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What Factors Will Continue to Drive Ctrip’s Revenue Post 3Q15?

Ally Schmidt

Ctrip Posts 3Q15 Results: Can It Continue Down the Growth Path?

(Continued from Prior Part)

A snapshot of Ctrip’s revenue

For 3Q15, Ctrip International (CTRP) saw its revenues grow by a strong 49% year-over-year to $501 million. It beat the estimate of $490.4 million, which was on the high end of the company’s guided range of 45%–50%. This is significantly higher than its US rivals. For 3Q15, Priceline’s (PCLN) revenue grew by 9.4%, Expedia’s (EXPE) grew by 13%, and TripAdvisor’s (TRIP) grew 17%.

Ctrip International (CTRP) is the fourth largest holding of the EGShares Emerging Markets Consumer ETF (ECON), accounting for 4.3% of its portfolio.

What makes Ctrip’s growth sustainable in the future is that all its revenue segments are participating more or less equally to the company’s growth.

Accommodation reservation

Accommodation reservations form the major part of Ctrip International’s revenues. The website Ctrip.com garners about 41% of its total revenues from accommodations bookings. It’s one of the leading providers of accommodations bookings. The accommodations revenue increased by about 43% year-over-year in the third quarter of 2015. This was backed by strong volume growth of 50%.

Transportation ticketing

Transportation ticketing revenues closely follow the accommodation revenues for Ctrip.com, forming about 36% of the company’s revenues. Ctrip has formed efficient relationships with various airline companies and other transportation companies in the nation. On its website, it provides one of the widest choices for bookings. Ticketing revenues surged by about 51% year-over-year for the third quarter of 2015. This was backed by strong volume growth of 150%.

Package tours

With the surge in tourism travel in China, Ctrip has taken advantage of being the first mover in online tour packages. This is one of Ctrip’s highest growing segments. The company’s package tour revenues grew by a strong 66% year-over-year to $0.93 million, forming about 17% of the revenues.

Corporate travel

Corporate travel forms a mere 4% of Ctrip International’s revenues. It grew by about 20% year-over-year for the third quarter of 2015.

Outlook

Ctrip International has seen its revenues grow between 20% and 30% per year for the last couple of years. The company looks on track to fulfill its target this year as well. It’s expected to continue to see strong growth in revenues in the near future, with fourth quarter revenues expected to grow by 45%–50%, above analyst estimates of 40% growth. This is despite China’s decreasing GDP (gross domestic product). Consumer travel spending is expected to remain strong in the future.

This will be backed by strong volume growth, which is expected to come at pricing discounts. However, Ctrip’s industry consolidation will help it gain pricing power.

Continue to Next Part

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