CTRP

[David Randolph]

On UTVG's thread we've discussed the dichotomy between buying the smaller and lower priced competitor in an industry or paying up for the leader.

At the time I've defended that I preferred to buy the cheap stock (from a valuation standpoint), also because I believed a smaller company could grow faster than a larger one.

UTVG was trading at 10 times earnings while CTRP was trading at more than 70 times earnings and UTVG was growing faster, so it seemed rational to me to go with UTVG. The market proved this assessment completely wrong.

I've been noticing the same behavior in another, completely different industry, which is the solar energy industry. FSLR is the market leader and it sports a much higher valuation than its peers. However, when things got very tough, FSLR help up reasonably well, much better than the other (more "undervalued") solar stocks, and now FSLR is pushing up to new all time highs while others are still on the floor.

I've also learned that in rough economic times investors expect (and it usually happens), the leaders to absorb market share from weaker competitors.

I'm a very strong believer in the travel & tourism sector in China. I believe all those people moving around are producing a huge market and CTRP is the leader in its segment. By the way, here's CTRP's profile:

«Ctrip.com International, Ltd. (CTRP) and its subsidiaries provide travel related services including hotel reservation, air-ticketing, packaged-tour services, as well as Internet advertising and other related services. It sells air tickets for Chinese airlines, including Air China, China Eastern Airlines, China Southern Airlines, and Shanghai Airlines, as well as international airlines operating flights originating from cities in China, such as United Airlines, Northwest Airlines, Air Canada, DragonAir, and Lufthansa. The company also offers independent leisure travelers bundled packaged-tour products, which include air-ticketing and hotel reservations; sells travel guidebooks, which provide information for independent travelers; VIP membership cards that allow cardholders to receive discounts from restaurants, clubs, and bars. The company markets its products and services through on-site promotions, cross-marketing, online marketing, and advertising. The company was founded in 1999 and is based in Shanghai, the People's Republic of China.»

The company trades at 36.5 times 2008 estimated EPS, while it grows EPS by 42%. This is cheap, because, in 5 years:



Anyway, I don't want to put any limits on the stock.

I'm just tired of trying to be smarter than the crowd, going for smaller and more obscure companies, because the potential benefit doesn't seem to compensate the risk. Differently from what I expected, the more "overvalued" companies actually hold up better in tough economic times.

It's easy for a $200 M market cap to be cut in half, compressing its multiple from, say, 16 to 8. But it takes a lot more to compress the earnings multiple of a multi-billion dollar company, because investors don't feel so afraid of holding these ones.  

The conclusion of all this is that I'll pay up for this leader.

The Trading Plan is:

Buy CTRP, 6.66% of capital.

[David Randolph]

Another notion that I had and I'm starting to lose was that smaller companies usually grow faster than bigger ones. I'm starting to see that the World is just way too big for any company to find limits to its growth ... (unless we're talking about a $50 B plus company with global presence).

Moreover, smaller companies often don't have the resources, in terms of capital or qualified people, to grow fast and in a sustainable manner.

So probably risk is lower and growth prospects are about the same when comparing $1 B plus companies with less than $1 B market cap companies.

It seems easier to invest for the long term in $1 B or more companies than in smaller ones, which are more risky and volatile.

I feel comfortable holding CTRP ($3.7 B market cap) from a risk perspective. And the potential continues to be huge.

[la-onda]

fyi:
CTRP: Jumps +1.57%; Vol +71%; Last 90 Min of Trading
Wednesday, April 16, 2008 16:21ET

During the last 90 minutes of today's session, shares of Ctrip.com Interational Ltd. (NasdaqNM: CTRP) demonstrated a strong UPWARD close relative to its 13:30 ET statistics. "Strong Closers" are determined by proprietary Knobias calculations performed during the last segment of each trading day.

sym: CTRP      @13:30 ET        @CLOSE      % CHANGE
----------   -----------   -----------  ------------
PRICE             $53.43        $54.27        +1.57%
VOLUME           382,290       654,352       +71.17%
#TRADES            2,552         4,401       +72.45%
DAY-HI            $53.87        $54.47       LATE-HI
DAY-LO            $52.13        $52.13           N/A

chart:

[David Randolph]

- "Is it big, the largest in its industry?"

- "Well, yes"

- "Then worry not, it will come back"

I'll keep holding CTRP.

[David Randolph]

BNP Paribas published a small analysis for CTRP last Tuesday, entitled:

Ctrip.com Int'l: Cruising ahead

(you can download it below)

The stock is challenging the $63 resistance level.

