Morgan Stanley to hold Cheng rating target price down to 75.90 USD

Beijing time July 31 Evening News, Morgan Stanley published a study today to maintain the "overweight" rating of Ctrip (NASDAQ:CTRP) shares, and cut its target share price from 76.80 U.S. dollars to 75.90 U.S. dollars.

The following is the full report:

Ctrip reported strong revenue growth and faster market share growth. Profit margins have shown signs of stability, despite larger investments. The mobile-end service continues to attract users, accounting for more than 40% of total trading volume. We reiterated the "overweight" rating of Ctrip, but lowered the target share price from USD 76.80 to $75.90.

Second quarter performance stable

Net revenue rose 38% to 1.72 billion yuan, more than the company's previous revenue forecasts (up 30% to 35%) on the line, higher than our expectations of 3%. Operating margins grew 1% per cent on a month-on-month scale, but fell 11% to 5% year-on-year. The share gain for ads per share is 0.88 yuan (0.14 U.S. dollars), down 40% year-on-year, but better than the analyst's average forecast of 0.11 dollars.

Strong sales growth

In the second quarter, all of Ctrip reported strong sales growth. Hotel booking business volume growth of 64% year-on-year, traffic ticket business volume growth of 83%. Ticket sales rose more than 35% year-on-year, close to the industry average of 3 times times. Tourism Business sales rose 42% year-on-year.

Lower average selling price partly offsets sales growth

The average price of hotel bookings fell 10% year-on-year, but below the 12% to 13% of the first two quarters. This is mainly due to an increase in sales from lower-ranked cities and a significant portion of the hotel coupon costs. The average price of the ticket business fell by 24%, despite a flat ticket commission. This is mainly due to the fact that the ticket sales of ground traffic (such as trains and cars) currently account for a larger proportion, and the Commission level of these ticket sales is lower. The average price of tourism products fell 23% year-on-year. This is mainly due to the recent events in South-East Asia negative impact, leading to a slowdown in outbound travel business growth.

Profitability tends to stabilize

Operating profit margin rose 1%, but fell 11% to 5% year-on-year. (Not according to the United States General accounting standards for 12%.) This is mainly due to higher investment. Ctrip predicts that, due to favorable seasonal factors, profitability will tend to stabilize, the third quarter may rise.

Growth of online/mobile bookings

Total online bookings (both PC and mobile) accounted for 80% of the total, up from 70% in the previous quarter, setting a new record. Mobile application total downloads increased by 60%, to about 200 million times, and the activation rate reached 50%. Mobile-end bookings reached 3 times times the same period last year, with the recent maximum trading amount exceeding 200 million yuan. (D-Gold)