Ctrip.com – 4Q09: Sustaining Leadership Despite Rising Competition
•Earnings topped - Sales advanced 43% YoY to Rmb566mn, 10% above Ctrip's high-end guidance and our expectation. Diluted earnings per ADS (US$0.19) climbed 48% YoY, 2% ahead of our forecast.
•What we liked - 1) Hotel booking sales (46% of total) surged 33% YoY, mainly due to rising hotel booking volume (+30%). 2) Air ticketing sales (40% of total) climbed 45% YoY, driven by volume growth (+33%) and pricing recovery. 3) Ctrip enjoyed scalability as non-GAAP operating margin expanded 1ppt QoQ and 5ppts YoY to a 3-year high of 42%, thanks to improving ASP and tight cost management. 4) Ctrip has become the second largest corporate travel services provider in China (vs. out of the top 10 a year ago).
•What concerned us - Ctrip expects its 1Q10 sales to grow 30% YoY, after surging 43% in 4Q. We consider the guidance conservative as it implies flattish pricing.
•What concerned us - Ctrip expects its 1Q10 sales to grow 30% YoY, after surging 43% in 4Q. We consider the guidance conservative as it implies flattish pricing.
•Ctrip - Enjoys competitive edges over peers - Our DCF fair value of US$46.4 implies ~40% share price upside. In our view, Ctrip sets itself apart from its rivals with its premium brand and customer services: 1) Ctrip, which has been growing 3-4x faster than the industry average, enjoys an industry-high ~80% repeat customers ratio. 2) It dominates China's online travel services with ~56% of the market, 3x the level of the next two players combined (iResearch), yet it has only serviced ~2% of China's online population. 3) Taobao and China Mobile's '12580 hotline' may offer alternative distribution channels. Yet Ctrip, as a 'pure play' travel services provider, adds value via its customized travel products and a well-run call center. 4) Ctrip aims to capture ~20% of China's travel services market in the years to come, 5-6 times the current level. Notably, Expedia owns ~20% of the US travel market despite its stronger hotel/airline partners and tougher rivalries.Ctrip - Enjoys competitive edges over peers - Our DCF fair value of US$46.4 implies ~40% share price upside. In our view, Ctrip sets itself apart from its rivals with its premium brand and customer services: 1) Ctrip, which has been growing 3-4x faster than the industry average, enjoys an industry-high ~80% repeat customers ratio. 2) It dominates China's online travel services with ~56% of the market, 3x the level of the next two players combined (iResearch), yet it has only serviced ~2% of China's online population. 3) Taobao and China Mobile's '12580 hotline' may offer alternative distribution channels. Yet Ctrip, as a 'pure play' travel services provider, adds value via its customized travel products and a well-run call center. 4) Ctrip aims to capture ~20% of China's travel services market in the years to come, 5-6 times the current level. Notably, Expedia owns ~20% of the US travel market despite its stronger hotel/airline partners and tougher rivalries.
Dice Holdings – CQ4: Solid Quarter
•Solid beat, trends stabilize - Revenue / EPS were $27MM (-25% Y/Y) / $0.06, above our / consensus revenue forecasts of $25MM / $26MM and EPS estimates of $0.04 / $0.04. We remain encouraged as the upside to the top line flowed through to adj. EBITDA and net income outperformance. Adj. EBITDA was $11.4MM, vs. our / consensus $10.2MM / $10.6MM. Management noted that the recruitment market continued to stabilize in CQ4 and ended the quarter on a strong note. Deferred revenue climbed Q/Q for the first time since early C2008, driven by momentum in its Dice.com segment.
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