OrhanDobbinlir的部落格

Summary

• Ctrip reported Q3 earnings and earnings ahead of analyst estimates.
• The inventory tanked on weak This autumn income and margin guidance.
• Minimizing my price tag focus on on Ctrip but trying to keep my acquire rating.
• We may possibly see added marketing force in the subsequent months.

Ctrip (NASDAQ:CTRP) documented Q3 earnings and income in advance of analyst estimates but the stock was down eight% soon after the report. There ended up a couple of motives for the submit-earnings fall: weak Q4 revenue assistance, margin and pricing strain, and that was what investors have been focusing on. But the Q3 numbers had been really very good. Earnings improved 37.eight% to $347 million, which was $eleven.three million earlier mentioned the consensus and in advance of management assistance for a 30% to 35% increase. Non-GAAP EPS diminished 30% to $.36, but conquer the analyst estimates by $.04. Accommodation reservation quantity increased sixty nine% Y/Y, and lodging reservation revenue improved fifty six% Y/Y to $a hundred and fifty five million. Transportation ticketing volume improved ninety eight% Y/Y, although the segment's earnings increased 32% Y/Y to $130 million. The two segments are experiencing pricing force as the business seeks to enhance industry share and as the opposition intensifies.

Margins have been after once again beneath strain as the organization will increase investments to seize market place share. Gross margin was down 300 bps Y/Y to seventy two%, but was flat Q/Q and up from Q1 2014. Non-GAAP running margin was eleven%, when compared to 27% in Q3 2013 and 12% in the earlier quarter. Adding to margin problems, management guided gross margin in Q4 to be down 200 bps Q/Q and three hundred bps Y/Y on merchandise blend alterations and climbing reservation costs. Q4 non-GAAP running ought to be unfavorable 15% at mid-position, symbolizing a 26 proportion point drop over Q minix neo x8 android tv box. Income and marketing and advertising will erode the operating margin by nine share details on elevated brand and marketing investing, while merchandise advancement must erode the functioning margin by thirteen share points Q/Q due to the headcount improve in R&D and organization improvement groups. Administration also guided for thirty% profits development in This fall, which was under the analyst consensus at the time.

I am also dissatisfied with the This fall guidance and margin worries are problematic, but if we consider the extended-phrase see, Ctrip still represents a reliable stock to own. I am reiterating my bullish see on Ctrip, but I am lowering my price tag focus on from $81 to $73 on the ahead of-pointed out anxieties. Even so, administration has reiterated its prolonged-phrase margin projections, but the visibility into the next pair of years is low. 2015 ought to be yet another calendar year of aggressive pressures, but margins should also stabilize next yr and start growing in 2016. It is also essential to notice that administration is always conservative with its forward-hunting advice. In the desk beneath, you can evaluate management's quarterly guidance with the described figures because Q1 2012. The organization has managed to conquer its very own revenue assistance 10 out of 11 times at mid-point of the assistance, whilst handling to defeat the higher conclude of its assistance in the very last seven quarters. Because this is the first time that administration did not provide a profits range, we ought to just take the 30% earnings assistance as the mid-point. I feel that the advice is once once more conservative and that This fall income need to boost among 32% and 35%. Ctrip's share price may possibly experience some pressure in the pursuing weeks, but the extended-expression story stays powerful.

Resource: Ctrip earnings reviews