1、60,50,40,30,20,10,Ctrip,1,2,Deutsche BankMarkets Research,RatingHoldAsiaChina,CompanyCtrip,Date14 September 2012Company Update,TechnologySoftware & Services,Reuters,Bloomberg,Exchange Ticker,Price at 13 Sep 2012 (USD)Price target - 12mth (USD)52-week range (USD),17.3016.6038.36 - 12.48,CTRP.OQ,CTRP
2、UQ,NSM,CTRP,HANG SENG INDEX,20,048,Coupon competition fadesAlex YaoResearch Analyst,Competition for customer acquisition likely to shift from coupons to others.We believe both Ctrip and eLong have scaled back coupon offerings followingfierce competition in July. We believe the coupon competition has
3、 reduced itsmarginal return and forced eLong to re-evaluate its customer acquisitionstrategy. We expect both companies to maintain a lower level of coupons incoming quarters. Although the competition among the two will definitelycontinue, Ctrips relative advantage in areas such as brand equity could
4、 lead tocost savings and margin improvement in the near future.but long-term competitive landscape remains unclear,(+86) 21 2080 Alan Hellawell IIIResearch Analyst(+852) 2203 Key changes,Besides eLong, non-OTA models (e.g. vertical search and ecommerce) are,Price target,15.83 to 16.60 ,4.9%,gaining
5、momentum in Chinas online travel market. We view the new models,as offering a unique value proposition to leisure travellers as offline travelresources and information shift increasingly online. In addition, all majorplayers in the field have strong capital resource, making aggressive price warless
6、efficient from long-term competitive landscape perspective.Ctrip remains in early phase of investment cycleWe believe Ctrips 2012 inv plan includes customer acquisition and retention,new product development, coverage expansion and infrastructure upgrade.,Price/price relative,We view its coupon offer
7、ings as just one measure to acquire new customers.,9/10,3/11,9/11,3/12,We think the inv cycle is still in an early phase and could extend into 2013.HANG SENG INDEX (Rebased),Maintaining Hold and raising target price to USD16.60We base our target price on FY13E non-GAAP EPADS of USD1.60, FY13-15EEPAD
8、S CAGR of 14%, and a PEG of 0.7x, implying 2013E PE of 10x, in linewith the shares historical forward PE trough. Key upside/downside risks:,Performance (%)AbsoluteHANG SENG INDEX,1m20.0-0.2,3m5.15.4,12m-54.45.3,better/worse macro, market share gains/losses, pricing, dilutive M&A activity.Forecasts A
9、nd Ratios,Year End Dec 31Sales (CNYm)EBITDA (CNYm)Reported NPAT (CNYm)Reported EPS FD(CNY)DB EPS FD(CNY)OLD DB EPS FD(CNY)% ChangeDB EPS growth (%)PER (x)EV/EBITDA (x)DPS (net) (CNY)Yield (net) (%),2010A2,881.21,126.81,048.16.956.956.950.0%48.339.430.10.000.0,2011A3,498.11,155.91,076.47.087.087.080.
10、0%1.835.525.90.000.0,2012E4,165.3749.2619.04.224.224.220.0%-40.425.914.20.000.0,2013E5,110.81,034.0911.06.316.316.093.6%49.617.39.20.000.0,2014E5,863.91,238.51,092.17.367.366.985.5%16.614.96.70.000.0,Source: Deutsche Bank estimates, company dataDB EPS is fully diluted and excludes non-recurring item
11、sMultiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which usesthe year end close_Deutsche Bank AG/Hong KongAll prices are those current at the end of the previous trading session unless otherwise indicated. Prices a
12、re sourcedfrom local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subjectcompanies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus,investors should be aware that the firm may have a conflict of interest t
13、hat could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012.,14 September 2012Software & ServicesCtrip,Model updated:13 Septembe
14、r 2012,Fiscal year end 31-Dec,2009,2010,2011,2012E,2013E,2014E,Running the numbers,Financial Summary,AsiaChinaSoftware & ServicesCtrip,DB EPS (CNY)Reported EPS (CNY)DPS (CNY)BVPS (CNY)Weighted average shares (m)Average market cap (CNYm),4.694.690.0020.813520,337,6.956.950.0040.514238,874,7.087.080.0
15、046.314436,119,4.224.220.0041.414115,805,6.316.310.0048.113915,805,7.367.360.0053.614315,805,Reuters: CTRP.OQ,Bloomberg: CTRP UQ,Enterprise value (CNYm),17,955,33,861,29,908,10,651,9,531,8,341,Valuation Metrics,Hold,P/E (DB) (x)P/E (Reported) (x),32.232.2,39.439.4,35.535.5,25.925.9,17.317.3,14.914.9
