C-Trip - China e-commerce

Ctrip Is Back to Underpromising and Overdelivering 1 comment
by: Dan Wieman December 15, 2009 | about: CTRP
Dan Wieman

Up until the financial crisis, long-time investors knew not to trust Ctrip’s (CTRP) management when they provided guidance of 25% growth. Inevitably, the company produced earnings and revenue growth well in excess of 25%. In its most recent quarter, Ctrip seems to have resumed its phenomenal growth. For its fiscal third quarter, the company produced net revenue growth of 47% on a year-over-year basis. Excluding the impact of the ezTravel acquisition, net revenues grew at a 40% year-over-year rate. Earnings growth was even more impressive, growing 80% on a year-over-year basis to $28 million.

In a recent post, I estimated a value for Ctrip at $66 per share assuming 25% growth for five years declining to 15% by year 10 and assuming a 10% discount rate. I hesitate to model growth higher than 25%, but obviously Ctrip is worth much more if they can sustain 40% growth. It’s amazing that after one quarter $66 per share doesn’t seem all that expensive. I’ll continue to wait for a reasonable margin of safety relative to this value.

Ctrip: Priced Beyond Reason 1 comment
by: Danny Furman January 04, 2010 | about: CTRP
Danny Furman

China's equivalent of Priceline.com (PCLN), Ctrip.com (CTRP), is the PRC's leading online travel agent and operates with almost erotic profit margins. The Company's record quarter, thus far, was during the 2008 Beijing Summer Olympics (Q4 FY2008), with $100M in revenue and $32M in net income. Through the first TWO quarters of 2009, CTRP has booked $128M in sales and earnings of $41M. Even with two quarters each matching last year's record quarter to finish this year (arguable, given China's stimulus spending however unlikely, given reality), CTRP earns about $1.50/share and trades at a P/E of 50 and a P/S near 15.

Given the current valuation, it appears that investors are pricing in a delusion that CTRP does not have significant competition in China and will continue to grow unhindered. Despite beating analyst earnings estimates, margins have dropped thus far in 2009 due to lowered ticket prices. Leading airline CEA sells discounted tickets through Taobao.com (ALBCF.PK) and direct competitors eLong (LONG), Travelsky (TSYHF.PK) and Universal Travel (UTA) are all profitable and growing.

"Middlemen companies" in China (such as travel agencies) will never make the kind of money American ones have. A higher savings rate and better education in math make Chinese consumers more prone to shop wisely. My point in this case is that Chinese people currently don't fly (or take cruises...) as much as Americans (if at all), making what has CTRP so highly valued ($5B or 25x 2008 sales, which included The Olympics!) some parabolic expected future growth. If the Chinese consumer is going to use CTRP more, he is going to need to see value there. Since he has never even flown before, he will not care how much retail prices are for air-travel and simply find the best deal for what he wants, absent of any prior loyalty.

While CTRP was first to the party, there are now other well-equipped players to take advantage of the young travel market in China. Chinese airlines, which didn't have the same pre-internet glory days American ones did, are generally new and modeled to grow in today's economy. In turn, they will price tickets and work with other sellers in a way that maximizes profits in today's economic environment, whereas American airlines (not just AA) have shot themselves in the foot time and time again by trying to maintain excessive retail premiums.

Early investors in CTRP have already been paid handsomely and momentum has carried the stock to unreasonable levels.

My estimated fair value for CTRP is 35X 2009 earnings which, at a more realistic $1.30/share, makes the $72 stock overvalued by about $22/share.

Disclosure: Author holds a short position in CTRP

08.01.2010 11:01
Ctrip.com Announces ADS Ratio Change

SHANGHAI, Jan. 8 /PRNewswire-Asia/ -- Ctrip.com International, Ltd. , a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, today announced that it will change the ratio of its American depositary shares ("ADSs") to ordinary shares from two (2) ADSs representing one (1) ordinary share to four (4) ADSs representing one (1) ordinary share, effective on January 20, 2010.

