Qunar Will Not Be Stopped By The Price War
Tue, Jul. 5, 5:38 PM
Thu, Jun. 23, 9:16 AM
Thu, Jun. 23, 7:40 AM
- Qunar Cayman Islands Limited (NASDAQ:QUNR) has received a preliminary non-binding proposal from Ocean Management Limited to acquire all the outstanding shares of Qunar not owned by Significant Shareholders (who have majority voting power) for $30.39 pre ADS or $10.13 per ordinary share (one ADS = 3 ordinary shares).
- The buyer is an entity related to Ocean Imagination L.P., a private equity fund focused on investing in travel-related industries in China. The transaction will be funded with a combination of debt and equity capital.
- Recent SA articles: Pro & Con.
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- Ctrip (CTRP -2.7%) is lower after beating Q4 estimates and guiding for 75%-80% Y/Y Q1 revenue growth, after accounting for the consolidation of peer Qunar's (QUNR +4.4%) results following the end of Q4 - Ctrip owns 45% of Qunar's voting interests following an October deal with Baidu. Consensus, which doesn't account for the Qunar consolidation, is for 45.9% growth.
- Qunar, which saw a major executive shakeup in January, is higher after beating Q4 estimates on the back of 148% revenue growth. On its earnings call (transcript), Qunar said it's declining to give formal Q1 guidance due to ongoing extension talks with hotel owners regarding the company's merchant hotel program, as well as its ongoing efforts to work with airlines to "clean up the agent market and eliminate the irregular behaviors by certain ticketing agencies on our platform."
- Ctrip's Q4: Accommodation (hotel) revenue rose 41% Y/Y to RMB1.2B ($183M). Transportation ticketing revenue rose 61% to RMB1.2B ($192M) thanks to a 143% increase in ticket volume. Packaged tour revenue rose 50% to RMB350M ($54M). Corporate travel revenue rose 26% to RMB136M ($21M).
Gross margin was flat Q/Q and up 400 bps Y/Y to 73%. Operating expenses rose 17% Y/Y (less than revenue growth of 50%) to RMB2.02B ($311M). Ctrip ended 2015 with $4.6B in cash and $4.8B in debt.
- Qunar's Q4: Accommodation revenue rose 423.6% Y/Y to $82.6M. Flight revenue rose 84.7% to $98.2M. Mobile accounted for 75.3% of total revenue.
Gross margin fell to 60.8% from 62.4% in Q3 and 73.5% a year ago. R&D spend rose 532.7% Y/Y to $236.5M, product sourcing spend 207% to $52.4M, sales/marketing 213% to $134.7M, and G&A (excluding one-time stock compensation expenses) 121.5% to $20.6M. Qunar ended 2015 with $1.1B in cash and $510M in debt.
- Ctrip: Q4 results, earnings release
- Qunar: Q4 results, earnings release
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- Ctrip (CTRP -4.3%) says it's authorized to invest $1.3B in cash and issue 5.4M ordinary shares (equal to 21.6M ADS') via "limited partnership capital contribution or other financing arrangements, in several non-U.S. investment entities, which are managed or owned by parties unaffiliated with each other and unaffiliated with the Company and are dedicated to investing in businesses in China."
- Ctrip adds the entities "will acquire a significant minority stake" in Qunar (QUNR +12.6%) from Qunar shareholders, via privately-negotiated deals involving cash and/or Ctrip shares as payment.
- The news comes less than three months after Ctrip announced a deal to buy a major stake in Qunar (its biggest rival) from Baidu. The deal left Ctrip owning 45% of Qunar's voting interests, and Baidu 25% of Ctrip's voting interests.
- Last week, Ctrip announced it's investing $180M in Indian online travel firm MakeMyTrip.
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- Hammered three days ago as U.S. and Chinese markets tumbled, the story is much the same today for U.S.-traded Chinese tech firms. The Nasdaq is down 2.7%, and the Shanghai and Shenzhen exchanges respectively fell 7% and 8.3% overnight amid an ongoing selloff in the yuan, which now trades at 6.59 per dollar.
- The Guggenheim China Tech ETF (CQQQ -4.7%) is now down 8% in 2016. It's still 30% above an August low of $25.36.
- Internet giants Baidu (BIDU -7.1%) and Alibaba (BABA -6.5%) are among the names seeing steep losses. Others include Sina (SINA -6%), Weibo (WB -8.5%), Qunar (QUNR -12.4%), JD.com (JD -6.4%), ChinaCache (CCIH -9.6%), Jumei (JMEI -8.7%), Zhaopin (ZPIN -5.7%), Baozun (BZUN -7.4%), NQ Mobile (NQ -5.8%), and Momo (MOMO -6.1%). Over in Hong Kong, messaging/gaming leader Tencent (OTCPK:TCEHY) fell 4%.
- ETFs: QQQC, KWEB, EMQQ
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Nov. 25, 2015, 3:54 PM
- Qunar (QUNR +4.1%) is back above $40 after beating Q3 estimates with the help of a 381% Y/Y increase in mobile revenue to $153.5M (now 73.6% of total revenue). Q4 guidance is for 105%-125% Y/Y sales growth (largely below a 124.6% consensus) and 85%-105% gross profit growth.
- Top-line performance: Adjusting for a bookings model shift, hotel reservation revenue rose 188.6% Y/Y to $50.7M, and flight revenue 91.2% to $93.9M. Hotel and flight volume respectively rose 119.8% and 49.4% to 22M rooms and 33.9M tickets.
- Financials: Spending remained heavy: Sales/marketing spend +188.6% Y/Y to $120.9M, R&D +78.1% to $64.3M, product sourcing 87.5% to $29.4M, G&A +15.6% to $19.4M. Due to certain hotel reservations being recognized on a gross basis, gross margin fell to 62.4% from 72% in Q2 and 72.4% in Q3 2014. The Ctrip deal has been expected to eventually yield lower spending growth.
- On the earnings call (transcript), China's second-biggest online travel firm suggested it expects to reach EBITDA breakeven in Q3 2016. The company also said it remains on track to pare its aggressive offline marketing spend (aims to grow Qunar's customer base) in 1H16.
- Q3 results, PR
Qunar Cayman Islands Ltd. engages in the provision of travel and tourism services through an online commerce platform. It operates through the following segments: Hotel and Travel Agent Services; Advertising; and Group Sales. It offer pay-for-performance, display advertising, and online services... More
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