Ctrip.com International Summary
Core Content
Ctrip.com International, a major player in the retailing sector, is analyzed in this document with a focus on its financial performance, valuation metrics, and strategic initiatives. The report is dated 15 March 2018 and includes insights from analysts Wendy Huang, Ivy Luo, Marcus Yang, and Frank Chen.
Key Financials
- Price: US$48.73 (as of 03:04, 15 Mar 2018 GMT)
- 12-month target price: US$67.00
- 12-month total share return (TSR): +37.5%
- Market Cap: US$25,010 million
- 30-day average turnover: US$180.6 million
- Shares on issue: 513.2 million
Financial Performance (2017A to 2020E)
| Metric |
2017A (Rmb m) |
2018E (Rmb m) |
2019E (Rmb m) |
2020E (Rmb m) |
| Revenue |
26,780 |
33,108 |
42,743 |
52,926 |
| EBIT |
2,926 |
4,981 |
9,776 |
13,790 |
| Reported Profit |
2,142 |
3,715 |
7,585 |
10,907 |
| Adjusted Profit |
3,976 |
5,892 |
10,010 |
13,425 |
| Gross Cashflow |
5,004 |
6,976 |
11,097 |
14,512 |
| CFPS (Rmb) |
8.62 |
11.66 |
18.23 |
23.46 |
| CFPS Growth (%) |
49.7 |
35.3 |
56.3 |
28.7 |
| PGCFPS (x) |
35.7 |
26.4 |
16.9 |
13.1 |
| EPS (adj) (Rmb) |
6.74 |
9.84 |
16.44 |
21.71 |
| EPS Growth (%) |
66.2 |
46.0 |
67.1 |
32.1 |
| PER (adj) (x) |
45.7 |
31.3 |
18.7 |
14.2 |
| ROA (%) |
3.1 |
4.5 |
7.5 |
9.5 |
| ROE (%) |
5.1 |
6.8 |
10.9 |
13.2 |
| EV/EBITDA (x) |
41.4 |
27.5 |
15.6 |
11.5 |
| Net Debt/Equity (%) |
-3.0 |
-12.7 |
-23.0 |
-34.6 |
| P/BV (x) |
2.0 |
1.9 |
1.8 |
1.6 |
4Q17 Performance
- Revenue: Rmb6.4bn (26% YoY growth), in line with consensus.
- Accommodation Reservation Revenue: Rmb2.3bn (25% YoY growth), driven by increased reservation volume.
- Transportation Ticketing Revenue: Rmb2.9bn (20% YoY growth), slowing from 41% in the previous quarter due to regulation impact.
- Packaged Tour Revenue: Rmb623m (34% YoY growth), with volume growth in both organized and self-guided tours.
- Corporate Travel Revenue: Rmb207m (15% YoY growth), impacted by the Kindergarten PR incident.
- Gross Margin: Expanded 6ppts YoY to 83%.
- Non-GAAP Operating Profit: Rmb908m (15% YoY growth), beating consensus by 7%.
- Non-GAAP EPS: Rmb1.56, 49% above consensus.
1Q18 Outlook
- Revenue Growth Guidance: 9–11% YoY, below market expectations of 16% YoY.
- Segment Growth:
- Accommodation Reservation: 18–20% YoY
- Transportation Ticketing: Flat YoY
- Packaged Tours: 10–15% YoY
- Corporate Travel: 20–25% YoY
- Management's View: 1Q18 is expected to absorb the biggest impact, with growth expected to re-accelerate in 2Q18 and 2H18.
International Business Expansion
- International Revenue (2017): Over 20% of total revenue.
- International Ticketing (2017): Over 40% of ticketing revenue.
- Strategic Partnerships:
- Big Bus Tours: Signed in Nov 2017 for better in-destination transportation services.
- Hungarian Tourism Agency & Tennis Australia: Formed partnerships in Nov and Dec 2017.
- Priceline's OpenTable: Partnered in Jan 2018 to enable restaurant bookings.
- Korail (South Korea): Launched rail ticket sales in Feb 2018.
- International Car Rental Service: Launched on Trip.com in Mar 2018.
Earnings and Target Price Revisions
- FY18 EPS: Cut by 10% due to lower-than-expected 1Q18 guidance.
- FY19 EPS: Trimmed by 1% but retained largely unchanged.
