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Expect A 30%+ Decline In Underperforming eLong When The Buyout Rumors Turn Out To Be False
- eLong gained 60% over the past month solely on takeover rumors.
- Ctrip has been taking market share from eLong, and eLong's recent earnings reports have disappointed.
- Ctrip ruthlessly stole an important partner away from eLong.
- Expedia, eLong's majority shareholder, says the takeover rumors are false and doesn't want to sell its stake.
- Recent profitability issues are being mostly attributed to investment in mobile, but one of the real issues is lower room per revenue.
- The lower room per revenue is a significant issue as it is mostly due to cut spending from the Chinese government on luxury hotels.
- With the loss of luxury hotel income, the company has definitely lost some of their competitive advantage that will hold shares in check.
- We foresee a 2014 price tag of $14.
Another Way To Bet In The Chinese Online Travel Market
Expedia, eLong Partner in Chinese Corporate Travel ForayEli Hoffmann • Nov. 27, 2007
Thu, Aug. 21, 4:58 PM
- In addition to beating Q2 revenue estimates (while missing on EPS), Qunar (NASDAQ:QUNR) is guiding for 90%-95% Y/Y Q3 revenue growth; the consensus is for revenue to grow 83% to $72M.
- Mobile revenue rose 511.8% Y/Y in Q2 to $22.9M (35.5% of revenue), fueling the revenue beat. Flight revenue +143.3% to $45M; hotel revenue +79.5% to $11.5M. Flight ticket volume +66.1%, and revenue/ticket +46.4%. Hotel room night volume +105.2%, but revenue per room night -12.5%.
- Gross margin fell to 73.6% from 78.1% in Q1 and 78.2% a year ago (hurt EPS). Qunar notes higher payment-processing fees pressured its gross profit.
- Spending was heavy: R&D spend +181.6% Y/Y to $29.3M, sales/marketing +212.4% to $34.7M, product sourcing spend +416.1% to $10.9M, G&A spend +432.9% to $18M. Online marketing spend +120.5% Q/Q to $23.8M.
- If history is any guide, Ctrip (NASDAQ:CTRP) and/or eLong (NASDAQ:LONG) could follow Qunar higher.
- Q2 results, PR
Thu, Aug. 7, 7:06 PM
Wed, Aug. 6, 6:21 PM
- Priceline (NASDAQ:PCLN) is investing $500M in Chinese online travel leader Ctrip (NASDAQ:CTRP) through a convertible bond, and has been granted permission to buy Ctrip shares in the open market over the next 12 months. Between the bond and the share purchases, Priceline can hold up to a 10% stake.
- The companies are also expanding their existing partnership (formed in 2012). Priceline will provide Ctrip customers access to its 500K+ non-Chinese accommodations, and Ctrip will provide Priceline customers access to its 100K+ Greater China accommodations.
- In addition, Ctrip will provide access to Priceline's rentalcars.com and OpenTable inventory, and Priceline will promote Ctrip's air/attraction ticketing services to its customers. Priceline will have the right to nominate an observer to Ctrip's board.
- The alliance poses a fresh challenge to Expedia-controlled eLong (NASDAQ:LONG) and Baidu-controlled Qunar (NASDAQ:QUNR). Expedia recently shot down a rumor stating Ctrip was looking to acquire Expedia's eLong stake.
- CTRP +14.2% AH.
Mon, Jul. 7, 7:21 AM
Thu, Jul. 3, 10:27 AM
- An "industry insider" tells Marbridge Consulting Ctrip (CTRP +0.9%) plans to buy Expedia's (EXPE +2%) 65% stake (82.4% voting right) in rival Chinese travel bookings site eLong (LONG +4.4%) through a share swap that would value eLong (current market cap of $754M) at $800M-$1B.
- Marbridge notes Tencent owns 15% of eLong's voting rights, and that Ctrip and Tencent have jointly invested in two companies - one of them is LY.com, which Ctrip recently poured $200M into.
- eLong and Expedia are trading higher. Some of Marbridge's scoops have panned out, and others haven't.