Ctrip's ADS holders as of January 19, 2010 will receive one additional ADS for every one ADS held at the close of business on January 20, 2010. The effect on the ADS price will take place on January 21, 2010.

For Ctrip's ADS holders, this ratio change will have the same effect as a two-for-one ADS split. There will be no change to Ctrip's underlying ordinary shares. Furthermore, no action is required by ADS holders to effect the ratio change.

Why I'm Short Ctrip
by: Danny Furman January 24, 2010 | about: CTRP / QCOM / PCLN / CEA / ALBCF.PK / SOHU / SNDA / LONG
Danny Furman picture Danny Furman
163
Followers
1
Following
Follow

* Articles (30)
* Instablogs (35)
* StockTalks (84)
* Comments (363)
* Profile

Send Message

You are currently following Danny Furman
Stop Following

You are no longer following Danny Furman
About this author:

* Profile & More Articles

Submit
an article to
back to yahoo finance add to my yahoo back to cake

*
Font Size:
*
Print
* Email
* TweetThis

I recently wrote a brief explanation of why I believe Ctrip.com (CTRP) is significantly overpriced, citing most importantly the herd mentality of investors from the United States and Europe who had pushed the company's market cap to over $5B, 20X sales and 55X earnings. This enormous herd obviously saw parallels between CTRP and Priceline.com (PCLN), which dominates the market it created for discounted travel in the US.

CTRP does provide the same services as PCLN, however it is an entirely different business. China's travel industry is a baby and consumers make purchases at Ctrip.com because it's the only way they know how. American consumers accept Priceline.com as the cheapest way to travel, which it often is, and happily purchase there what they remember paying much more for in the past. Basically, CTRP is a retailer in a new industry and PCLN is a discounter in an established one.

Contrary to what investors seem to expect, CTRP faces broad and significant competition. Chinese airlines even sell tickets directly through discounted online services, as China Eastern Air (CEA) does through Taobao.com (ALBCF.PK). Publicly traded CTRP competitors Sohu.com (SOHU), Shanda (SNDA), eLong (LONG), Baoshinn (BHNN.OB), UTA and TravelSky (TSYHF.PK) are all growing (mostly faster than CTRP) and profitable. SOHU and SNDA both operate leading Chinese search engines and recently announced plans to spin off their travel businesses, so I'm not familiar with their market share or operations specifically in this sector. Ultimately, China's travel market is a new one, almost exclusively on line, extremely competitive and likely to see decreased margins as it saturates.

While many stocks have lost some ground in the last week, CTRP is now over 15% off its January peak, largely thanks to a 6% Thursday sell-off immediately following a 2-for-1 split. Some analysts called the split a bullish event and Piper Jaffray upped their target price to $81 (pre-split) a week ago, but this is a case in which the contrarian in me has too much ammo to listen to the cheerleading at all.

Having graduated from La Jolla High School in 2001, I first heard about stock splits as my first economics teacher, family friends and the like explained how investing $5K in local Qualcomm (QCOM) or another internet company made them fit for retirement (before the bubble burst). Similarly, CTRP has had two magnificent runs, trippling from 2006 to 2007 and again in 2009, earning the stock a "Qualcomm in Y2K-esque" valuation. All else aside, the recent appreciation in CTRP paired with a 2-for-1 split appears bullish for the stock and has likely convinced many to open new long positions. Still, it is the only individual stock in which I hold a short position.

My explanation for the CTRP split is simple. The intent is to attract less educated investors to the table and for institutional investors to dump their 10 figure stakes on the public bit by bit before gravity takes hold of the stock. PCLN shares trade for $200+, so a $75 price tag on shares of CTRP was doubtfully affecting institutional or experienced investor sentiment in the slightest.

Making CTRP trade in the $30s puts it on a lot of people's radars and here's why: Newbies think a lower share price means more upside and there are always newbies cluelessly buying China. Inexperienced investors will convince themselves (as I would have a year ago) that CTRP has upside potential similar to other Chinese stocks in the $20-$40/share price range, despite a market cap of 10 times or more and a valuation that implies growth consistent with years the company had much less competition and higher margins.

