Ctrip.com (CTRP): Raising PT After Margin Improvement - Instinet

November 25, 2016 7:22 AM EST
Get Alerts CTRP Hot Sheet
Price: $43.17 +0.75%

Rating Summary:
    18 Buy, 5 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 18 | New: 19
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Instinet analyst, Jialong Shi, reiterated his Buy rating on shares of Ctrip.com (NASDAQ: CTRP), after Ctrip’s 3Q diluted EPS beat consensus of CNY0.78 on better margins.

The company posted in-line 26% YoY revenue growth to CNY5.6bn. Its operating margin improved 18pp YoY to 18%, backed by both cost savings and operating leverage. Ctrip trimmed headcount at its call centre by 16% YoY in 3Q as a result of increased adoption of tech-powered service. Ctrip reiterated its longterm operating margin target of 20-30% and GMV target of CNY1.2-1.4tr by 2020. It guided in line19-22% YoY revenue growth for 4Q16F.

By segment, transportation ticketing revenue grew 34% on a pro forma basis, driven by increased monetization for the rail and bus ticketing business which accounted for 10-15% of its total transportation revenue. Air ticketing was resilient, with faster-than-industry volume growth (10% YoY) despite shifting from 3P to 1P model. Reported hotel booking revenue grew 8% YoY. Excluding the effects of VAT and the merchant-model revenue, the growth would be 27%. Packaged tour revenue rose 37%, driven by GMV growth.

Ctrip’s gross profit of CNY4.3bn was 8% ahead of consensus forecasts. GPM of 78% was 5pp higher than Street estimates. The better-than-expected GPM was driven primarily by seasonality and strong top-line growth. Non-GAAP operating margin was 18%, up significantly from 4% in 2Q16 and ~0% in 3Q15 on a pro forma basis, backed by both cost savings and operating leverage. Meanwhile, according to the company, Qunar (QUNR US, NR) for the first time recorded positive non-GAAP OPM in 3Q16 vs -26%/-41% in 2Q16/3Q15 respectively.

The price target of $58 inches up from $57 based on higher estimates using the same DCF assumptions.

For an analyst ratings summary and ratings history on Ctrip.com click here. For more ratings news on Ctrip.com click here.

Shares of Ctrip.com closed at $40.99 yesterday.



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