12-21-2015, 01:49 AM
C-trip (CTRP)
- C-trip is the leading online travelagency in China, needless to say that it is a big market opportunity, not only because of the size of China, but especially because mass tourism is a relatively new phenomenon in China and this market will grow at double digit rates for some time to come.
- C-trip has also cemented its position as the leading platform through a network of alliances, which will take some of the competitive sting out of the market and improve margins
- Margins will also likely improve as C-trip has invested a lot in its platforms, and when these scale up margins will improve, we already saw something of that in the last couple of quarters.
- There are risks, but in our view these are mainly macro risks like a Chinese economic collapse, which we don't think is very likely. C-trip has had no problems with the economic slowdown in China so far. Retail sales in China are still growing at a double digit rate, it's mostly the old smokestack industries where the trouble lies.
The chart does look rather friendly
The couple of jumps in the latter part of the year come from exceeding expectations in October and an aliance in November. There has also been a 2:1 stock split early December.
We have good memories of these, as we first recommended the shares on Seeking Alpha in 2012 when the price (pre-split) was just $15, so by now that has seven folded. We subsequently wrote more on SA (here and here).
We might already start to nible at these prices (below $50) but ideally would like a cheaper entry point as the stock isn't cheap.