[David Randolph]

Technical target of CTRP's bullish breakout is $86, whatever that's worth.

[la-onda]

yesterday with new 52 weeks high 

[berloga]

Wednesday May 7, 8:39 am ET 
Analyst downgrades Ctrip.com on increased share price, limits to 1st-qtr profit upside


NEW YORK (AP) -- A Piper Jaffray analyst lowered his rating on Ctrip.com International Ltd. Wednesday, saying shares of the Chinese online travel company have reached a fair price following a recent run-up.

Ctrip.com International Ltd. shares set an all-time high Monday, and are up almost 40 percent since Jan. 24.

Analyst Aaron Kessler, who has a price target of $68 on Ctrip.com's U.S.-traded shares, cut his rating to "Neutral" from "Buy." Shares closed at $66.82 Tuesday.

The company is scheduled to report its first-quarter results on May 14. Kessler predicted the company will exceed Wall Street's estimates. But because of February snowstorms in China, he said the company's profit will beat expectations by only 2 cents or 3 cents per share, and investors may expect more.

In the fourth quarter, Ctrip.com's profit topped Wall Street estimates by 4 cents per share.

Shares of Ctrip.com fell $2.17, or 3.2 percent, to $64.65 in premarket trading.

[David Randolph]

Thanks for the information berloga.

I've attached the complete research report from Piper Jaffray.

Taking a look at this analyst's expectations for Q1 2008 results ...

«• Expect Modest Upside To Earnings. Ctrip reports earnings on 5/14. We expect modest upside to our net revenue estimate of $45.2M (50% y/y on a USD basis; 41% y/y on a RMB basis) and $0.17 GAAP/$0.21 PF. We note that consensus estimates are $47.0M and $0.18 GAAP EPS, and guidance calls for 35% y/y growth (on RMB basis). We expect EBITDA of $17.7M, and an EBITDA margin of 39.2%. We believe we could see $2M-$4M upside to our revenue estimate and $0.02-0.03 EPS upside. We note that while we expect upside to our numbers, we believe the snowstorms in February impacted travel which may limit the level of upside in Q1.»

Consensus estimate is for revenue of $47 M and $0.18 GAAP EPS. I say this estimate is ripe to be surpassed by a wide margin, because it entails a sequential decline in revenue from $57 M in Q4 07 and a decline in EPS from $0.29 also in Q4 07.

Well, if we take a look at history, revenues have been climbing 23% a quarter (on a sequential basis), on average, for the past 4 quarters. And, because of snowstorms, analysts expect revenues to decline 21% from Q4 07 to Q1 08. I don't believe that's going to be the case at all.

I say everything is ready for a big upside "surprise" when CTRP releases earnings about a week from now. The market says that will be the case, as the stock is near an all time high.

[Ramsburg]

Update:

A few downgrades (because of the quake impact) drove the stock down with heavy selling today…
There were out a lot of new research notes published today, I’ve read a few ones and despite the short term impact I think the main general guidance doesn’t change so drastically.

I’ve selected 3 Research Notes to share here:
- (Goldman Sachs) «1Q08: slower 2Q guidance unfortunate, but not thesis changing»
- (Morgan Stanley) «1Q08: Quake Impact Now, Market Share Gain Then…»
- (Susquehanna) «Downgrade to Neutral on Valuation - Rating: Neutral»

You can download this attached zip file containing the 3 complete notes of research:


After today’s plunge, CTRP tested the ascending support level (near $56), if the stock holds above this level the up-swing will still be in play.

Trading Plan:
Hold CTRP

[Ramsburg]

Update:

Goldman Sachs published a new research note today with the following comments:

COMPANY UPDATE
Ctrip.com International (CTRP)
BUY

CTRP: GS 9th Annual Internet Conference takeaways


What's changed
Ms. Jane Sun, CFO of Ctrip.com, presented on May 22 at GS's 9th Annual
Internet conference. The company showcased its core competencies that
continue to build up barriers to entry to the online travel agency industry,
including: superior customer service, broad national coverage, advanced
IT systems, effective S&M campaigns, and strong brand equity. On new
products, Ctrip is actively exploring various opportunities, and expects
corporate travel (where it hopes to become No. 1 in the China market in
2009) and inbound travel (with potential co-operation with international
travel agencies) to be the major areas of focus for 2008. Despite the
slowdown in the economy, Ctrip expects the China travel market to grow at a
double-digit rate in 2008, and its market share gains typically accelerate
during tough times, given its solid execution and ample financial resources.