Additionally, the increased Piper Jaffray target price for CTRP was less than 10% above the market price at the time, indicating that analysts there are "bluffing with a weak hand" and afraid to provide a target that sounds unrealistic. Insiders have sold multi-million dollar stakes in recent months and institutions have done about twice as much selling as buying in the last month, suggesting the stock has run farther than many knowledgeable folks see as reasonable.

I am not necessarily suggesting shorting CTRP at Friday's price ($32.65), although I believe the stock is still overvalued by 20% or more. If, however, anyone is thinking about buying CTRP, consider yourself warned.

02.02.2010 23:01
Ctrip Reports Fourth Quarter and Full Year 2009 Financial Results



SHANGHAI, Feb. 2 /PRNewswire-Asia/ -- Ctrip.com International, Ltd. , a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, today on February 3, 2010, China time, announced its unaudited financial results for the fourth quarter and the full year ended December 31, 2009.

Highlights for the Fourth Quarter of 2009 -- Net revenues were RMB566 million (US$83 million) for the fourth quarter of 2009, up 43% year-on-year. Excluding net revenues attributable to ezTravel, Ctrip's net revenues were RMB546 million (US$80 million) for the fourth quarter of 2009, up 38% year-on-year. -- Gross margin was 77% for the fourth quarter of 2009, remaining consistent with that in the same period in 2008. -- Income from operations was RMB189 million (US$28 million) for the fourth quarter of 2009, up 62% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB239 million (US$35 million), up 60% year-on-year. -- Operating margin was 33% in the fourth quarter of 2009, compared to 30% during the same period in 2008. Excluding share-based compensation charges (non-GAAP), operating margin was 42%, compared to 38% during the same period in 2008. -- Net income attributable to Ctrip's shareholders was RMB190 million (US$28 million) in the fourth quarter of 2009, up 57% year-on-year. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB240 million (US$35 million), up 56% year-on-year. -- Diluted earnings per ADS were RMB1.32 (US$0.19). Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.66 (US$0.24). -- Share-based compensation charges were RMB50 million (US$7 million), accounting for 9% of the net revenues, or RMB0.34 (US$0.05) per ADS for the fourth quarter of 2009. Highlights for the full year 2009 -- Net revenues were RMB2.0 billion (US$291 million) in 2009, up 34% from 2008. Excluding net revenues attributable to ezTravel, net revenues were RMB1.9 billion (US$281 million) for the full year 2009, representing an increase of 29% from 2008. -- Gross margin was 77% in 2009, compared to 78% in 2008. -- Income from operations was RMB687 million (US$101 million) in 2009, up 49% from 2008. Excluding share-based compensation charges (non-GAAP), income from operations was RMB818 million (US$120 million) in 2009, up 39% from 2008. -- Operating margin was 35% in 2009, compared to 31% in 2008. Excluding share-based compensation charges (non-GAAP), operating margin was 41%, compared to 40% in 2008. -- Net income attributable to Ctrip's shareholders was RMB659 million (US$97 million) in 2009, up 48% from 2008. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB790 million (US$116 million), up 38% from 2008. -- Diluted earnings per ADS were RMB4.67 (US$0.68) in 2009, compared to RMB3.23 (US$0.47) in 2008. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB5.60 (US$0.82), compared to RMB4.16 (US$0.61) in 2008. -- Share-based compensation charges were RMB131 million (US$19 million), accounting for 7% of the net revenues, or RMB0.93 (US$0.14) per ADS in 2009.

"Year 2009 was a year of challenges and opportunities. We continued to increase our market share, strengthen our vendor relationships, and enhance our customer service," said Min Fan, President and Chief Executive Officer of Ctrip. "With the increasing travel demand in China, Ctrip is committed to working diligently to capture the opportunities ahead of us."

