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Ctrip surges most since 2013 on record revenue forecast

03/23/2015| 6:46:57 PM|

Ctrip.com rallied the most in two years after it forecast an increase in first-quarter sales that exceeded analysts’ estimates.

(Bloomberg) -- Ctrip.com International Ltd. rallied the most in two years after the Chinese travel-booking website forecast an increase in first-quarter sales that exceeded analysts’ estimates.

The American depositary receipts surged 25 percent to $57.58 on Friday in New York, the biggest one-day advance since May 2013. Trading volume of about 22 million shares was almost 11 times the average of the past three months. Qunar Cayman Islands Ltd., an online travel search company, surged to the highest since its U.S. debut in November 2013. The Bloomberg China-US Equity Index rose 1.9 percent.

Ctrip, China’s largest online travel provider, said first-quarter sales will grow as much as 50 percent to about $390 million, exceeding all eight analysts’ estimates compiled by Bloomberg. The company said it’s expanding its international travel business as more Chinese can afford overseas trips. The revenue forecast shows that the industry is continuing to grow at a robust pace even as the economy slows, according to Cheng Cheng at Pacific Crest Securities LLC.

“Analysts didn’t expect such strong guidance from Ctrip, which gave record sales growth guidance not only for the first, but also the second quarter, showing management’s confidence about the outlook,” Juan Lin, an analyst at 86Research Ltd. said by phone from Shanghai. “China’s travel sector has always been in a fast-growth mode, and the pace accelerated last year.”

Shanghai Rally

Tourism revenue in 2014 grew 15 percent to $551 billion, Xinhua News Agency reported in February, citing Du Jiang, deputy director of the National Tourism Administration.

Ctrip’s forecast first-quarter sales will rise at least 40 percent from 1.6 billion yuan ($260 million) a year ago. That would mean a quarterly record since its U.S. listing in 2003. It reported an adjusted net loss of 98 million yuan for the three months ended in December on a 33 percent revenue increase in a March 19 statement.

Ctrip’s smaller peer Qunar said earlier this month sales may grow as much as 90 percent in the first three months this year, after more than doubling in the prior quarter.

Qunar rose 8.7 percent to $36.71. Its 29 percent gain this week was the biggest on record. Tuniu Corp., an online leisure service provider based in Nanjing, China, soared 12 percent to $14.31 on Friday, rallying the most in three months.

The Bloomberg gauge of the most-traded Chinese stocks in the U.S. has advanced for five consecutive days, rallying 5.4 percent in the period. The Shanghai Composite Index surged to the highest since May 2008 in an eight-day rally.

Trading Risks

China’s securities regulator, in a statement on its microblog Friday, urged investors to consider risks in investing in the shares traded in the country’s mainland markets. Margin trading surged to record highs and new account openings rebounded to the highest level since December.

“We shouldn’t be thinking if we don’t buy now, we will miss it,” an unidentified spokesman for the China Securities Regulatory Commission said in the statement.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the largest U.S. exchange-traded fund that tracks mainland Chinese stocks, added 2.1 percent to a record high of $40.53 on Friday. The iShares China Large-Cap ETF, which tracks Hong Kong-listed companies, advanced 0.4 percent to $43.34.

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