- Target Price (TP): Maintained at US$67.00 based on 27x FY19E PER and 1x PEG.
Price Catalyst
- 12-month price target: US$67.00, based on PER methodology.
- Catalyst: Fast-growing international business.
Action and Recommendation
- Recommendation: Maintain "Outperform" rating and recommend buying on weakness.
Estimate Revisions
| Metric |
Old Estimate (Rmb m) |
New Estimate (Rmb m) |
Revision (%) |
| Net Revenue (1Q18E) |
7,376 |
6,754 |
-8% |
| Gross Profit (1Q18E) |
5,979 |
5,603 |
-6% |
| Non-GAAP Operating Profit (1Q18E) |
1,073 |
942 |
-12% |
| Non-GAAP Operating Margin (1Q18E) |
14.6% |
13.9% |
-0.6 ppt |
| Non-GAAP Net Profit (1Q18E) |
942 |
795 |
-16% |
| Non-GAAP Diluted EPS (1Q18E) |
1.56 |
1.34 |
-14% |
Ratio Summary
| Ratio |
2015 |
2016 |
2017E |
2018E |
2019E |
2020E |
17–18E |
18E–19E |
19E–22E |
| EV/Revenue (x) |
15.4 |
9.6 |
6.8 |
5.3 |
4.1 |
3.3 |
- |
- |
- |
| EV/EBITDA (x) |
254.4 |
-223.8 |
46.4 |
29.4 |
16.4 |
12.0 |
- |
- |
- |
| EV/FCF (x) |
32.6 |
-721.5 |
35.9 |
18.9 |
15.6 |
11.6 |
- |
- |
- |
| P/E (Non-GAAP) (x) |
34.3 |
83.5 |
47.7 |
32.2 |
19.3 |
14.6 |
- |
- |
- |
| P/E (Non-GAAP, ex cash) (x) |
34.8 |
87.1 |
47.1 |
30.2 |
17.0 |
11.8 |
- |
- |
- |
| Price/Sales (x) |
16.4 |
10.2 |
7.2 |
5.7 |
4.4 |
3.6 |
- |
- |
- |
| Price/Book (x) |
2.4 |
2.3 |
2.2 |
2.1 |
2.0 |
1.8 |
- |
- |
- |
Financial Statement
| Metric |
2015 |
2016 |
2017E |
2018E |
2019E |
2020E |
17–18E |
18E–19E |
19E–22E |
| Gross Revenue (Rmb m) |
11,497 |
19,788 |
26,977 |
33,347 |
43,052 |
53,309 |
24% |
29% |
21% |
| Net Revenue (Rmb m) |
10,898 |
19,228 |
26,780 |
33,108 |
42,743 |
52,926 |
24% |
29% |
21% |
| Gross Profit (Rmb m) |
7,854 |
14,499 |
22,101 |
27,681 |
35,932 |
44,594 |
25% |
30% |
21% |
| Gross Margin (%) |
72% |
75% |
83% |
84% |
84% |
84% |
108 bps |
46 bps |
36 bps |
| SG&A (Rmb m) |
7,473 |
16,067 |
19,175 |
22,700 |
26,157 |
30,804 |
18% |
15% |
16% |
| Operating Profit (Rmb m) |
381 |
(1,431) |
2,142 |
3,715 |
7,585 |
10,907 |
73% |
104% |
34% |
| OPM (%) |
3% |
-8% |
11% |
15% |
23% |
26% |
322 bps |
653 bps |
669 bps |
| Net Income (Rmb m) |
2,508 |
(1,431) |
2,142 |
3,715 |
7,585 |
10,907 |
73% |
104% |
34% |
| Adjusted Profit (Rmb m) |
3,150 |
2,129 |
3,976 |
5,892 |
10,010 |
13,425 |
48% |
70% |
28% |
| NPM (%) |
23% |
-7% |
8% |
11% |
18% |
21% |
322 bps |
653 bps |
669 bps |
Strategic Developments
- Ctrip is expanding its international travel services and penetrating lower-tier cities to drive 30% CAGR in GMV by 2020.
- The company is focusing on international business, aiming to grow it to 40–50% of revenue in the next five years.
- Continued synergies from the consolidation of Skyscanner are expected to support growth.
Analysts
Source
- FactSet, Macquarie Research, March 2018
- All figures in Rmb unless noted, target price in USD.