Recent Developments

Change of Ratio of ADS to Ordinary Shares

Effective on January 21, 2010, Ctrip changed the ratio of its ADSs to ordinary shares from two ADSs representing one ordinary share to four ADSs representing one ordinary share. For Ctrip's ADS holders, this ratio change had the same effect as a two-for-one ADS split.

Investment in the Travel Service Segment of Wing On Travel

In early February 2010, Ctrip's wholly owned subsidiary, C-Travel International Limited, entered into an agreement with Wing On Travel (Holdings) Limited, whereby C-Travel agrees to invest in and Wing On Travel agrees to sell to C-Travel, 90% of the issued share capital of Wing On Travel's travel service segment (operated through Wing On Travel's subsidiary, HKWOT (BVI) Limited), for a total consideration of approximately US$88 million (or HK$684 million) in cash. The closing of the transaction is subject to certain conditions, including approval by shareholders of Wing On Travel.

Headquartered in Hong Kong, Wing On Travel primarily operates in Hong Kong and engages in tour packages, airline ticketing, hotel reservation and inbound and outbound travel operations. Wing On Travel operates approximately 20 branches, along with a call center and the website http://www.wingontravel.com/ to service travelers. Wing On Travel is one of the most recognized travel brands in Hong Kong and was awarded as the "Best Travel Agency in Hong Kong" for four consecutive years since 2006. With more than 45 years in business, Wing On Travel has successfully built up a large base of loyal customers and a seasoned management team in the leisure travel market.

Through this investment, Ctrip will significantly increase its presence in Hong Kong, in addition to Mainland China and Taiwan. With Hong Kong becoming one of the most popular destinations and international travel hubs for Chinese travelers, Ctrip is able to establish a strategic position in Asia. This investment will enable Ctrip to offer more comprehensive products and elevated services to domestic, outbound and inbound travelers. Ctrip's leading market position in the travel services industry in Mainland China combined with Wing On Travel's solid track record in the leisure travel market will bring an innovative platform to service the increasing number of business and leisure travelers in the Greater China area.

James Liang, Chairman of the board of Ctrip, said, "We are pleased to enter into this transaction with Wing On Travel. Together, we will leverage Ctrip's cutting-edge technology and Wing On Travel's extensive expertise in leisure travel to bring our product offerings and services to a new level. Through this alliance, Ctrip is well positioned in the Greater China area to meet travelers' onshore and offshore travel needs. This transaction will become an important milestone in Ctrip's history."

Fourth Quarter and Full Year 2009 Financial Results

For the fourth quarter of 2009, Ctrip reported total revenues of RMB603 million (US$88 million), representing a 43% increase from the same period in 2008 and a 3% increase from the previous quarter in 2009.

For the full year ended December 31, 2009, total revenues were RMB2.1 billion (US$311 million), representing a 34% increase from 2008.

Hotel reservation revenues amounted to RMB279 million (US$41 million) for the fourth quarter of 2009, representing a 33% increase year-on-year, and a 7% increase quarter-on-quarter. Excluding revenues attributable to ezTravel, Ctrip's hotel reservation revenues were RMB275 million (US$40 million), representing a 31% increase year-on-year, primarily driven by the increase in hotel reservation volume. Excluding revenues attributable to ezTravel, Ctrip's hotel reservation revenues increased by 7% quarter-on-quarter, primarily driven by the increase in the commission per hotel room.

For the full year ended December 31, 2009, hotel reservation revenues were RMB956 million (US$140 million), representing a 25% increase from 2008. Excluding revenues attributable to ezTravel, Ctrip's hotel reservation revenues were RMB942 million (US$138 million) for the full year 2009, representing a 23% increase from 2008. The hotel reservation revenues accounted for 45% of the total revenues in 2009, compared to 48% in 2008.

Air ticket booking revenues for the fourth quarter of 2009 were RMB240 million (US$35 million), representing a 45% increase year-on-year, and remaining consistent with those in the previous quarter. Excluding revenues attributable to ezTravel, Ctrip's air-ticketing revenues were RMB233 million (US$34 million) for the fourth quarter of 2009, representing a 41% increase year-on-year, primarily driven by a 33% increase in air ticketing sales volume, and a 6% increase in commission per ticket year-on-year. Excluding revenues attributable to ezTravel, Ctrip's air-ticketing revenues remained consistent with those in the previous quarter.

