Ctrip Earnings Tank Shares: Solid Bounce Candidate Below $57

Citigroup commented on Ctrip.com (CTRP) following earnings out last night saying they recommend taking advantage of any weakness as a buying opportunity for long-term investors.

Though Ctrip's guidance has historically been conservative, the company lowered YoY revenue growth guidance to "30% for 2Q," but on the call, re-affirmed FY08 guidance of 35%. This lower guidance is primarily attributed to the earthquake in Sichuan, which has impacted travel to the province and dampened overall travel sentiment.

Addressing recent concerns over deteriorating domestic traffic YoY growth from the Big 3 Chinese airlines, with YoY growth slowing to 3.9% in March and 3.7% in April, the Firm stresses that Ctrip continues to outpace the market due to market share gains from local agencies, with air ticketing revenues up 68% YoY vs. the market up 10% in 1Q.

Reiterates Buy and $78 target.

Notablecalls: I feel CTRP represents a pretty solid bounce candidate. The company continues to execute in the midst of a perfect storm (snowstorms, earthquake in Sichuan, upcoming Olympics, dampening overall demand).

The stock will get hit today but I will be buying it starting from $57 (long here some but willing to average down) as I feel there is a lot of institutional buy interest in the name.

Just a hickup.

Comments

[hknmtt]

i am a fun of ctrip. In China you can see it everywhere. At the airport, on the flights, in the shuttlebus, on the radio, in business magazines. The most profitable business for Ctrip is hotel booking. With the largest market share (higher than all smaller competitors added together) Ctrip can get a much higher commission rate than other HRCs.
Risks? Yes.
First of all, the fastest growth of Ctrip is in its airticket booking. Delivery and collection of fares are expensive and the cost is getting higher and higher. The new labor contract law in China favors low income, less insured people who forms Ctrip delivery forces.
Though Chinese customers are using credit card more and more on the internet, but old school business travellers are the last to accept credit card payment and they form a major part of Ctrip members.

[fosterch]

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