Tag Archives: ctrp

Qunar’s Airline Battle Won’t Slug No. 1 Chinese Agency Ctrip: ITG

Qunar ‘s ( QUNR ) ongoing dispute with China’s airlines won’t hurt China’s No. 1 online travel agent Ctrip.com ( CTRP ), which is expected to report March-quarter travel sales that doubled vs. last year, ITG analyst Henry Guo said. Ctrip and Qunar stocks split on the stock market today , with shares of Ctrip 1.7%, as Qunar fell 1.5%. IBD’s 11-company Leisure-Travel Booking industry group was up a fraction. For Q1, Guo expects Ctrip to report 4.19 billion to 4.29 billion yuan ($640 million to $650 million), topping the consensus view for 4.16 billion yuan. Ctrip hasn’t yet set a date for its Q1 earnings release. That outperformance would follow a months-long battle with flagship carrier Air China — along with some other local airlines including Hainan Airlines and its Hong Kong Airlines unit, as well as China Eastern’s Shanghai Airlines — over fees charged by booking agents such as Qunar. Ctrip acquired a stake in Qunar after the two formed a partnership last year. In the wake of airlines’ refusal to list on Qunar.com, the site now directs users to Ctrip.com or to airlines’ official websites, Guo wrote in a research note. “We believe this should help drive Ctrip’s organic transportation revenue growth and partially offset Qunar’s air-ticketing weakness,” he wrote. Hotel occupancy in China fell to 53.1% in Q1 from 53.6% in the prior quarter, Guo said, but revenue per available room surged 2.2% year over year, “suggesting improved monetization for the whole hotel industry.” At the same time, he says  InterContinental Hotels Group ( IHG ) and Hilton Worldwide ( HLT ) reported 8.3% and 8% year-over-year growth for their Chinese operations, respectively, and Marriott International ( MAR ) saw revenue per available room in Asia rise 6.8% vs. last year. Guo expects Ctrip to report a 76% to 86% jump in accommodations sales vs. the year-earlier quarter, topping the company’s guidance for 70%-80% growth. He sees Ctrip’s travel segment more than doubling revenue. Packaged tours — one of Ctrip’s growth engines — has benefited from outbound travel to high-demand destinations like Japan, South Korea and Southeast Asia, Guo wrote. Relaxed visa requirements have helped fuel outbound travel. He expects 52% year-over-year growth in this segment.

Baidu Zooms On ‘Solid’ Search Growth, ‘Very Strong’ Revenue Outlook

Baidu ( BIDU ) stock shot up Friday after China’s Internet search leader gave a Q2 outlook above consensus late Thursday while posting Q1 earnings and revenue that beat and met, respectively, Wall Street views. Baidu posted “solid results on core search” along with “very strong” revenue guidance for Q2, ITG Investment Research analyst Henry Guo told IBD via email Friday. China’s slowing economic growth “has no impact on advertisers spending,” Guo said. “Local merchants continue to embrace search advertising as mobile helps Baidu penetrate into local, expanding its advertiser base.” Brean Capital on Friday upgraded Baidu stock to buy from hold. Baidu, often referred to as China’s Google, is investing heavily in services ranging from online payments to online-to-offline transactions including food delivery. And, like Alphabet ( GOOGL )-owned Google, Baidu is spending on research and development of driverless cars. Baidu stock was up 6.5% in midday trading in the stock market today , near 198, its highest level since mid-December. Baidu stock has gained 96% since hitting a nearly three-year low of 100 in late August, but shares have fallen 10% over the past 12 months. Baidu revenue rose 31% year over year in local currency to RMB 15.821 billion ($2.454 billion). That’s above the $2.44 billion that Factset had expected and fell in line with the RMB 15.83 billion analysts polled by Thomson Reuters were looking for. Baidu said that its Q1 revenue excluded Chinese online travel agency Qunar Cayman Islands. In October, Baidu-backed Qunar announced a share swap with Ctrip.com ( CTRP ), another leading Chinese online travel agency. Baidu now owns 3% of Qunar. Baidu also owns 25% of Ctrip, which owns 45% of Qunar. Mobile revenue represented 60% of total revenue in Q1, up from 50% in Q1 2015, Baidu said. Baidu reported EPS ex items of RMB 6.80 ($1.05), down 12% year over year. Still, that’s above the RMB 5.96 analysts polled by Thomson Reuters had expected. For Q2, Baidu guided revenue ranging from RMB 20.110 billion ($3.12 billion) to RMB 20.580 billion ($3.19 billion), representing an increase of 21% to 24% year-over-year in local currency. On an apples-to-apples basis, excluding Qunar from Baidu’s financials, Baidu said that the guidance represents a 28%-31% year-over-year increase in RMB.

