There is research on this stock available only to PRO subscribers.
- I am initiating on TOUR with a Buy and $34 target, implying 85% potential upside.
- China's growing outbound tourism provides a favorable tailwind to TOUR, which leads the vertical by leveraging its scale, customer service and brand recognition.
- Attractive M&A option for larger/more established internet or online travel company that is looking to build up its outbound tourism business.
- TOUR, a late entrant to the China online travel agent sector (OTA) was listed on the NASDAQ at a loft valuation despite widening losses.
- Increased marketing may lead to market share gain but greater amount of losses.
- I think that the China OTA sector is a looming bubble, given the high valuation and intensifying competition.
- Nanjing-based Tuniu Corp. plans to raise $80.0 million in its upcoming IPO, offering 8.0 million shares at an expected price range of $9-$11 per share.
- Tuniu Corp. offers Chinese consumers organized and self-guided tours, along with travel-related services to support leisure travelers.
- Despite increasing demand in online travel booking, we suggest investors avoid this IPO as competition is high and the company lacks a clear path to profitability.
- Top-line revenue grew 75% in 2013 vs 2012 to $322 million.
- Gross profits are 6.2% of revenue, and the loss rate on revenue is 4.1%. Gross profits are too low for TOUR to ever make much money.
- CTRIP & QIHU indicated investment interest on the IPO. Ctrip has a $6.4 billion market cap. Qihoo 360 has a $22 billion market cap.
- TOUR is a leading online leisure travel company in China.