Another Way To Bet In The Chinese Online Travel Market

Apr.29.13 | About: eLong, Inc. (LONG)

When one talks about online Chinese travel agencies, everybody thinks International (NASDAQ:CTRP), perhaps with good reason. After all, is the undisputed leader in China's online travel market, having taken 45.4% of that market in 2012.

But with such a well-known name in a market desperate for growth stories, buying comes at a cost. The stock trades at 29.6 times forward 2013 earnings, as well as 4.4 times TTM revenues. And it already carries a significant market capitalization, at nearly $2.9 billion.

What if there was another way to play the Chinese travel market?

As a matter of fact, there is. There is yet another quoted player which also enjoys a good market position, as we can see below (Source: China Internet Watch, Enfodesk)

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Notice the second largest player in that market: eLong (NASDAQ:LONG). eLong holds 16.2% of the market to's 45.4%. is nearly 3 times larger in terms of market share, and a bit below 6 times larger in terms of revenues. On the other hand, eLong is growing somewhat faster, with revenues predicted to grow 29% in the March quarter versus 19% for

In terms of valuation, eLong trades at about the same price/sales as, 4.4 times, but is somewhat more expensive in terms of forward 2013 price/earnings, since it commands a 40 multiple.

Although the valuation multiples are broadly in line with's, being smaller and growing faster can make it more attractive for an aggressive growth investor. eLong carries a market capitalization of $516 million.

Still a lot of growth ahead

Traveling is the kind of good which sees a hockey stick pattern of consumption as incomes rise. China is no exception, and every study indicates continued potential for the market to continue expanding. For instance, according to

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It's not a surprise that online travel will expand so much, after all China is expected to have more than double the internet users than the U.S. plus Japan combined in 2015 (Source: China Internet Watch, Boston Consulting Group). And yet (NASDAQ:PCLN) is a $35 billion company and Expedia (NASDAQ:EXPE) - eLong's majority shareholder -- is a $7.9 billion company. It's likely that over time and eLong will actually exceed the size of the U.S. online agencies.

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Both and eLong seem decent growth stocks given the market potential and growth rates. is the Chinese market leader, but growing a bit slower than eLong. eLong might be better for more aggressive growth investors seeking higher growth and lower market capitalizations.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.