JG Capital maintains Ctrip neutral rating target price 40 USD

Sina Science and technology news Beijing time, August 2 morning, investment company JG Capital released a study today, the Ctrip (NASDAQ:CTRP) stock rating maintained in the "neutral" (Neutral) unchanged, while its target price to 40 U.S. dollars.

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

Second-quarter results review; maintain a "neutral" rating

We maintain Ctrip's "neutral" rating unchanged, with 12-month target price raised to $40.

Second quarter results:

Ctrip's second-quarter revenue was $200 million (up 28 from a year earlier), above Wall Street analyst's average of $190 million trillion, and 36 cents per share (up 48% from a year earlier), above Wall Street analyst's average of 28 cents. Ctrip's gross profit margin for the second quarter was 75%, the chain grew 1%, and the operating profit margin rose to 16%, but less than 17% in the same period last year.

Ctrip second-quarter revenue exceeded expectations, mainly because of the success of the price war marketing campaign, driving a strong growth in business volume. Ctrip in the second quarter, the volume of hotel bookings increased 44%, much higher than 10% of the industry growth rate, ticket bookings increased by 35%. According to our tracking, Ctrip second quarter coupon activity basically leveling. In addition, Ctrip also benefited from lower-than-expected tax rates and non-holding interests.

Competition：

We believe that the growth rate of business travel in China has slowed, while leisure tourism is accelerating. Ctrip is still the best performing company in the business travel market, especially in the high-end market, but Ctrip is facing a long-term challenge from the leisure tourism market. We see that competition has stabilized in recent years, which will help Ctrip preserve the existing market position.

Ctrip is defending its market share through a parity strategy. Company management disclosed that the leisure tourism market has achieved significant growth. We note that E-commerce companies are also entering the tourism market, but we believe that good relations between Ctrip and travel service providers and strong enforcement capabilities will help the company grow faster than its rivals.

Mobile：

Transactions from mobile channels grew twice times year-on-year, accounting for more than 20% per cent of hotel bookings and 15% per cent of airline bookings. The coupon program not only supports Ctrip bookings, but also helps promote Ctrip mobile applications.

We believe that in the future market competition, mobile will become an important market, and in this competition in the early stage, Ctrip occupies a good position.

Outlook for the third quarter:

Ctrip expects gross revenue in the third quarter to rise 20% to 26% year-on-year, higher than average Wall Street analyst expectations. Ctrip also expected the third-quarter profit margin to be flat.

Rating and target price:

We maintain Ctrip's "neutral" rating with a target price of 40 dollars. Based on our forecast of $1.80 per share earnings for Ctrip 2014, the earnings ratio is 22 times times higher. (Tangfeng)