Friday, May 19, 2006

CTRP Analysis

We looked at CTRP in a previous article. International Ltd. is a leading consolidator of hotel accommodations and airline tickets in China. The company aggregates information on hotels and flights and enable customers to make informed and cost-effective hotel and flight bookings. It acts as an agent in substantially all of the booking transactions. It targets primarily business and leisure travelers in China who do not travel in group. These travelers form a traditionally under-served yet fast-growing segment of the China travel industry.

CTRP is a hot stock and has seen significant growth in the past three months. The stock has seen a growth of about 74% since the beginning of the year. Let us take a quick look at the financials to see how things look like at the moment.

Hotel reservation revenue increased by 35.5%. Air ticketing revenues increased by 202%. Packaged tour revenues increased by 272%. The other section increased by 400%. Net revenues increased by 54% year over year. The product development costs increased by 83%. Income from operations increased by 25% year over year. Comparing to the revenue growth of 60% year over year, the income were somewhat less because of the rise in operating expenses. Earnings per share increases by 21%.

Looking at the balance sheet provides further information about the company. The assets increased by just 9% compared to the prior quarter. The total share holder equity grew by 9% quarter over quarter. The total equity per share is about 4 dollars/share. The profit margin for CTRP is about 80% and this compares to the 73% profit margin at expedia. The price of CTRP is about 3.43 times higher than Expedia. However, CTRP earnings are only 1.5 times better than Expedia. The plus is that CTRP is growing at a fast clip compared to Expedia. The market cap of CTRP is 1.55 billion where as the market cap of EXPE is 4.84 billion. CTRP has some competitive advantages unlike Expedia as it has hardly any competition in China in its category. At current prices, CTRP does look a bit pricy, it has to dip a bit before it is a buy.

1 comment:

Anonymous said...

I shorted a boatload at over $50. All downside from here. Short-term target = $35.