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- I expect Baidu and Ctrip to merge their online travel units by year-end.
- Such a merger would allow Baidu to focus on search while maintain a relevant presence in the OTA space.
- Ctrip on the other hand would become the largest OTA in China via merger with Qunar.
Qunar Quiet Period Conclusion Provides Investment Opportunity
GlobeNewswire (Aug 5, 2014)
at CNBC.com (Jun 13, 2014)
GlobeNewswire (May 15, 2014)
at CNBC.com (Apr 8, 2014)
at CNBC.com (Jan 22, 2014)
at CNBC.com (Dec 18, 2013)
at MarketWatch.com (Nov 1, 2013)
at CNBC.com (Nov 1, 2013)
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. 16, 1:21 PM
- Though Qunar's (QUNR -3.3%) Q1 revenue beat consensus by $3.9M, soaring spending led EPS to miss by $0.15. R&D spend rose 116.8% Y/Y to $19.5M, product sourcing spend 358.2% to $6.3M, sales/marketing spend 158.8% to $21M, and G&A spend 293% to $10.8M.
- Also: Gross margin fell 170 bps Q/Q and 300 bps Y/Y to 78.1%, and $10.8M was spent on marketing for Qunar's Baidu Zhixin unit. Both Qunar and rival Ctrip (CTRP +0.1%) are spending heavily on promotions
- The good news: Qunar expects Q2 revenue to grow 90%-95% Y/Y, an acceleration from Q1's 83.6% clip.
- Mobile revenue rose 114% Q/Q and 415% Y/Y to $17.1M, and made up 31.7% of total revenue. Total Web users +3% Q/Q and +24% Y/Y to 241M; total mobile users +12% Q/Q and +86% Y/Y to 60.3M. Estimated flight ticket volume +75% to 17.5M; estimated room-night volume +100.7% to 5.9M.
- Pac Crest (Outperform) has lowered its PT by $6 to $34 due to spending worries, but remains bullish long-term.
- Q1 results, PR
Thu, May. 15, 5:08 PM
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.
Wed, Mar. 26, 4:04 PM
- Aided by King's poor debut and general momentum stock weakness, U.S. and Chinese Internet stocks have fallen hard for the second time this week.
- In addition to King rival Zynga and newly-minted VR headset maker Facebook, Twitter (TWTR -7.1%) is among the leading U.S. decliners. Exactly 3 months after reaching a peak of $74.73, shares have fallen below their post-IPO opening price of $45.10. They remain well above their $26 IPO price.
- Other U.S. decliners: P -5.2%. Z -6.2%. TRLA -7%. GSVC -4.8%. SVVC -4.1%.
- Many Chinese Internet stocks have also been hit hard. Sungy Mobile (GOMO -23.2%), which posted a Q4 beat and in-line guidance yesterday afternoon, is the biggest decliner. Others: QIHU -8%. WUBA -9.5%. MOBI -10.6%. QUNR -7.8%. NQ -7%. YOD -7.6%. WBAI -7.5%. SOHU -7%. ATHM -6.5%. SFUN -6.3%.
- Internet/social media ETFs: FDN, PNQI, SOCL
Mon, Mar. 10, 3:57 PM
- Chinese Internet and solar names, many of them among the standouts of the 2013/2014 tech rally, are heading into the close with steep losses after the Chinese government reported exports fell 18.1% Y/Y in February (much worse than expected).
- Internet decliners: WUBA -10.7%. YOKU -7.3%. ATHM -7.2%. QUNR -6.4%. NQ -6%. RENN -5.2%. CTRP -5.2%. YY -4.4%. WBAI -4.4%. KONG -5.5%.
- Solar decliners: JKS -6.3%. YGE -5.8%. TSL -6.7%. CSUN -4.9%. CSIQ -4.5%. DQ -4.2%. HSOL -4.5%.
- Solar ETFs: KWT, TAN
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.
Tue, Jan. 28, 1:00 PM
- Chinese Internet stocks, crushed over the last few trading days amid SEC-related concerns and a general rout in tech momentum plays, are rebounding sharply today in tandem with other high-beta tech stocks.
- Possibly helping: The SEC has settled a dispute with Deloitte over its request for documents related to Longtop Financial, a Deloitte-audited Chinese firm suspected of accounting fraud. The settlement, which comes after the SEC received a "substantial volume" of requested docs, is fueling hopes the SEC's auditing ban on the Chinese arms of the big-4 accounting firms (including Deloitte) will be revoked, and a final resolution between U.S. and Chinese regulators achieved.
