Earnings from Ctrip.com (CTRP)

Lost in the hectic day yesterday was a nice earnings report from Ctrip.com (CTRP), one of the fund holdings. This is a Chinese travel stock that I've held in my own personal account, on and off, for the better part of two years. All it does it quietly execute while people chase sexy names. It's valuation is very rich at this point (I'd like to see it pull back a bit myself), but again - talk about demographic trends. A newly affluent middle class... who want to travel. Simple story anyone can understand. But once again, it's not so easy as throwing a dart - it's competitor elong (LONG) has stunk - not quite sure how it can not produce when the 'rising tide lifts all boats' but I don't follow it close enough to comment; it just doesn't seem to execute.

For those of you who remember the late 90s, think Priceline, Expedia et al .... as with those companies who eventually (actually VERY quickly) faced a horde of competition, the risk here is competition and cannibalization from Ctrip's own customers as they take a direct sales model. But so far it has not been a significant issue - just something to monitor in the future. Management is also conservative and knows how to manage expectations which I like....

• China's top online travel agent, Ctrip.com (CTRP), posted unexpectedly strong quarterly profit driven by rising travel demand, pushing up its stock price in after-hours trading. Third-quarter profit almost doubled to $15 million, or 21 cents per American Depositary Share, from 12 cents a year earlier, as a growing middle class and rising incomes mean more Chinese are spending more on travel and leisure.
• Excluding stock-based compensation, Ctrip posted earnings of 26 cents per ADS, topping analysts' forecasts for 22 cents, according to Reuters Estimates. Revenues rose to a record $46 million, as hotel reservations, flight bookings and package tours all posted strong growth.
• Ctrip shares have risen about 84 percent this year, while domestic rival eLong Inc. (LONG), in which U.S. online travel giant Expedia Inc. (EXPE) has a majority stake, has dropped by more than a fifth.
• Revenue -- which Ctrip said was up 55 percent from a year earlier in yuan terms, stripping out a rise in the yuan against the U.S. dollar -- was split roughly in half between the mainland's first tier and second tier cities, said executives.
• However, revenue growth from second-tier cities was 40-45 percent, almost double the 20-30 percent growth in the main cities such as Beijing and Shanghai.
• The company was also facing pressure from airlines that increasingly sell directly to customers, but its one-stop shopping business model would help it maintain a strong relationship with airlines. "Direct sales will continue to grow," said Chief Executive Min Fan. "But Ctrip continues to work closely with all airlines."
• The Shanghai-based firm forecast year-on-year net revenue growth of about 35 percent in the current fourth quarter, the same estimate it made for the third quarter when revenues rose 55 percent.

Again, I really like this name but it's extremely rich at 60x 2008 estimates, hence it is not a major position at this time, as I've cut it back since fund inception as it relentlessly moves upward.

Long Ctrip.com in fund; no personal position