16、,Price (13 Sep 12)Target Price52 Week rangeMarket Cap (m),USD 17.30USD 16.60USD 12.48 - 38.36EURm 1,935USDm 2,497,P/BV (x)FCF Yield (%)Dividend Yield (%)EV/Sales (x)EV/EBITDA (x)EV/EBIT (x),11.794.20.09.024.226.1,6.763.60.011.830.132.1,3.274.60.08.525.928.1,2.653.40.02.614.215.8,2.287.30.01.99.210.1
17、,2.047.60.01.46.77.3,Company Profile,Income Statement (CNYm),C International, Ltd. is a consolidator of hotelaccommodations and airline tickets in China. TheCompany aggregates information on hotels and flights andenables its customers to make informed and cost-effectivehotel and flight bookings. Pri
18、ce Performance6050403020,Sales revenueGross profitEBITDADepreciationAmortisationEBITNet interest income(expense)Associates/affiliatesExceptionals/extraordinariesOther pre-tax income/(expense)Profit before taxIncome tax expenseMinoritiesOther post-tax income/(expense)Net profitDB adjustments (includi
19、ng dilution)DB Net profit,1,9881,5917415306871733061765132806590659,2,8812,3291,1277301,05438660991,191205401,04801,048,3,4982,7831,1569001,0661065801181,290262901,07601,076,4,1653,1627497506741281501069082921106190619,5,1113,8661,0348909451154501201,1802971609110911,5,8644,4521,23910301,13613274012
20、01,3883502001,09201,092,10Sep 10Dec 10Mar 11Jun 11Sep 11Dec 11Mar 12Jun 12,Cash Flow (CNYm),Cash flow from operations,1,028,1,550,1,851,643,1,248,1,337,CtripMargin Trends403632282420,HANG SENG INDEX (Rebased),Net CapexFree cash flowEquity raised/(bought back)Dividends paidNet inc/(dec) in borrowings
21、Other investing/financing cash flowsNet cash flowChange in working capital,-176852000-487365220,-1621,3881,56400-2,233719263,-2051,646-16900-1271,349734,-125519-1,575000-1,056-47,-1281,12000001,120276,-1471,19000001,190196,1612,09,10 11EBITDA Margin,12E,13EEBIT Margin,14E,Balance Sheet (CNYm)Cash an
22、d other liquid assetsTangible fixed assetsGoodwill/intangible assets,1,435551390,2,1546541,055,3,5036841,105,2,4477341,105,3,5677721,105,4,7578161,105,Growth & Profitability,Associates/investmentsOther assets,947835,2,8591,395,2,7071,762,2,7071,617,2,7071,891,2,7072,110,50403020100,09,10,11,12E,13E,
23、14E,302520151050,Total assetsInterest bearing debtOther liabilitiesTotal liabilitiesShareholders equityMinoritiesTotal shareholders equityNet debt,4,15701,1701,1702,925622,987-1,435,8,11601,9261,9266,104866,190-2,154,9,76102,6162,6167,0421037,145-3,503,8,60902,4242,4246,0711146,185-2,447,10,04202,97
24、52,9756,9371307,067-3,567,11,49503,3893,3897,9561508,106-4,757,Sales growth (LHS),ROE (RHS),Key Company Metrics,Solvency0-10-20-30,Sales growth (%)DB EPS growth (%)EBITDA Margin (%)EBIT Margin (%)Payout ratio (%)ROE (%),34.145.437.334.60.026.7,44.948.339.136.60.023.2,21.41.833.030.50.016.4,19.1-40.4
25、18.016.20.09.4,22.749.620.218.50.014.0,14.716.621.119.40.014.7,-40-50-60-70,09,10,11,12E,13E,14E,Capex/sales (%)Capex/depreciation (x)Net debt/equity (%)Net interest cover (x),8.93.3-48.0nm,5.62.2-34.8nm,5.92.3-49.0nm,3.01.7-39.6nm,2.51.4-50.5nm,2.51.4-58.7nm,Source: Company data, Deutsche Bank esti
26、mates,Net debt/equity (LHS)Alex Yao+86 21 2080 1666Page 2,Net interest cover (RHS),Deutsche Bank AG/Hong Kong,14 September 2012Software & ServicesCtripCoupon competition fadesCoupon competition fades as marginal return declinesChannel checks reveals coupon competition is scaling back,We find that bo
27、th Ctrip and eLong have scaled back coupon offerings since mid-August,following escalated competition in July. Our proprietary tracking model which examsall hotel offerings from both companies in Beijing, Shanghai, Tsingtao and Hangzhou suggests Ctrip has been cutting coupon offerings significantly
28、in 3-star and abovehotels while slightly increasing coupon offerings in 2-stars since early August.For 2-star hotels, Ctrip has increased coupon offerings over the past several weeksacross all the four cities that we track. Especially from 21 August, coupon value as apercentage of commission revenue
29、 has increased sharply, 30pp on average. The otherkey metric, i.e. percentage of hotels offering coupons, has been relatively stable overthe past five weeks.For 3-star or above hotels in Shanghai and Beijing, coupon value as a percentage ofcommission revenue has dropped significantly, on average 25p
30、p and 13pp respectively,over the past five weeks. The percentage of hotels offering coupons has also declinedover the past five weeks. As of 10 September, this metric, on average, was 73% inShanghai and 78% in Beijing compared with 96% in Shanghai and 95% in Beijing on6 August.Tier-2 and more leisur