Implications
We continue to view Ctrip as one of our favorite franchise names. Through
its excellent execution, relentless focus on service quality, and continued
efforts in new product offerings, we think Ctrip will be one of the primary
beneficiaries of travel resource/supply chain consolidation in China for years
to come. 80% of revenues are from existing customers, and Ctrip is rapidly
expanding market share at the expense of small mom & pop shops. At the
end of 1Q, Ctrip had 4.5mn active users, largely high-end business travelers
who are less economically sensitive. It booked 2.3 hotel rooms and 2.1
airline tickets per customer per year in 2007, which has expanded to 2.5 each
so far in 2008. Despite the near-term event-driven impacts on its business,
we are optimistic about Ctrip's long-term growth prospects.

Valuation
Our 12-m TP remains US$67, based on 34X (35X previously) our 2009E non-
GAAP EPS estimate of US$1.97. Our DCF model suggests a US$63 valuation.

Key risks
Impact from macro-economic conditions and special events.

Technical comment: CTRP broke down its ascending support two sessions ago, but quickly bounced above the support level. This could be a good signal if the stock keeps holding above this area.
I'm setting a protective stop below the recent low, as I was ready to sell this position after this recent (false?) breakout.

Trading Plan:
HOLD CTRP with a stop @ $54.90

[Ramsburg]

Update:

Susquehanna Financial Group just published a new research note:

Summary:

VALUATION
We maintain our Neutral rating on CTRP. Historically, Ctrip shares trade at a P/E between
35x to 45x. CTRP currently trades at 33x 2009 non-GAAP EPS, but given the near-term
adverse impact from the earthquake and the Olympics, we believe its shares will continue
to linger at low end of its P/E band. We do not believe the one-time event should change
the long-term growth potential of Ctrip, but investors may find a better buying opportunity
than the present.
RISKS
The upside risks include: 1) fast pickup in online booking, which will lead to margin
expansion, and 2) penetrating more second and third-tier regions. The downside risks
include a slowdown in the Chinese economy, airline operators and chain hotels beefing up
direct sales, and competitions from rivals such as eLong.

Full research note for download (4 pages):


This is not a positive note; they are concerned with short term factors that even if not changing the long term thesis may affect short term stock performance.

From a technical point of view, CTRP is still trading above its ascending support, but the recent price action is putting this technical reference in trouble.
I’m going to upgrade our stop level a little tighter for protection:

Trading Plan:
HOLD CTRP with a stop @ $55.90

[Ramsburg]

CTRP was stopped @ $55.90

[setravis]

Ctrip jumps after 2Q report beats analyst views
Thursday August 14, 1:20 pm ET 
Ctrip climbs after 2nd-qtr report beats expectations, company announces share buyback plan


NEW YORK (AP) -- Shares of Ctrip.com International Ltd. jumped Thursday after the Shanghai-based online travel company reported second-quarter earnings and revenue ahead of analysts' expectations.
American Depositary Shares of Ctrip, which also announced a share buyback plan, rose $7.84, or 18.2 percent, to $51.04. The stock has traded between $35.91 and $70.89 in the past year.


Late Wednesday, Ctrip said that for the quarter that ended June 30 it earned 119.3 million RMB ($17.4 million), or 25 cents per U.S.-traded share, compared with 88.2 million RMB in the year-ago quarter.

Excluding share-based compensation charges, Ctrip earned 32 cents per share.

The company's revenue, after subtracting business tax and related surcharges, rose to 375 million RMB ($54.7 million) from 288 million RMB, helped mainly by increases in hotel reservation and air ticketing revenue.

Analysts polled by Thomson Reuters expected, on average, a profit of 20 cents per U.S.-traded share on revenue, minus business tax and related surcharges, of $53.8 million.

Ctrip expects third-quarter revenue to grow 15 percent to 20 percent over the year-ago quarter. The company's revenue totaled 322.7 million RMB ($43 million) in the third quarter of 2007.

The company added that its board approved a plan to repurchase up to $15 million of its ADS. Ctrip will seek shareholder approval for the plan at its annual meeting in September.

In a client note, Citi Investment Research analyst Catherine Leung kept her "Buy" rating for the stock but lowered her price target to $53 from $78.

The analyst said she still thinks Ctrip "is caught in a perfect storm scenario near-term: negative impact from one-time events (Olympics) plus a slower domestic travel market/ economy," but she thinks its fundamentals may come out stronger in the long run.

In the near term she expects shares to be range-bound "as investors try to look beyond 3Q to gain greater clarity post-Olympics on the magnitude of 4Q rebound and '09 run rate."