Morningstar

Morningstar, Inc.

Equity Bottom-Up

Net revenue at narrow-moat Ctrip was up 21% year over year versus guidance of 18% to 23%. Second-quarter revenue growth guidance is 16% to 21%, versus our full-year estimate of 16%. Operating profit was up 50% year over year as the operating margin increased 200 basis points to 10.8% in the quarter, versus our full-year assumption of 100 basis points margin increase. We maintain our earnings assumptions as Ctrip’s expenses to sales ratio have fluctuated significantly quarter to quarter and it…

Ctrip’s business strategy is to expand internationally, penetrate into low-tier cities in China, and enhance product offerings. Skyscanner, a global travel search site acquired in 2016, Trip.com which is in 22 currencies, and TrainPal, which was launched in September 2018, are Ctrip’s global brands. As of second-quarter 2018, Ctrip had over 7,000 franchise offline stores to penetrate into the lower-tier cities. The Ctrip app is a one-stop shop for travelers providing 60 travel-related products…

Ctrip will issue new shares to Naspers for its 42.5% stake in MakeMyTrip, the largest Indian online travel company. We estimate the consideration is at a 15% premium to MakeMyTrip’s last close before the announcement of the deal. Ctrip will invest certain ordinary shares and class B shares of MakeMyTrip in a third-party investment entity concurrently with the share exchange. Subsequent to the transaction, Naspers will own approximately 5.6% of Ctrip's ordinary shares, and Ctrip and the…

China

Trip.com Group Ltd. provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services.

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