Bearish stock to watch: Ctrip.Com International Ltd (NASDAQ: CTRP)

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Ctrip.Com International Ltd (NASDAQ: CTRP) stock fell over 2.1% in the pre-market session on September 10th, 2019 (Source: Google finance) after the company posted better than expected results for the second quarter of FY 19. Non-GAAP operating profit in the quarter was RMB1.7 billion, grew 43% year-on-year and 26% quarter-over-quarter. Non-GAAP operating margin for the second quarter was 20% increasing from 16% in the same period of 2018 and 17% in the previous quarter. As of June 30, 2019, the balance of cash and cash equivalents, restricted cash and short-term investment held to maturity, deposit and financial product was RMB67.8 billion or USD9.9 billion. In July, the company announced a transferable term loan facility of up to USD2 billion equivalent with a greenshoe option of up to USD500 million.

Meanwhile, International revenue accounted for over 35% of the total revenues in the second quarter of 2019, with the rapid growth of outbound travel and the global brands. CTRP expect this to become 40% to 50% in the next three to five to four years. The hotel and flight ticket sale for cross border travel activities maintained faster growth during the quarter, more than doubling the growth of China’s outbound trips. The international air ticket business maintained strong growth, specifically’s air ticketing volume recorded triple-digit growth for the 11th consecutive quarter. Ground transportation registered healthy volume growth this quarter. International train ticket volume grew more more than 7 times year-over-year. Packaged-tour revenue for the second quarter of 2019 was RMB1.1 billion, representing a 25% increase from the same period in 2018.

CTRP in the second quarter of FY 19 has reported the adjusted earnings per share of 33 cents, beating the analysts’ estimates for the adjusted earnings per share of 30 cents, as per Zacks Investment Research. The company had reported the adjusted revenue growth of 19 percent to $1.27 billion in the second quarter of FY 19, beating the analysts’ estimates for revenue of $1.25 billion. Accommodation reservation revenue for the second quarter of 2019 was RMB3.4 billion, representing a 21% increase from the same period in 2018. This was primarily due to the strong execution in increasing accommodation choices and quality of services that the company offer for the customers. Revenues from other business increased by 22% year-on-year in the second quarter of 2019, reaching RMB524 million. This was primarily driven by strong growth in the advertisement and Financial Services business. Gross margin was 79% for the second quarter of 2019, compared to 80% in the same period in 2018 and remained consistent with the previous quarter.

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