Ctrip Shares Fall After Providing Disappointing Guidance

17 Mar, 2016

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Ctrip.com International Ltd. (NASDAQ: CTRP) on Wednesday released its fourth-quarter earning and revenue result, beating analysts’ estimate. But shares still fell as it miss its first-quarter revenue guidance.

In the fourth quarter, revenue of China’s largest online travel agency jumped 50 percent to 2.9 billion yuan from a year earlier, beating analysts’ estimate by 60 million yuan.

Net income attributable to shareholders was 76 million yuan (US$12 million) for the fourth quarter of 2015, compared to net loss of RMB224 million (US$36 million) in the same period in 2014. Excluding share-based compensation charges, diluted earnings per ADS were $0.11 for the fourth quarter, beating analysts’ estimates by $0.05.

Crtip had been expanding its business through acquisition last year. Ctrip announces it completed a share exchange transaction with Baidu last year involving its biggest rival Qunar Cayman Islands, giving the company owning 45 percent of Qunar’s voting interest. The company has also purchased a majority stake in Elong Inc., an online trip-booking service. Ctrip also invested 1.2 billion yuan in India’s largest online travel agency MakeMyTrip last year.

“After the consolidation with Qunar, competition in the online travel market has become much more reasonable,” Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, said by phone. “China’s online travel market is still a very fast growing sector.”

The company expects that revenue will grow 75 percent to 80 in the first quarter,reflecting the consolidation of Qunar’s financial results. Analysts think that this figure is disappointing, because the two companies account for 80 percent of the Chinese hotel and air ticket markets.

“We expect Ctrip’s investment in other industry players last year to help improve services and products to better serve Chinese travelers,” James Liang, chief executive officer, said in the statement.

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