For the full year ended December 31, 2009, air ticket booking revenues were RMB888 million (US$130 million), representing a 35% increase from 2008. Excluding revenues attributable to ezTravel, Ctrip's air ticket booking revenues were RMB866 million (US$127 million), representing a 31% increase from 2008. The air ticket booking revenues accounted for 42% of the total revenues in 2009, remaining consistent with those in 2008.

Packaged-tour revenues for the fourth quarter of 2009 were RMB49 million (US$7 million), representing a 62% increase year-on-year, and an 11% decrease quarter-on-quarter. Excluding revenues attributable to ezTravel, Ctrip's packaged-tour revenues were RMB 41 million (US$6 million), representing a 36% increase year-on-year due to the increase of leisure travel volume, and a 5% decrease quarter-on-quarter due to the decreased volume caused by seasonality.

For the full year ended December 31, 2009, packaged tour revenues were RMB177 million (US$26 million), representing a 62% increase from 2008. Excluding revenues attributable to ezTravel, Ctrip's packaged-tour revenues were RMB 149 million (US$22 million), representing an increase of 37% year-on-year. The packaged tour revenues accounted for 8% of the total revenues in 2009, compared to 7% in 2008.

For the fourth quarter of 2009, net revenues were RMB566 million (US$83 million), representing a 43% increase from the same period in 2008 and a 4% increase from the previous quarter. Excluding net revenues attributable to ezTravel, net revenues were RMB546 million (US$80 million), representing an increase of 38% from the same period in 2008 and a 5% increase from the previous quarter.

For the full year ended December 31, 2009, net revenues were RMB2.0 billion (US$291 million), representing a 34% increase from 2008. Excluding net revenues attributable to ezTravel, net revenues were RMB1.9 billion (US$281 million) for the full year 2009, representing an increase of 29% from 2008.

Gross margin was 77% in the fourth quarter of 2009, remaining consistent with that in the same period in 2008 and that in the previous quarter.

For the full year ended December 31, 2009, gross margin was 77%, compared to 78% in 2008.

Product development expenses for the fourth quarter of 2009 increased by 37% to RMB88 million (US$13 million) from the same period in 2008 and increased by 9% compared to the previous quarter, primarily due to an increase of product development personnel and share-based compensation charges. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 13% of the net revenues, compared to 14% in the same period last year and in the previous quarter.

For the full year ended December 31, 2009, product development expenses were RMB308 million (US$45 million), representing an increase of 31% from 2008. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 14% of the net revenues, remaining consistent with those in 2008.

Sales and marketing expenses for the fourth quarter of 2009 increased by 20% to RMB98 million (US$14 million) from the same period in 2008 and 4% from the previous quarter, primarily due to the increase of marketing related activities. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 16% of the net revenues, decreasing from 19% in the same period last year and 17% in the previous quarter.

For the full year ended December 31, 2009, sales and marketing expenses were RMB345 million (US$51 million), representing an increase of 20% from 2008. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 16% of the net revenues, decreasing from 18% in 2008.

General and administrative expenses for the fourth quarter of 2009 increased by 51% to RMB62 million (US$9 million) from the same period in 2008 and 32% from the previous quarter, primarily due to an increase of administrative personnel and share-based compensation charges. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 6% of the net revenues, remaining consistent with those in the same period in 2008 and in the previous quarter.

For the full year ended December 31, 2009, general and administrative expenses were RMB196 million (US$29 million), representing a 14% increase from 2008. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 6% of the net revenues, remaining consistent with those in 2008.

Income from operations for the fourth quarter of 2009 was RMB189 million (US$28 million), representing an increase of 62% from the same period in 2008 and a decrease of 5% from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB239 million (US$35 million), increasing by 60% from the same period in 2008 and by 6% from the previous quarter.

