20140402-大和证券-Long-term_business_growth_intact_14页_522kb

报告摘要

TravelSky Technology 696 HK Summary

Core Content

TravelSky Technology is a leading provider of aviation information technology services in China. The company faced a disappointing 2013 performance, which led to concerns about its EBIT margin. However, the analysis suggests that the EBIT margin is expected to improve in 2014 and onwards, driven by several long-term growth factors.

Main Points

2013 Performance: The EBIT margin declined by 3 percentage points YoY to 27.5%, primarily due to one-off costs such as increased technical fees and operating-lease expenses.
2014 Outlook: EBIT margin is expected to start improving in 2014, with a forecasted 13.8% increase in operating costs, which is in line with revenue growth.
Revenue Drivers: The company is expected to benefit from the growth of the China aviation market, with booking growth anticipated to track traffic growth. Additional revenue streams include accounting settlement services, a cargo logistics system, IT outsourcing, and the monetization of its Umetrip app.
Monetization of Umetrip: Expected to begin contributing to earnings from 2015, primarily through advertising income.
Share Price and Target: The share price fell 14% after the 2013 results were announced, and the 6-month target price was lowered to HKD8.40 from HKD9.50. The 2014E PER is at 13x, which is considered undemanding.
Earnings Growth: Forecasted EPS CAGR of 14% for 2013-16E, with core EPS expected to rise from 0.451 in 2014E to 0.608 in 2016E.
Profitability Improvements: The company expects to see improved net profit margins in 2015-16 due to a combination of factors, including the positive impact of international bookings and the shift to usage-based pricing for online travel agents.
Monopoly Status: TravelSky is expected to maintain its dominant position in the Chinese aviation IT market, with limited competition from foreign GDS systems due to the regulatory and legal barriers.
Outbound Traffic Growth: Strong growth in outbound travel is anticipated, which will help improve net margins due to higher booking fees for international trips.

Key Financial Information

Revenue (CNYm)

2013: 4,479
2014E: 5,099
2015E: 5,827
2016E: 6,668

Net Profit (CNYm)

2013: 1,206
2014E: 1,318
2015E: 1,518
2016E: 1,779

Core EPS (Fully-Diluted)

2014E: 0.451
2015E: 0.519
2016E: 0.608

Net Profit Margin

2013: 27.5%
2014E: 25.9%
2015E: 26.1%
2016E: 26.7%

EBITDA Margin

2013: 36.0%
2014E: 36.0%
2015E: 36.1%
2016E: 36.6%

EBIT Margin

2013: 27.5%
2014E: 27.6%
2015E: 28.2%
2016E: 29.2%

Dividend Yield (%)

2014: 2.6%
2015: 3.1%
2016: 3.6%

DPS (CNY)

2014: 0.155
2015: 0.178
2016: 0.209

PBR (x)

2014: 1.7
2015: 1.5
2016: 1.4

EV/EBITDA (x)

2014: 7.8
2015: 6.9
2016: 5.9

ROE (%)

2014: 13.8%
2015: 14.4%
2016: 15.2%

Key Ratios

Sales Growth (YoY): 13.9% in 2014E, 14.3% in 2015E, 14.4% in 2016E
EBITDA Growth (YoY): 13.8% in 2014E, 14.6% in 2015E, 15.9% in 2016E
Operating Profit Growth (YoY): 14.1% in 2014E, 17.0% in 2015E, 18.4% in 2016E
Net Profit Growth (YoY): 9.3% in 2014E, 15.1% in 2015E, 17.2% in 2016E
Gross-Profit Margin: 46.1% in 2014E, 46.0% in 2015E, 46.2% in 2016E
ROCE: 14.4% in 2014E, 15.2% in 2015E, 16.2% in 2016E
ROIC: 19.3% in 2014E, 18.5% in 2015E, 19.0% in 2016E

Share Price and Market Data

2013 Share Price: HKD7.30
6-month Target Price (2014): HKD8.40 (down from HKD9.50)
Upside: 15.1%
12-month Range (HKD): 4.73-8.53
Market Cap (USDbn): 2.75
3m Avg Daily Turnover (USDm): 2.85
Shares Outstanding (m): 2,926
Major Shareholder: China TravelSky Holding Co (29.3%)

Key Risks and Considerations

Main Risk: Weaker-than-expected booking growth could impact the outlook.
Competitive Landscape: Limited impact from foreign GDS due to regulatory and legal constraints.
Cost Management: Operating costs are expected to moderate over time, with staff costs forecasted to rise by 14% in 2014 and decline to 12% by 2016.
VAT Impact: The implementation of VAT caused a 6.6% decline in domestic ASP for 2013, but the effect is expected to be mitigated over time.

Long-Term Outlook

Growth Drivers: Continued expansion of the aviation industry, monetization of Umetrip, and diversification into other travel-related services (hotel, car rental, railway, tours).
Monopoly Position: TravelSky is expected to maintain its dominance in the China GDS market, with limited competition.
Outbound Traffic: Expected to grow strongly, leading to higher booking fees and improved net margins.
Online Travel Agents: The shift to usage-based pricing should increase revenue and improve net-profit margins.
Industry Growth Stage: The Chinese aviation IT market is still in a growth phase, and TravelSky is well-positioned to benefit from this.

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