- Company forecasts as much as 50% fourth-quarter revenue growth
- Bloomberg China ADR index ends two-day drop; A-share ETF gains
Ctrip.com International Ltd. rallied to a record as the Chinese online travel services provider exceeded analysts’ third-quarter earnings estimates and said it expects to post revenue growth of as much as 50 percent for the final three months of this year.
The American depositary receipts surged 16 percent to $109.85 in New York. Trading volume of 12.1 million shares was more than triple the full-day average of the past three months. The Bloomberg China-US Equity Index advanced 1.8 percent.
Ctrip’s ADRs jumped after the company posted third-quarter adjusted net income of $401 million, driven mainly by a $377 million gain from the “deconsolidation of Tujia.com International Co.,” a home-sharing service similar to AirBNB Inc.’s, according to the company’s earnings statement. The forecast for annual revenue growth of 45 percent to 50 percent compares with an average estimate of 42 percent among 12 analysts surveyed by Bloomberg.
Amid increasing competition and a pricing war that was eating into profit margins, Ctrip has worked to improve market share by offering consumers discounts on its products and collaborating up with competitors. Ctrip has joined in a Baidu-backed share-swap deal with rival Qunar Cayman Islands Ltd, giving the two companies an estimated 80 percent of the Chinese hotel and air ticket markets. Earlier this year, the company also purchased a majority stake in Elong Inc, an online trip-booking service.
“The profits that the company reported were better than what people expected because those operating margins started to inflect again to the positive,” Jeff Papp, senior analyst at Oberweiss Asset Management Inc, which oversees about $1.9 billion, said by phone on Thursday. “With the collaboration with Elong, and with the deal with Qunar, I think the competitive landscape has dramatically improved.”
The Bloomberg gauge of Chinese ADRs rose for a second day. Online retailer Alibaba Group Holding Ltd. increased 0.2 percent to $77.87, ending a two-day decline. Search engine Baidu Inc. gained 1.5 percent to $207.80. Qunar slumped 8.6 percent to $35.08, the lowest since Oct. 9. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF rose 1.4 percent to $37.98.