Mon, Jun. 30, 12:46 PM
Tue, Jun. 24, 9:29 AM
- Citing concerns about air ticket commission cuts, Stifel's George Askew has downgraded Ctrip (CTRP) to Hold.
- Askew notes Air China is lowering its commission on ticket bookings to 2% from 3%, and considers it "likely that other Chinese airlines will follow Air China’s example, particularly the number one and two players China Southern and China Eastern."
- He's assuming a 0.5% net reduction in Ctrip's air ticket commission, and has respectively slashed his 2014 revenue and earnings estimates by 2% and 3%.
- Transportation ticketing revenue accounted for 39% of Ctrip's Q1 sales, and was up 43% Y/Y.
- Qunar (QUNR) is following Ctrip lower. Peer eLong (LONG) might also get hit.
Fri, May. 9, 11:39 AM
- After pricing its 8M-share IPO at $9, Tuniu (TOUR) opened at $9 but has since risen 12% to $10.08.
- The Chinese online packaged tour seller has a market cap of $474M, or 1.5x 2013 sales. It sold 7.38M new shares, and 620K on behalf of existing holders. Tuniu had 2013 revenue of $324.2M (+75% Y/Y), and a net loss of $13.2M.
- Chinese online travel peers Ctrip (CTRP +4.9%), Qunar (QUNR +1.8%), and eLong (LONG +1.5%) are all trading higher.
Mon, Apr. 28, 10:17 AM
- Sohu (SOHU -4.8%) missed Q1 estimates and provided light Q2 guidance. Meanwhile, as part of a recent crackdown, the Chinese government has pulled The Big Bang Theory and other popular U.S. shows from sites such as Sohu.com, Youku.com (YOKU -4.4%), Baidu's (BIDU -5%) iQiyi, and Tencent Video (TCEHY -2.8%). Time observes The Big Bang Theory has produced 1.3B video views since launching on Sohu TV in '09.
- The news is overshadowing a $1.22B investment in Youku by Alibaba (ABABA) and an affiliated P-E firm, and a WSJ report stating Alibaba is forming a mobile search JV with leading mobile browser firm UCWeb (once targeted by Baidu).
- The deals are the latest in a long line of investments and partnerships struck by Alibaba, Tencent, and Baidu, as each firm tries to build a Web/mobile empire covering over a dozen valuable markets.
- Is Qihoo (QIHU -0.8%) next in line to make a deal? With a $21.6B market cap, the security app/browser/search provider and Baidu rival is the biggest Chinese Internet company to remain independent of the big-3. Qihoo was reported in January to be talking with Alibaba.
- Other decliners: NQ -6.5%. VIPS -5.2%. WB -4.2%. WBAI -3%. LONG -4.5%. QUNR -2.4%.
Tue, Apr. 8, 9:37 AM
- Bloomberg reports leading Chinese travel sites Ctrip (CTRP +5.4%) and Qunar (QUNR +5.4%) are "discussing a range of possibilities, from a full-blown merger to a partnership."
- Sources caution the talks are at an early stage, and that ownership structure and financing haven't yet been agreed upon.
- With combined 2013 sales of more than $1B, a Ctrip-Qunar merger would create a Chinese online/mobile travel powerhouse ... provided regulators don't object. The companies have been aggressively battling for mobile customers, sacrificing margins in the process.
- Ctrip and Qunar are both rallying. Rival eLong (LONG +1.9%) is also higher amid positive early trading for recently-pressured Chinese Internet stocks.
- Baidu (BIDU +1.8%) owns 58.6% of Qunar, which delivered a strong IPO last year.
Thu, Feb. 27, 2:21 PM
- Sources tell Marbridge Consulting Alibaba (ABABA) is talking with Ctrip (CTRP +6.9%) about a possible investment.
- Alibaba took stakes in AutoNavi and Sina's Weibo microblogging platform last year. Marbridge's track record with investment/M&A rumors is mixed, but it has made some accurate calls in recent months.
- Ctrip has rallied above $55, and Chinese online travel rivals Qunar (QUNR +3.3%) and eLong (LONG +8.3%) are also posting sizable gains.