Gaming And Messaging Drive Up Tencent Q4 Revenue And Stock

Tencent Holdings showed the growing maturity of China’s love for all things Internet with a fourth-quarter earnings report containing strong growth in online games and social networking revenue. Tencent ( TCEHY ) said revenue surged 45% in local currency to $4.7 billion, beating the consensus estimate of $4.3 billion. Tencent shares, which trade over the counter in the U.S., rose 4% to 20.36 Thursday. The company’s primary stock listing is in Hong Kong, where it is the heaviest-weighted component of the 50-issue benchmark Hang Seng index, accounting for more than 10% of the index. Profit fell slightly short in Q4 as Tencent continues to aggressively invest in video content and mobile operations. Tencent reported earnings per share minus items of 12 cents, up 21% from a year earlier, though the result was a penny short of the consensus estimates as polled by Thomson Reuters. The company reported a net profit of $1.1 billion, up from $905 million a year earlier. “The overall results were pretty strong, with mobile gaming really exceeding expectations,” said Henry Guo, an analyst at ITG Investment Research. “One concern is the money Tencent is spending to acquire video content, but management believes they have the scale to mitigate the bottom-line pressure of content costs.” In 2015, Tencent made heavy investments to expand its library of exclusive premium videos. Tencent has an exclusive partnership with the National Basketball Association to broadcast NBA games in China. Tencent also has an agreement with Walt Disney ( DIS ) to be the exclusive online distributor of the first six “Star Wars” movies. The expanding video catalog led to a six-fold increase in video subscriptions year over year, as mobile daily video views nearly doubled over that time, the company said. Tencent is among China’s Internet leaders, along with e-commerce king Alibaba ( BABA ) and search leader Baidu ( BIDU ). Other China Internet leaders include e-commerce company JD.com ( JD ) and NetEase ( NTES ), which is the second-largest gaming company in China by revenue, after Tencent. Despite a slowing China economy, its Internet leaders have continued to show healthy growth. On Feb. 24 NetEase reported Q4 earnings that beat estimates. JD.com reported Q4 earnings on March 1 that showed strong revenue growth and a smaller-than-expected loss. JD is the largest online direct-sales company in China. A year ago, JD formed a strategic partnership with Tencent. Alibaba also beat estimates when it posted Q4 earnings on Jan. 28. Alibaba provides e-commerce platforms used by businesses and individuals to sell goods and services. Its sprawling business includes cloud computing and mobile payment services. Chinese online travel agency Ctrip ( CTRP ) had a different story. It reported Q4 revenue Wednesday that jumped 50% in local currency and beat views, but the company’s Q1 revenue guidance widely missed expectations. At Tencent, revenue from online games, its largest revenue source, rose 33% to $2.46 billion in Q4, primarily driven by growth from smartphone games through its WeChat and QQ mobile platforms. Monthly active users for its QQ messaging platform for mobile increased 5% year over year to 853 million. Monthly active users on its WeChat mobile messaging service rose 39% to 697 million. Both products serve as a strong distribution platform for Tencent games and digital content offerings. They also send massive volumes of traffic to Tencent’s social networking service, enabling a boost in online advertising. Online advertising revenue rose 118% year over year to $880 million. “Our connection strategy has really extended WeChat and mobile QQ from being social communication tools to becoming platforms for games, publishing, social advertising, premium content distribution and provisioning of other online services,” said Tencent President Chi Ping Lau in the conference call with analysts. Revenue from its social network and messaging services rose 37% to $1.1 billion. The increase was mainly driven by growth in subscription revenue, as well as higher revenue from virtual item sales.