The Journey Back to Ctrip

I sold out most of my Ctrip.com (CTRP) in early May in the upper $60s as the stock had made a huge run. [May 2: Bookkeeping: Cutting Ctrip.com to Almost Nothing] The company posted very good earnings but some vague future guidance has the stock down 10%+  to the $56 range, so I am going to buy back what I sold off here in the $56-$58 range. This allows me to get back the shares I sold off for a 14-16% discount from where I sold them not 2 weeks ago. I still find the valuation hard to swallow, but this company has been a personal favorite for years and is never "cheap". If the stock falls to the lower $50s I'd increase my position more.

I've increased my stake from 0.1% of portfolio to 1.3% with this AM's purchases.

• Chinese travel Web site operator Ctrip.com International Ltd. said Wednesday its first-quarter profit jumped on higher airline ticket sales.
• Net income rose 52 percent to 98.8 million RMB ($14.1 million), or 1.43 RMB per share (20 cents per share) from 64.9 million RMB or 0.96 RMB per share.
• The company said it earned 27 cents per share excluding expenses for stock-based compensation. Analysts polled by Thomson Financial expected profit of 18 cents per share, including stock-based compensation expenses, on sales of $46.5 million.
• Sales rose 47 percent to 366.7 million RMB ($52.3 million) from 249.2 million RMB.
• Chief executive Min Fan said the company was able to achieve strong results despite challenging weather conditions. Several analysts noted that the company was hurt by snowstorms in the first quarter.

Looking forward

• Citi analyst Catherine Leung maintained her "Buy" rating and said the company had a very strong first quarter. However, she said the company was meeting turbulence in the second quarter, primarily because of the recent earthquake in western China.
• Shares of Ctrip.com International Ltd. plunged Thursday after Chinese travel Web site operator lowered its second-quarter outlook, primarily because of the earthquake that struck western China Monday. The company said late Wednesday it expects growth of 30 percent, compared with a previous estimate for growth of 35 percent.

Well the earthquake is an issue, but it's a natural disaster, not something that is a Ctrip.com operational issue. Hence it means very little in the long term scheme of things. But the market, as always, overreacts to 90 day periods of time (the quarter) so we got a nice plunge to reacquire our stock position at a lower cost basis. Thank you market.

Disclosure: Long Ctrip.com in fund and personal account

Comments

[e chang]

I owned some CTRP since August 2005 (13.75 split adjusted). Sold some over time but the remaining shares grew right back. Never thought of buying more because the valuation seemed high for a long time. You may be right in that this may be a good opportunity to add a little.