JPMorgan keeps Cheng-rated target price up to $82

Beijing time, August 1 morning News, JPMorgan released a study today to maintain the "overweight" (NASDAQ:CTRP) overweight rating, and its target share price from 57 U.S. dollars to 82 U.S. dollars.

The following is a summary of the report:

Strong revenue and business growth in the second quarter showed that the market share of Ctrip continued to increase. We believe that Ctrip's aggressive strategic investments will still be rewarded, even though short-term margins may be under pressure. We believe that all investments will continue to strengthen the market position of Ctrip and long-term value proposition for consumers, which will bring more powerful profitability in the coming years. We maintain the "overweight" rating of Ctrip and raise its target share price to 82 US dollars.

Revenue growth continues to be strong. Revenue in the second quarter of 2014 was 3% per cent higher than expected on Wall Street as a result of strong business growth. NON-GAAP (non-US general accounting standards) operating profit rate of the chain stability in 11.7%, basically with our expectations flat, but because the passive income lower than expected, resulting in NON-GAAP net profit is not up to expectations.

The volume of business growth continues. The volume of accommodation and ticketing business continued to grow strongly, by 64% and 83% respectively year-on-year. Despite the contribution of the new project, the core hotels (up 60%) and air tickets (up 35% to 40% Year-on-year) remain the main drivers of growth. We anticipate that Ctrip will continue to capture market share and consolidate market position.

Increased confidence in long-term revenue growth. Given the huge increase in market share and the acceleration of business growth, we are now more confident in the long-term sustained growth of ctrip. As a result, we are expected to raise the company's 2015-2017 revenue composite annual growth rate from 23% to 30%, and the compound annual growth rate of earnings per share is expected to rise from 36% to 45%.

Maintain an overweight rating and raise the target price to 82 dollars. Our 82 dollar target price is based on: 2015 NON-GAAP per share ADS (US depository shares) earnings of 2.05 U.S. dollars, 2015-2017 per share ads composite annual growth rate of 45%,peg (P/E ratio of relative profit growth) of 0.9%. Our target price corresponds to a 2015-year P/E ratio of 40 times times. (PEI)