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Ctrip Plunges in New York on Profit Margin Concern

12/01/2014| 5:04:44 PM|

Ctrip.com International Ltd. (CTRP), China’s largest travel booking website, tumbled the most in 10 months in New York after saying increased competition is eroding profit margins.

Ctrip.com International Ltd. (CTRP), China’s largest travel booking website, tumbled the most in 10 months in New York after saying increased competition is eroding profit margins.

The American depositary receipts fell 8.5 percent to $53.50. Trading volume of 14.9 million shares was 7.6 times the daily average of the past three months. Qunar Cayman Islands Ltd (QUNR), a Ctrip competitor, halted a three-day gain. 21Vianet Group Inc. dropped 10 percent after the data-center operator’s third-quarter earnings trailed analysts’ estimates. The Bloomberg China-US Equity Index (HSCEI) rose 1.9 percent.

Ctrip said adjusted operating margin for the fourth quarter will drop by 35 percentage points from a year earlier to about negative 15 percent, after it narrowed in the previous three months. Chief executive James Liang said revenue growth will slow as the company seeks to lure second-tier city consumers amid intensified competition. UBS AG and Raymond James & Associates cut the stock to the equivalent of hold from buy.

“People kind of hoped the worst of the competition had passed, and that doesn’t seem like the case,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $1.5 billion in assets, said by phone from Lisle, Illinois. “Ctrip’s margin pressure largely is from competition that it has to match different prices from competitors like Qunar.”

Ctrip’s drop cut its gain this year to 7.8 percent. 21Vianet slid to $18.61. Qunar retreated from a three-week high to $26.05. The Bloomberg index of the most-traded Chinese stocks in the U.S. advanced to 111.70.

China Life, Renesola

Ctrip’s hotel reservation business, which accounts for two fifths of the sales, rose 56 percent to $155 million in July to September while transportation ticket service almost doubled in volume, according to its earnings statement.

China Life Insurance Co Ltd (2628) rose 9.3 to the highest since January 2013 after the company said it added agents in the third quarter at the fastest pace in the last four years. Bitauto Holdings Ltd (BITA), the automobile listing website, gained 6.8 percent to $93.06. Renesola Ltd. (SOL) dropped 7.1 percent to $1.97 as the solar panel maker’s third-quarter revenue trailed analysts’ estimates.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., jumped 3.1 percent to $40.93. The Hang Seng China Enterprises Index rose 2.5 percent to a two-month high. The Shanghai Composite Index climbed 1.4 percent to 2,604.35, the strongest level since August 2011.

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TAGS: Ctrip | shares | competition
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