Thursday, August 14, 2008

Interesting Stock Reaction to Ctrip.com (CTRP)

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We're behind on earnings reports - there are quite a few this week and I've been unable to keep up with the volume, so we'll catch up over the next week.

Interesting reaction in the stock today for Ctrip.com (CTRP) as it is up nearly 20% - we hold very little so it's not really helping us. They beat analysts estimates by a wide margin but have provided very weak guidance (for them). Usually they lowball, but in the years I've been following the company I've never seen guidance of 15-20%. The market seems to be ok with it, perhaps since the stock has been beaten to such a pulp. The number of curveballs in this market is astounding - we've had far better results / guidance in other names and they've proceeded to sell off 30% within a week. Then a company with what I consider weak guidance gets a jump of almost 1/5th. Simply mind numbing action of late. The "other" Chinese company that we own which reported last night, which was also beaten down, and is far cheaper - had what I considered a far better report and is down a few %. I give up on trying to provide explanations - it is what it is.
  • For the second quarter of 2008, Ctrip reported total revenues of RMB402 million (US$59 million), representing a 30% increase from the same period in 2007 and a 10% increase from the previous quarter. (analysts in at $54M)
  • Hotel reservation revenues amounted to RMB196 million (US$29 million) for the second quarter of 2008, representing a 14% increase from the same period in 2007 and the previous quarter primarily due to increased volume in hotel bookings.
  • Air-ticketing revenues for the second quarter of 2008 were RMB169 million (US$25 million), representing a 44% increase from the same period in 2007 and a 6% increase from the previous quarter, primarily due to increased air ticketing volume.
  • Packaged-tour revenues for the second quarter of 2008 were RMB24 million (US$3 million), up 85% from the same period in 2007 primarily due to the increased leisure travel volume, and a decrease of 11% from the previous quarter due to seasonality.
  • Income from operations for the second quarter of 2008 was RMB127 million (US$19 million), which represented a 34% increase from the same period in 2007 and a 15% increase from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB159 million (US$23 million), representing a 34% increase from the same period in 2007 and a 10% increase from the pervious quarter.
  • Operating margin was 34% in the second quarter of 2008, compared to 33% in the second quarter of 2007 and 32% in the previous quarter. Excluding share- based compensation charges (non-GAAP), operating margin was 42% in the second quarter of 2008 compared to 41% in the second quarter of 2007 and was relatively consistent with the previous quarter.
  • Net income for the second quarter of 2008 was RMB119 million (US$17 million), representing a 35% increase from the same period in 2007, and a 21% increase from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income was RMB151 million (US$22 million), representing a 35% increase from the same period in 2007, and a 14% increase from the previous quarter.
  • Diluted earnings per ADS were RMB1.72 (US$0.25) for the second quarter of 2008. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB2.17 (US$0.32) for the second quarter of 2008. (again, the world we live in is non GAAP so $0.32 vs analysts $0.20)
Outlook
  • For the third quarter of 2008, Ctrip expects the year-on-year net revenue growth rate to be in the range of 15-20%.
Very small share repurchase
  • The board of directors has approved a share repurchase program, which is subject to shareholder approval during Ctrip's annual general meeting currently scheduled in September 2008. The board has authorized Ctrip to repurchase, using funds from Ctrip's available cash balance, up to US$15 million worth of its own ADSs.
Analysts currently have $1.02 EPS for the year, with this $0.12 beat you have a $1.14 but it is unclear how the next quarter will react with this lowered guidance. But say they can do $1.20, at $51 it's a forward P/E of 42x. I find that rich considering this new guidance which probably is a low ball, but far lower than I can recall this company ever giving. But the market likes it, and that's all that matters.

[Feb 28: Ctrip.com Continues to Impress]
[Jan 5: Zachstocks on Ctrip.com]

Long Ctrip.com in fund; no personal position



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