For the full year ended December 31, 2009, income from operations was RMB687 million (US$101 million), representing an increase of 49% from 2008. Excluding share-based compensation charges (non-GAAP), income from operations was RMB818 million (US$120 million), increasing by 39% from 2008.

Operating margin was 33% in the fourth quarter of 2009, compared to 30% in the fourth quarter of 2008 and 37% in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 42%, compared to 38% in the fourth quarter of 2008 and 41% in the previous quarter.

For the full year ended December 31, 2009, operating margin was 35%, compared to 31% in 2008. Excluding share-based compensation charges (non-GAAP), operating margin was 41%, compared to 40% in 2008.

Net income attributable to Ctrip's shareholders for the fourth quarter of 2009 was RMB190 million (US$28 million), representing a 57% increase from the same period in 2008, and a 1% increase from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB240 million (US$35 million), representing an increase of 56% from the same period in 2008, and an increase of 11% from the previous quarter.

For the full year ended December 31, 2009, net income attributable to Ctrip's shareholders was RMB659 million (US$97 million), representing an increase of 48% from 2008. Excluding share-based compensation charges (non-GAAP), net income attributable to Ctrip's shareholders was RMB790 million (US$116 million), representing an increase of 38% from 2008.

The effective tax rate for the fourth quarter of 2009 was 20%, increased from 2% in the same period of 2008, primarily because in the fourth quarter of 2008, the preferential tax rate of 15% was retroactively applied to certain PRC subsidiaries of Ctrip, which obtained approval for the High and New Technology Enterprise ("HNTE") status, from January 1, 2008. The effective tax rate for the fourth quarter of 2009 increased from 13% in the previous quarter, primarily due to the increase in the amount of non tax-deductible share-based compensation as a percentage to our income as a whole.

The effective tax rate for the full year ended December 31, 2009 was 17%, compared to 19% in 2008, primarily due to the decrease in the amount of non tax-deductible share-based compensation as a percentage to our income as a whole.

Diluted earnings per ADS were RMB1.32 (US$0.19) for the fourth quarter of 2009. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.66 (US$0.24).

For the full year ended December 31, 2009, diluted earnings per ADS were RMB4.67 (US$0.68), compared to RMB3.23 (US$0.47) in 2008. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB5.60 (US$0.82), compared to RMB4.16 (US$0.61) in 2008.

As of December 31, 2009, the balance of cash, restricted cash and short-term investment was RMB1.7 billion (US$253 million).

Business Outlook

For the first quarter of 2010, the Company expects to continue the year-on-year net revenue growth at a rate of approximately 30%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.

Conference Call

Ctrip's management team will host a conference call at 8:00PM U.S. Eastern Time on February 2, 2010 (or 9:00AM on February 3, 2010 in the Shanghai/HK time zone) following the announcement.

The conference call will be available on Webcast live and replay at: http://ir.ctrip.com/ . The call will be archived for 1 month at this website.

The dial-in details for the live conference call: U.S. Toll Free Number +1.888.679.8034, International dial-in number +1.617.213.4847, Passcode 72400835. For pre-registration, please click: https://www.theconferencingservice.com/prereg/key.process?key=PYCKN6G9G .

A telephone replay of the call will be available after the conclusion of the conference call through February 10, 2010. The dial-in details for the replay: U.S. Toll Free Number +1.888.286.8010, International dial-in number +1.617.801.6888; Passcode 36344086.

* March 2, 2010, 7:19 PM ET

Ctrip.com Files For Offering Of 5.7 Million ADSs; Stock Falls

By Eric Savitz

Ctrip (CTRP) this afternoon said it filed with the SEC to sell 5.7 million American depositary shares, each representing 0.25 ordinary shares. Goldman Sachs is managing the deal.

Proceeds will be used for strategic acquisitions and investments in complementary businesses, and for other general corporate purposes.

CTRP in late trading is down $1.13, or 3%, to $36.80; in the regular session, CTRP fell $1.14, or 2.9%, to $37.93.

