Overseas Chinese Equities, Aequitas Research

Ming Lu

A veteran with 19-year experience in equity research.

Geographical coverage:
* Companies operating in China, but listed in Hong Kong and the U.S.
* Previously China A-share (listed in mainland China).

Equity sector coverage:
* Chinese App / Internet-based consumption in China, e.g., Alibaba, Tencent, etc.
* Previously covered education, transportation, telecom, power, bank, advertisement, hotel, etc.

Research methods:
* Generally bottom-up.
* Talk to related people on the ground.  Talk to readers and independent writers for analyzing a news portal.  Talk to parents and teachers for analyzing a tutoring school. 
* Visit stores and show photos as evidence in notes.
* Do technical analysis when finding a short-seller attacking an equity.

Languages:
* English
* Mandarin Chinese (Official language of China)
* Shanghainese (Language of Shanghai, the most developed city in China)
* Cantonese (Language of Hong Kong and Canton Province, one of the most developed provinces in China)

Overseas Chinese Equities

Ctrip (CTRP): Overcame Two Difficulties in Q4, But Market Over-Reacted to “Global No. 1”

Ctrip (CTRP): Highest Q1 Operating Margin Since 2014, Upgrade to HOLD

(Some) Promises Kept in 1Q19, but Retaining Sell Rating and $36 Target Price for Ctrip.com

Ctrip Q318 Results: BAD (Increasing Margin Pressure) > GOOD (Bottoming of Revenue Growth)

Ctrip.com (CTRP): Ticketing Began to Recover, But Margin Declined in Key Season, 15% Downside

TRACKING TRAFFIC/Chinese Tourism: Outbound Traffic Growth Collapses, Domestic Activity Still OK

Equity Bottom-Up

<ul class="">
<li>CTRP became the largest OTA (Online Travel Agency) worldwide based on GMV (Gross Merchandise Value).</li>
<li>CTRP’s GMV reached USD100 billion in the trailing 12 months from 4Q17 to 3Q18.  This is more than the USD98 billion reported by <a href="https://www.smartkarma.com/entities/6669" target="_blank" data-smartkarma-citation="entities:6669:1">Expedia Inc (EXPE US)</a> and the USD91 billion reported by <a href="https://www.smartkarma.com/entities/15704" target="_blank" data-smartkarma-citation="entities:15704:1">Booking Holdings (BKNG US)</a>.</li>
<li>After the market’s overreaction to CTRP’s margin decline, we upgrade CTRP to HOLD.</li>
<li>Additionally, both Expedia (EXPE) and Booking (BKNG)'s P/E ratios for 2019E are 19x.  This is higher than the ratio that CTRP is trading at.</li>
</ul>


CTRP became the largest OTA (Online Travel Agency) worldwide based on GMV (Gross Merchandise Value).
CTRP’s GMV reached USD100 billion in the trailing 12 months from 4Q17 to 3Q18.  This is more than the USD98 billion reported by Expedia Inc (EXPE US) and the USD91 billion reported by Booking Holdings (BKNG US).
After the market’s overreaction to CTRP’s margin decline, we upgrade CTRP to HOLD.
Additionally, both Expedia (EXPE) and Booking (BKNG)'s P/E ratios for 2019E are 19x.  This is higher than the ratio that CTRP is trading at.


Ctrip.com (CTRP): Surpasses Expedia and Booking to Become the Largest OTA, Upgrade to HOLD

Trip.com

Ctrip.com (CTRP): Surpasses Expedia and Booking to Become the Largest OTA, Upgrade to HOLD