- Also: Morgan Stanley is calling the selloff a buying opportunity, and has picked five names it's a fan of - Baidu (BIDU +2.8%), YY (YY +14.5%), New Oriental (EDU +2.8%), Dangdang (DANG +6.8%), and Ctrip (CTRP +5.2%)..
- MS expects Baidu's margins (recently pressured by huge investments) to stabilize later this year with the help of accelerating sales growth; it's pleased with Ctrip's willingness to sacrifice near-term margins for share gains; it think Dangdang's e-commerce strategy is yielding margin improvement and better fulfillment efficiency; and it's a fan of YY's "sticky" user base and monetization potential (less than 2% of users are currently monetized).
- Major gainers include Sungy Mobile (GOMO +11.3%), 500.com (WBAI +18.3%), ChinaCache (CCIH +9.8%), Vipshop (VIPS +10%), Bitauto (BITA +9.5%), and Qunar Baidu-controlled (QUNR +8.8%).
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
Thu, Jan. 23, 9:59 AM
- SEC administrative law judge Cameron Elliot has barred the Chinese units of the Big-4 accounting firms - KPMG, Deloitte, PwC, and Ernst & Young - from auditing U.S.-listed companies for six months.
- Elliot declares the accounting firms "willfully" chose to withhold audit work papers from U.S. regulators for Chinese companies being investigated for accounted fraud. The firms have been worried about violating Chinese privacy laws by turning over the papers, and have argued the dispute needs to be resolved politically.
- Though the firms plan to appeal and say they can continue serving Chinese clients for now, shares of Chinese Web and solar names aren't handling the news well. Soft Chinese PMI data could be worsening matters.
- Chinese Web decliners: BIDU -2.5%. SOHU -3.2%. DANG -8.9%. SFUN -8.5%. PWRD -8.5%. QUNR -7.1%. LITB -6.5%. YY -6.1%. WUBA -6%. BITA -5.4%. EJ -5.9%. SINA -4.6%. LITB -6.5%. CTRP -5.4%. NQ -7.1%.
- Chinese solar decliners: TSL -8.7%. JASO -6.9%. SOL -6.3%. JKS -5.6%. CSIQ -5.4%. DQ -4.6%. YGE -5.6%. CSUN -6.2%. HSOL -7.8%.
- Qihoo (QIHU -4.6%) has joined the selloff in spite of a BrightWire report stating Alibaba (ABABA) has reached a deal to acquire a stake in the company. Marbridge Consulting reported two weeks ago Qihoo and Alibaba were in talks about a possible investment.
Thu, Jan. 9, 12:50 PM
Thu, Jan. 9, 11:44 AM
- Chinese online travel firms Ctrip (CTRP -12.6%) and Qunar (QUNR -12.1%), both of which have shown plenty of volatility in recent weeks, are each down sharply. A selloff in Chinese equities (followed the release of CPI/PPI data) could be playing a role.
- China's 86 Research is out with a note stating Qunar's adoption of mobile messaging leader Tencent's online payments platform, together with a related coupon promotion, could boost its mobile booking volumes as it contends with a Ctrip mobile promotion.
- Concerns about intense price competition/promotional activity in the Chinese online travel space have been around for a while.
- Ctrip is already down 21% in 2014. Shares fell sharply last Friday after Qunar provided upbeat air ticket bookings and mobile metrics.
Fri, Jan. 3, 4:36 PM
- Qunar (QUNR +10.9%) has announced it recorded 60K+ air ticket bookings on New Year's, and that half of its hotel bookings now come via mobile devices. (PR)
- The company also boasts (among other things) its Cheche mobile taxi-booking service now covers over 42 Chinese cities, and that a report from research firm TalkingData calls Qunar "the [travel] market leader for both December mobile app user coverage and usage rates for Android devices."
- Qunar, which had been largely treading water since delivering a very strong IPO on Nov. 1, closed sharply higher in response. Rival Ctrip (CTRP -7.9%), meanwhile, went in the opposite direction.
- The shoe was on the other foot last week: Ctrip rallied and Qunar slumped following a T.H. Capital note highlighting strong download activity for Ctrip's Android and iOS apps.
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
QUNR vs. ETF Alternatives
Qunar Cayman Islands Ltd is engaged in the operation of an online travel commerce platform with the provision of pay-for-performance services, display advertising services and other services in the People's Republic of China (PRC).
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