip will maintain the same strategy this year.

China's online tourism market trend in the fourth quarter of last year: Air passenger numbers rose 6% year-on-year, a slight decline compared with 8% in the third quarter. Hotel bookings grew 1% year-on-year, while the third quarter fell 3%. Ctrip's guiding expectation is that in the fourth quarter, hotel bookings will grow 20% to 25% year-on-year, compared with a 34% increase in the third quarter. We believe that the four-quarter guide of Ctrip may be somewhat conservative. On the whole, China's tourism market in the fourth quarter is relatively healthy, which may stimulate the Cheng to take more than 25% of the guidance of expectations. But investors are not focused on revenue gains, but on operating margins of 2014, which could leave investors feeling a bit disappointed.

Adjustment of performance expectations: for Ctrip in the fourth quarter of last year's performance expectations, as well as 2014 net revenue growth expectations, we remain unchanged. But the forecast for 2014-year operating expenses has been adjusted to lower operating profit margins (based on non-US GAAP) from 29.1% to 24%. The projected earnings per share will be lowered from USD 1.86 to $1.50.

Valuation: Continue to maintain the "neutral" rating of Ctrip, the target share price from 56 U.S. dollars to 42 U.S. dollars.