Going Long eLong with China on the Move

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 |  About: eLong, Inc. (LONG), Includes: EXPE
by: Michael Michaud

eLong USA China Promo

Kung Hei Fat Choi! Millions Go Traveling!


China holds the record for the world’s largest mass migration of people during a national holiday. Last week they celebrated Chinese New Year of the Rabbit by traveling back to their hometowns to visit with Family which most only get to do once a year. As I read, the Year of the Rabbit should be a good year for many. I wish you a happy, healthy and prosperous Chinese New Year of the Rabbit.

Egypt & Middle East Markets Stabilizing

With Mubarak gone, the Egyptians more happy, and Egypt now a bit more stable on all fronts, but with much work to do still, Middle East markets have showed a modest gain this Monday. This week, I recommend going long on ticker (NASDAQ:LONG), eLong China Online Travel Booking Service

eLongs Sky High Fundamental Valuation

eLong China Travel Service, which is traded on the Nasdaq, is a subsidiary of Expedia (NASDAQ:EXPE). eLong has a high flying PE ratio of about 130 right now. Will this high altitude valuation hold or descend? Short-term, yes it could with China authorities working to slow down its world highest growth rates by increasing interest rates and loan requirements. Long-term, it should fly high with many China travelers now, and the potential of multi-millions in the future. See below for its company profile and its offering for online bookings for thousands of hotels in cities across China, and now access to the world like USA with its China-USA Travel offer image above.

Overvalued and or Oversold?

eLong has been in a downtrend since November 11, 2010 at 21.97 to looking very oversold now at 14.25. If eLong’s long-term growth can hold, and it can expand its revenues and EPS, the potential for a sustainable strong PE ratio and stock price growth is showing a possibly very low-risk high-reward trade and investment right now. I do think long-term we are looking at a good buying opportunity in eLong, but there are many other factors to consider also. The problem with conventional market analysis wisdom of going long on eLong here is the high PE ratio issue. On a positive note, long-term big player investors have been increasing the global institutional ownership to 16% plus now on eLong. Its 52 week low was 9.10. eLong could possibly go lower here and test a lower valuation multiple, and then again, it could hold here and head higher based on its potential millions of subscribers and growth from people in the world’s country which is booming economically now.

eLong Earnings Report February 17

eLong will be announcing its 2010 4th quarter financial results February 17. eLong's management team will be on the call to discuss results and highlights and to answer questions. The toll-free number for U.S. participants is +1 866 844 9413. The dial-in number for Hong Kong participants is +852 3001 3802. The toll number for international participants is +1 210 795 0512. The pass code for all participants is ELONG.

China Travel Statistics from ChinaToday.com

China's tourism income reached 1,095.7 billion yuan (160.328 billion U.S. dollars) in 2007, up 22.6 percent year-on-year, said China National Tourism Administration on Thursday. The country hosted 131.87 million inbound tourists last year. Domestic and outbound travelers surpassed 1.6 billion and 40.95 million respectively. The international tourism income reached 41.91 billion US dollars, up 23.5 percent. Domestic tourism income reached 777.06 billion yuan, up 24.7 percent. The international inbound market maintained fast momentum last year. Tourists from other Asian countries took up 61.5 percent of all international tourists. Republic of Korea continued to be the first on the list of nations. By the end of 2007, the country had 13,583 star hotels, up 6.5 percent, while the number of travel agencies increased to 18,943 from 17,957 in previous year.

Buy Long eLong – Ticker LONG

Buy Entry: 13.80 to 16.14

Stop-Loss: 12.12

Take Profit Areas: 21.65 to 22.65, 23.52 to 24.61, 29.47 to 30.86, 40.85 to 42.86, 49.00 to 51.08

eLong Company Profile

eLong, Inc. operates as an online travel service provider in the People’s Republic of China. The company provides its customers with travel information and the ability to book rooms, air tickets, vacation packages, and other travel related services utilizing call center and Web-based distribution technologies. It facilitates the customers to book rooms in approximately 10,000 hotels in 450 cities across China, and fulfills air ticket reservations in approximately 80 cities across China. In addition, the company offers the ability to book rooms at approximately 100,000 hotels outside of China; and provides the customers informative content relevant to hotel and air travel decisions, including tourist and event site destination information, hotel facility information, and photos. eLong markets its services through online marketing, traditional media advertising, co-marketing with established brands of other companies, and direct marketing. The company was founded in 1999 and is headquartered in Beijing, the People’s Republic of China. eLong, Inc. operates as a subsidiary of Expedia Inc.

Click the eLong China Travel Service stock chart below for a larger view.

eLong China Travel Stock Chart

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LONG over the next 72 hours.