- Separately, the WSJ reports Chinese messaging/gaming giant Tencent (TCEHY) is looking to buy a stake in top Alibaba rival JD.com, which recently filed for a $1.5B IPO.
Wed, Feb. 19, 6:28 PM
Mon, Jan. 27, 12:44 PM
- U.S. and Chinese Internet stocks are adding to last week's big losses, as investors continue taking profits following major 2013 gains. Chinese stocks were hit last week by an emerging markets selloff, weak PMI data, and an SEC ban (pending appeal) on audits from the Chinese units of big-4 U.S. accounting firms.
- Twitter (TWTR -8.2%), the company bears are most likely to point to when arguing a new Internet stock bubble has formed, is headlining the U.S. decliners. Shares are still up 25% from their post-IPO opening trade of $45.10.
- Other U.S. decliners: GOOG -3.1%. FB -2.9%. YELP -5.3%. Z -5.1%. LNKD -4.3%. P -3.2%. ANGI -4.1%. ZNGA -3.1%. GRPN -3.1%.
- Chinese decliners: BIDU -2.9%. CCIH -19%. BITA -14.6%. CTRP -7.4%. NQ -7.9%. LONG -9.4%. DANG -7.3%. SOHU -4.3%. GOMO -5.8%. SINA -3.3%. QUNR -7.7%. SFUN -5.4%. WBAI -7.5%. RENN -5%.
- Internet/social media ETFs: FDN, PNQI, SOCL
Dec. 27, 2013, 12:41 PM
- T.H. Capital's Tian Hou believes cumulative downloads of Ctrip's (CTRP +3.2%) Android app (as of Monday) are up 16.3% since Nov. 19, thanks in part to a mobile-only hotel discount promotion covering eight major Chinese cities.
- Rivals Qunar (QUNR -2.7%) and eLong (LONG +0.4%) are respectively estimated to have seen 11% and 14% cumulative Android app download growth over this time.
- Hou also notes Ctrip's iOS app was ranked #3 on the Chinese App Store's travel app download list, trailing only a train ticket app and a taxi app.
- Ctrip already had strong mobile exposure going into Q4: The company mentioned in its Q3 report mobile had grown to account for 30% of its hotel bookings (up from 20% in Q2), and 15% of its air ticket bookings.
- Shares are up 130% YTD on what has been a very good year for Chinese Internet names.
- Previous: Ctrip invests in, strikes partnership with online car rental firm
Nov. 1, 2013, 11:12 AM
- After pricing its 11.1M-share IPO at $15 (above an elevated price range of $12-$14), Qunar (QUNR) opened at $28.35 and is now at $32.30, up 115.3%. That gives the Chinese online travel site a valuation of $3.64B, which in turn means Baidu's (BIDU) 58.8% post-IPO stake is worth $2.14B.
- For reference, Qunar had 2012 sales of just $81.7M, and 1H13 sales of $58.5M (+75% Y/Y).
- Rivals Ctrip (CTRP +1.2%) and eLong (LONG +1.7%) are trading higher.
- F-1, IPO preview
Oct. 25, 2013, 4:21 PM
- Chinese Internet and solar stocks, many of which have skyrocketed this year, have closed with decent losses after the Shanghai exchange fell for the fourth day in a row amid credit crunch worries, and as NQ Mobile continued to feel the impact of Muddy Waters' fraud allegations.
- Muddy Waters' detailed accusations regarding ghost addresses, a shell company, inflated market share figures, dubious cash balances, and spyware are likely to yield fresh scrutiny of the financial statements provided by Chinese ADRs, and could also affect the reception given to upcoming IPOs (I, II). Investor concerns about the bookkeeping of U.S.-traded Chinese firms had diminished some this year.
- Chinese Internet decliners: VIPS -9.1%. AMAP -6.1%. YY -6%. QIHU -4.8%. PWRD -5.7%. CYOU -4.7%. SINA -3.8%. LONG -3.5%. YOKU -3%.
- Chinese solar decliners: YGE -12.2%. JKS -9.4%. JASO -9%. DQ -7.2%. TSL -6.8%. CSIQ -4.8%. CSUN -4.4%.
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