If you thought
Priceline.com 's (Nasdaq: PCLN) quarterly
report was
impressiveon Monday, check out Chinese peer
Ctrip.com (Nasdaq: CTRP).
China's leading travel search engine posted blowout
financial results last night. Net revenues rose by 47% to
$79.9 million, and net profits soared by 80% to $0.39 a
share. Wall Street was -- literally and figuratively -- at
the other end of the world. Analysts figured that Ctrip would
deliver a profit of just $0.32 a share on $72.2 million in
net revenue.
There was strength across the board at Ctrip. Hotel,
airfare, and packaged tours posted revenue gains of 41%, 45%,
and 93%, respectively. The travel-site operator is targeting
top-line growth to decelerate to a mere 25% to 30% advance
during the current quarter, but nobody seems to be
complaining. The stock opened nicely higher this morning.
Ctrip is a thinking investor's play on China's booming
economy. If discretionary income grows, so will the appetite
for leisure travel -- and the necessity for corporate travel.
Ctrip is the top dog here. Smaller rival
eLong (Nasdaq: LONG) has historically
underperformed relative to Ctrip.
There are plenty of other publicly traded plays beyond the
travel portals.
Home Inns & Hotels (Nasdaq: HMIN) is a
rapidly growing chain of value-priced lodging.
China Eastern (NYSE: CEA) and
China Southern (NYSE: ZNH) are
airlines.
AirMedia Group (Nasdaq: AMCN) operates an
advertising network in the major Chinese airports.
The problem with the stock plays beyond Ctrip is that
China Eastern, China Southern, and AirMedia are all projected
to post a loss this year. eLong is marginally profitable.
Home Inns is squarely profitable, yet it joins Ctrip in the
camp of Chinese stocks with healthy growth prospects but
lofty earnings-based valuations.
What's an investor to do? Well, it's hard to ignore
growth. It also bears pointing out that Ctrip has now
trounced Wall Street profit expectations in each of the four
past quarters. If analysts are lowballing future targets,
too, Ctrip may be trading for a lower forward multiple than
analysts think.
Yes, this is yet another reason to go with growth in
China.
This article was originally published as
Scenes From a Chinese Airporton
Fool.com
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