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Ctrip profit jumps on record

(Reuters)
Updated: 2007-05-17 13:52

Ctrip.com , China's largest online travel agent, said first-quarter earnings rose 34 percent on record revenues amid strong overall growth in the travel services market.

The Shanghai-based company said net income increased to $8.4 million (64.9 million yuan), or 25 cents per American Depositary Share, beating the $7.38 million forecast by two analysts polled by Reuters Estimates.

Net revenue rose 49 percent to a record $30.1 million on increases in hotel reservations, air ticket and packaged tours businesses. The record high revenues came even as the first quarter is traditionally the slowest period for business travel.

The company, which launched its shares on Nasdaq in 2003, expects the rapid growth in domestic travel and leisure industry to attract more competition, but reckons its strong branding and service will help it maintain the current pace of growth.

"Branding, new products and service will help us differentiate us from others," Min Fan, the firm's chief executive, said during a teleconference with analysts.

The company, which is part-owned by Japanese online shopping mall operator Rakuten Inc. , said second-quarter sales would grow about 35 percent from a year earlier.

The firm had estimated in February that revenues for 2007 would rise by about 30 percent from a year earlier.

The company's ADS closed up 72 cents, or 1 percent, at $72.21.

Shares of Ctrip -- which vies with eLong Inc. , in which U.S. online travel giant Expedia Inc. has a majority stake -- have gained about 16 percent since the beginning of 2007, a sharp contrast with eLong's 23 percent fall.

The rising price has boosted Ctrip's share price-to-earnings ratio to about 60 times 2007 earnings estimates, outpacing the 42 multiple for eLong.

The company, which sells tours, hotel bookings and flights to the world's largest Internet market after the United States, said it was continuing to expand into China's second-tier cities.

The pace of revenue growth in second-tier cities is now about double that in first-line cities and in absolute terms is about level with large cities such as Beijing and Shanghai.

The government is keen to have airlines and travel agencies to offer electronic air tickets instead of paper ones by the end of 2007, a move that is boosting China's online travel industry.