Essay About Chinesceomuplneteivd  E2R3Smiaty Y201 And Fy19-21E Eps Cagr

Ctrip.Com International, Ltd Investment Thesis
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This document is being provided for the exclusive use of JIALING QIU at CHINESCEomUplNeteIVd  E2R3SMIaTy Y201O8 F06:H39OPMNHGKTKONG, TH[pic 5]Disseminated 23 May 2018 06:41 PM HKTAsia Pacific Equity Research23 May 2018Ctrip.com International, Ltd        Neutral[pic 6]Further downside risk from de-bundling seems limited;Price: $43.44lack of catalysts to re-rate        ▲ Price Target: $45.00[pic 7]Ctrip delivered in-line topline in 1Q, with OPM slightly above JPMe thanks to opex savings. Management highlighted that Ctrip will put “customer centric” as core priority, which will generate long-term value at the expense of some short- term earnings. After the strict execution of de-bundling VAS products, we think the worst seems to be over and its short-term margin recovery is also slightly better than expectation (guide 2Q Non-GAAP OPM of 15-16% vs JPMe/consensus at 14/15%). The stock price is likely to react positively to 1Q earnings, although we dont expect it to meaningfully outperform the sector as 1) there remains uncertainty on pace of recovery in 2H18, 2) looming competition from private companies in hotel may pose pressure on margins. Maintain Neutral.Customer centric reform to gradually drive business recovery. Topline growth seems to have troughed in 1Q (+11% YoY) vs. 2Q guidance of 12%- 17% YoY. With the strict implementation of de-bundling VAS products already reflected in 1H financials/guidance, we feel further downside risk from de- bundling seems limited. We expect 2H topline growth to recover to 21% YoY, with full-year growth of 18% YoY. The company maintains mid-term non- GAAP OPM guidance at 20%-30% (JPMe 18%/21% in 2018/19).Expect to see fiercer competition. In response to Meituan’s aggressive move such as issuing more hotel coupons, Ctrip intends to be aggressive in lower-end[pic 8]China Internet Alex Yao AC(852) [email protected] JPMA YAO Binbin Ding(852) 2800 [email protected] Chen(852) [email protected] Securities (Asia Pacific) Limited[pic 9]Price Performance70[pic 10]60$5040May-17 Aug-17 Nov-17 Feb-18 May-18hotel segment by prioritizing volume growth and market share gains to fend off         CTRP share price ($)[pic 11][pic 12]CCMP (rebased)competition. Its lower-end hotel business delivered 40%-50% YoY volume growth in the second half of 1Q18.Long-term growth drivers remain intact. For international business, Skyscanner maintained a solid 30% YoY growth in 1Q. Meanwhile, Ctrip’s organic international air ticketing (ex-Skyscanner) has already accounted for over 40% of total air ticketing revenue. For lower-tier city expansion,  total GMV of Ctrip’s offline stores witnessed a strong 50% YoY growth.Maintain Neutral and raise PT to US$45. We roll over our valuation base to 2019. Our PT is based on 2019E non-GAAP EPS of US$1.65, a FY19-21E EPS CAGR of 27%, and 1.0x PEG.Share Price: $43.44, Date of Price: (22 May 18), Bloomberg CTRP US, Reuters CTRP[pic 13]Source: Company, J. P. Morgan estimates, Bloomberg. * Note: Excluding share-based compensation expense.See page 6 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.www.jpmorganmarkets.comKey catalyst for the stock price:Margin recovery after market consolidationStrong growth in outbound travelUpside risks to our view:Faster-than-expected margin recoveryFaster-than-expected expansion in lower-tier cities and global marketsDownside risks to our view:Potential further de-bundling action in train/bus ticket businessSlower-than-expected margin recoveryFailure to develop new business[pic 14][pic 15][pic 16][pic 17][pic 18][pic 19][pic 20][pic 21]FY13 FY14 FY15 FY16E FY17E FY18E FY19E[pic 22][pic 23][pic 24]Peer group valuation comparison[pic 25][pic 26]Ticker        Rating        Price        PT        Mkt Cap        EV                 P/E        P/S        PEG        CAGR 18-ChinaUSDmUSDmFY18EFY19EFY18EFY19EFY18E20ECtripCTRP USNUSD 43.4USD 4523,69223,53736.4 x26.2 x5.6 x4.6 x1.0 x36.8%PricelinePCLN USOWUSD 2,077USD 2,385100,03692,16923.5 x20.5 x6.8 x6.0 x1.7 x14.0%ExpediaEXPE USNUSD 116.3USD 11517,49118,45123.1 x19.5 x1.5 x1.4 x1.5 x15.0%