13.03.2010 00:33
Ctrip Announces Signing of Definitive Agreements for Acquiring Minority Stakes in Two Hotel Operating Companies


SHANGHAI, March 12 /PRNewswire-Asia/ -- Ctrip.com International, Ltd. ("Ctrip"), a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, announced today that it has entered into definitive agreements to acquire minority stakes in two hotel operating companies. Through two separate transactions, Ctrip will acquire minority stakes in each of China Lodging Group, Limited and BTG-Jianguo Hotels&Resorts Co., Ltd.

Investment in China Lodging Group, Limited

Today, Ctrip entered into definitive agreements with China Lodging Group, or China Lodging, Limited and certain shareholders of China Lodging, pursuant to which, Ctrip will subscribe for ordinary shares to be issued by China Lodging and purchase ordinary shares from certain existing shareholders of China Lodging in reliance on Regulation S under the Securities Act of 1933, as amended. The aggregate number of ordinary shares that Ctrip will purchase from China Lodging and the selling shareholders pursuant to the agreements will be equal to approximately 8% of China Lodging's total ordinary shares outstanding immediately after the closing of this investment, which is expected to take place concurrently with China Lodging's initial public offering. Ctrip will pay the purchase consideration in cash at a price equal to the initial public offering price of China Lodging's ordinary shares.

China Lodging operates a leading economy hotel chain in China. It offers three hotel products: HanTing Express Hotel, HanTing Seasons Hotel and HanTing Hi Inn. China Lodging has filed a registration statement with the U.S. Securities and Exchange Commission in connection with an initial public offering with an estimated price range of $10.25 to $12.25 per American Depositary Share (or $2.5625 to $3.0625 per ordinary share).

Investment in BTG-Jianguo Hotels&Resorts Co., Ltd.

BTG-Jianguo Hotels&Resorts Co., Ltd., or BTG-Jianguo, is a hotel management company based in China. BTG-Jianguo manages over 60 hotels throughout China, with a focus on mid-to-high end markets.

In March 2010, Ctrip entered into an agreement with Hongkong Polaris Hotels Limited, or Polaris, whereby Ctrip has agreed to purchase from Polaris a 15% equity interest in BTG-Jianguo with an option to acquire another 10% within one year after the closing. The closing of this transaction is subject to receipt of necessary governmental approval and other customary closing conditions.

Min Fan, CEO of Ctrip, said, "Both China Lodging and BTG-Jianguo are leading China-based hotel management companies. Our investment in China Lodging and BTG-Jianguo is part of our long-term strategy to enhance our partnership with hotel groups in order to better service our customers."

Highest Gross Margin in the Hotels, Resorts & Cruise Lines Industry Detected in Shares of Ctrip.com International (CTRP, LONG, WOLF, RCL, MHGC)
Written on Fri, 07/09/2010 - 4:53am
By Chip Brian

Below are the top five companies in the Hotels, Resorts & Cruise Lines industry as ranked by gross margin. Gross Margin tells you how many of your sales dollars are profit. If efficiency is improved, more profits will result.
Ctrip.com International (NASDAQ:CTRP) has gross margin of 78.1%, a sales growth of 46.6%, and trailing 12 months sales of $318.5 million.
eLong (NASDAQ:LONG) has gross margin of 68.5%, a sales growth of 22.7%, and trailing 12 months sales of $55.8 million.
Great Wolf Resorts (NASDAQ:WOLF) has gross margin of 67.6%, a sales growth of 13.4%, and trailing 12 months sales of $272.4 million.
Royal Caribbean Cruises (NYSE:RCL) has gross margin of 59.1%, a sales growth of 12.1%, and trailing 12 months sales of $6 billion.
Morgans Hotel (NASDAQ:MHGC) has gross margin of 52.8%, a sales growth of 4.2%, and trailing 12 months sales of $231.8 million.
SmarTrend is bearish on shares of WOLF and our subscribers were alerted to Sell on May 20, 2010 at $2.50. The stock has fallen 26.9% since the alert was issued.