Maintain Ctrip's overweight rating

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Beijing time July 30 Evening News, Morgan Stanley today issued an investment report to maintain the "overweight" rating of Ctrip.

The following is a summary of the article content:

Ctrip will be in the U.S. Eastern Time July 31, 2013 after the U.S. stock market close (Beijing time August 1) released the second quarter of 2013 fiscal year results, and will be the Eastern time July 31 8 o'clock in the evening (Shanghai/Hong Kong time August 1 8 o'clock in the morning) the results of the conference call.

Performance expectations: We expect total revenue will reach 1.169 billion yuan, an increase of 20% year-on-year, and Ctrip's guidance is expected to increase 15% to 20%. The net profit will reach RMB 140 million yuan, increase 17% year-on-year. Diluted earnings per share of 0.16 U.S. dollars, an increase of 20%.

Earnings Focus:

Hotel Reservation Business Market Competition: In the past 9 months, Ctrip Hotel booking revenue began to accelerate, mainly by the increase in the volume of the promotion, but to a certain extent by the lower average sales price offset. We anticipate that the Ctrip Hotel reservation will continue to grow and the hotel's return cost will stabilize 10% to 15% of the hotel's commission revenue.

Air tickets return: Ctrip in late February this year, the introduction of air tickets rebate activities, the second quarter of the entire fiscal quarter will be affected by the event. We anticipate that, given Ctrip's dominance in the market, the impact of the activity on profitability is manageable.

Profit margin forecast: Ctrip's first-quarter operating profit margin is higher than we expected 23%, and the company expects margins to remain stable this year. We believe that Ctrip's 2012-year investment has begun to earn returns, and its marketing drive has won back the user and market share. In the network and mobile booking, the total proportion of Ctrip accounted for 50% and more than 10% respectively. We believe that Ctrip's profitability is expected to continue to rise thanks to sales growth and operating leverage.