Ctrip beats on top- and bottom-lines – but pressure on Chinese stocks continues to weigh share price down
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Ctrip beats on top- and bottom-lines – but pressure on Chinese stocks continues to weigh share price down

Ctrip, China’s biggest player in the online travel space, reported earnings last week that beat the Street’s expectations on top- and bottom-line measures. Its third quarter saw significant growth from the year-ago period, and its guidance was – if not stellar – nothing to cause it too many problems. But, after a brief increase, the company’s share price declined. Why? The answer may not have anything to do with Ctrip itself – but rather, with on-going pressure on the Chinese stock market due to trade tensions.

Ctrip’s share price declined by 5% last Friday!

 graph 1211 ctrip

Source: Yahoo Finance

Ctrip said that revenue rose by 15% from the year-ago quarter to $1.37 billion. That beat analysts’ expectations of $1.34 billion in revenue for the third quarter. Ctrip also beat on adjusted earnings, delivering $0.42 per share. That’s a minor decline from the year-ago quarter’s $0.44 per share, but an easy beat against expectations of $0.27. What’s more, the company’s international segment – a key division – saw incredible growth. Excluding Skyscanner, Ctrip’s international growth tripled that of the industry. And revenue from Skyscanner’s direct booking program surged by 250%!

Looking forward, the company now expects full year revenue growth of between 15% to 20% - analysts are forecasting 15.7%.

The one weak spot in the company’s quarter was a decline in gross margin from 84% in the third quarter of last year to 79% this time around. As a result, operating income was down 6% in constant currency, year on year. This aside, however, it is clear that Ctrip’s fundamentals remain strong.

Ctrip’s CEO, Jane Sun, made the following comment: “Ctrip reported solid results in the third quarter of 2018. We are seeing our large, growing, and loyal customer base continue to increase their engagements on Ctrip. We are selling more travel products across our customers' travel itinerary. With our strong foundation in the travel industry, despite the ongoing macro uncertainty, we are confident that we are the best travel company to capture more travel market share going forward.”

Disclosure

Dominion holds Ctrip in its Global Trends Luxury Fund.

 

Ctrip beats on top- and bottom-lines – but pressure on Chinese stocks continues to weigh share price down

 

 

 


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