• Tue
  • Oct 21, 2014
  • Updated: 9:16pm
BusinessChina Business
EARNINGS

Ctrip poised to report record 2013 earnings

PUBLISHED : Tuesday, 11 February, 2014, 9:53am
UPDATED : Wednesday, 12 February, 2014, 3:03am

Ctrip.com International, the mainland's biggest online travel agency, is expected to post solid earnings for the quarter to December on the back of strong demand from outbound travellers and an increase in bookings made through its own smartphone application.

The Nasdaq-listed company, which will report its results for the fourth quarter tomorrow, has benefited from the rapid growth of the travel industry on the mainland.

Expansion is being driven by rising disposable income, a broadening middle class, greater consumer appetite for outbound travel, a price-competitive airline industry and the emergence of the internet as an efficient medium to conduct travel transactions.

Barclays forecast Ctrip would post fourth-quarter net profit of US$38 million on revenue of US$229.4 million.

For the year to December, net profit is estimated to reach a record US$158.1 million on revenue of US$872.4 million, also a record high.

Alicia Yap, the head of China internet research at Barclays, said "intensified competition on pricing discounts and aggressive sales and marketing spend will continue to be a drag on [Ctrip's] margins and share price".

Founded in 1999, the Shanghai-based online travel agency provides bookings for hotel accommodation and packaged tours, ticketing services and corporate travel management on the mainland.

Barclays estimated Ctrip's air ticket revenue grew 25 per cent year on year in the quarter, compared with the firm's guidance of 20 to 25 per cent growth. Hotel booking revenue was forecast to rise 26.7 per cent, against Ctrip's 20 to 25 per cent guidance.

Packaged tour revenue was estimated to jump 37.5 per cent, against the 25 to 30 per cent guidance. Corporate travel revenue was predicted to grow 30 per cent, compared with the 20 to 25 per cent guidance.

Data from iResearch showed Ctrip had a 48.9 per cent share of the mainland's online travel market in the third quarter of last year. Its closest competitor was Beijing-based eLong, in which Expedia and Tencent have major interests, with 9.5 per cent.

Following the release of an updated smartphone app in September last year, Ctrip's booking volumes from mobile devices were expected to rise further and contribute more revenue. Barclays forecast mobile would make up 50 per cent of Ctrip's hotel bookings by next year.

Yap said leisure travellers were switching to online platforms to get better prices and do-it-yourself travel itineraries rather than the pricey packaged tours from traditional travel agents.

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