Ctrip sees strong start to 2017
Leading Chinese online travel firm Ctrip reported first quarter figures for 2017 at the end of last week, demonstrating a strong underlying business. Net revenue for the three months ending March 31 rose an incredible 46% from the year-ago quarter to RMB 6.1 billion. This is a beat against analysts’ expectations of 2%. The share price dropped slightly following the news, but this is likely a reflection of its incredible rise already this year – and in any case, the decline reversed itself the following day.
Ctrip is up an incredible 38% so far in 2017
SOURCE: Yahoo Finance
One of the most important narratives about Ctrip in the first quarter is the demonstration of its successful implementation of an acquisitions strategy. The company bought competitor Skyscanner last year in order to dominate the market, and it has achieved its goal. With around 80% market share in the OTA space, Ctrip has been able to decrease its marketing spend significantly and implement new economies of scale. The result is a big win on its bottom line: +7.6% to gross margin (now at 80.5%), and a huge increase in operating margin to 15.4% of revenue from just 0.2% in the previous year.
James Liang, Ctrip’s executive chairman, said: “This is the first quarter we consolidated Skyscanner results. By leveraging Skyscanner and other strategic overseas investments, we expect to further strengthen our international product offerings and improve user experiences for both Chinese and international travelers."
Meanwhile, the group’s CEO, Jane Jie Sun, said: "We kicked off 2017 with great results. The group has continued to achieve healthy revenue growth and margin expansion. We have also been making great strides in penetrating into lower-tier cities and expanding into international markets, thanks to our teams' strong execution and strategic investments."
Dominion holds Ctrip in its Global Trends Luxury Fund.
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