Chinese travel-booking company Ctrip (NASDAQ:CTRP) recently reported solid 2Q10 results and strong guidance for 3Q10. Data from the airline industry and the city of Shanghai have indicated strong growth momentum for Ctrip in July 2010. I believe Ctrip is on track to surpass its guidance of 25% Y/Y increase in air-ticketing volume in 3Q10, 25%-30% growth in hotel-booking volume, and 35%-40% Y/Y increase in overall revenue. "A rising tide lifts all boats." I forecast strong growth in China's overall travel volume will help Ctrip overcome challenges posed by less important factors such as air-ticketing commission cuts and high-speed rail's substitution effect on airlines. Detailed data and analysis are as follows:
Based on official data from Civil Aviation Administration of China (CAAC), total number of China's air passengers rose 21% year-over-year (17% month-over-month) to 25.47 million in July 2010. Domestic passengers increased 20% Y/Y (35% M/M) to 23.71 million. International passengers rose 44% Y/Y (13% M/M) to 1.76 million (Chart 1). Based on data from TravelSky, the leading provider of IT solutions for China's airline industry, total number of China's air passengers rose 22% Y/Y (17% M/M) to 26.73 million in July. Domestic passengers increased 20% Y/Y (17% M/M) to 23.85 million. International passengers rose 43% Y/Y (16% M/M) to 2.88 million (Chart 2). These data points have indicated strong growth momentum of travel activities in China. I believe Ctrip's air-ticketing volume in July has grown faster than the overall passenger growth of 21% because it has been gaining market share against air-ticketing industry peers. I believe Ctrip is on track to surpass its guidance of 25% Y/Y increase in air-ticketing volume in 3Q10.
Chart 1: CAAC Air Passenger Data
Chart 2: TravelSky Air Passenger Data
Chart 3: Shanghai World Expo Traffic Data
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