31、e travel destinations (e.g. Tsingtao and Hangzhou) alsoexperienced a similar decreasing trend in terms of coupon offerings among 3-star andabove hotels, but the drops were relatively milder than in Shanghai and Beijing. Withregard to the coupon value as a percentage of commission value, tier-2 citie
32、s haddifferent changes. Tsingtao recorded a generally flat trend on average for 3-star andabove hotels while Hangzhou experienced sharp decreases (34pp on average).We find coupon offerings from both companies has stabilized since early September,mainly because eLong seems to have started re-evaluati
33、ng its customer acquisitionstrategy.,We find both Ctrip and eLonghave scaled back couponofferings since mid-August,following escalatedcompetition in July,Figure 1: Coupon value as % of commission revenue inShanghai140%120%100%80%60%40%20%,Figure 2: % of hotels offering coupons in Shanghai110%100%90%
34、80%70%60%50%,0%,2012/8/6,2012/8/21,2012/8/26,2012/9/5,2012/9/10,40%,2012/8/6,2012/8/21,2012/8/26,2012/9/5,2012/9/10,2 star,3 star,4 star,5 star,2 star,3 star,4 star,5 star,Source: Deutsche Bank, company dataDeutsche Bank AG/Hong Kong,Source: Deutsche Bank, company data,Page 3,14 September 2012Softwa
35、re & ServicesCtrip,Figure 3: Coupon value as % of commission revenue inBeijing140%120%100%80%60%40%20%,Figure 4: % of hotels offering coupons in Beijing110%100%90%80%70%60%50%,2012/8/62 star,2012/8/213 star,2012/8/26,2012/9/54 star,2012/9/105 star,2012/8/62 star,2012/8/213 star,2012/8/264 star,2012/
36、9/5,2012/9/105 star,Source: Deutsche Bank, company dataFigure 5: Coupon value as % of commission revenue inTsingtao140%120%,Source: Deutsche Bank, company dataFigure 6: % of hotels offering coupons in Tsingtao120%100%,100%80%80%,60%40%,60%40%,2012/8/62 star,2012/8/213 star,2012/8/26,2012/9/54 star,2
37、012/9/105 star,2012/8/62 star,2012/8/213 star,2012/8/26,2012/9/54 star,2012/9/105 star,Source: Deutsche Bank, company dataFigure 7: Coupon value as % of commissions revenue inHangzhou140%120%100%80%60%40%20%,Source: Deutsche Bank, company dataFigure 8: % of hotels offering coupons in Hangzhou110%100
38、%90%80%70%60%50%40%,2012/8/62 star,2012/8/213 star,2012/8/26,2012/9/54 star,2012/9/105 star,2012/8/62 star,2012/8/213 star,2012/8/26,2012/9/54 star,2012/9/105 star,Source: Deutsche Bank, company data,Source: Deutsche Bank, company data,A comparison between Ctrip and eLong in coupon offeringFor 2-sta
39、r hotels, Ctrip generally offers a higher coupon than eLong both in terms ofabsolute value and the percentage of commission revenue. For example, Ctrip offeredaverage coupons worth RMB40 per room night or 131% of its commission revenue for2-star hotel consumers in Beijing, vs. RMB36 or 126% offered
40、by eLong.For 3-star and above hotels, Ctrip still offers a higher coupon in absolute value acrossthe four cities that we monitor; eLong however overwhelms Ctrip in terms of couponvalue in terms of the percentage of commission revenue. Given their similarcommission rates (15%), we believe Ctrips high
41、er coupon value is primarily due todifferent room offerings and hotel classification among the two.,Page 4,Deutsche Bank AG/Hong Kong,14 September 2012Software & ServicesCtripA higher portion of 2-star hotels on Ctrip offers coupon than on eLong across all fourcities, while for 3-star or above hotel
42、s, eLong overtakes Ctrip in terms of thepercentages of hotels offering coupon.,Figure 9: Average coupon value in ShanghaiRMB1009080706050403020100,Figure 10: Average coupon value in BeijingRMB1009080706050403020100,2 Star,3 Star,4 Star,5 Star,2 Star,3 Star,4 Star,5 Star,eLong,Ctrip,eLong,Ctrip,Sourc
43、e: Deutsche Bank, company dataFigure 11: Average coupon value in TsingtaoRMB9080706050403020100,Source: Deutsche Bank, company dataFigure 12: Average coupon value in HangzhouRMB80706050403020100,2 Star,3 Star,4 Star,5 Star,2 Star,3 Star,4 Star,5 Star,eLong,Ctrip,eLong,Ctrip,Source: Deutsche Bank, co
44、mpany dataFigure 13: Coupon value as % of commission revenue inShanghai140%120%100%,Source: Deutsche Bank, company dataFigure 14: % of hotels offering coupons in Shanghai120%100%80%,80%60%60%,40%20%0%,40%20%0%,2 Star,3 Star,4 Star,5 Star,2 Star,3 Star,4 Star,5 Star,eLong,Ctrip,eLong,Ctrip,Source: Deutsche Bank, company dataDeutsche Bank AG/Hong Kong,
