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Tuniu Races To Internet Bull Market

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Tuniu eyes bullish IPO market

When does an 87 percent rise in your share price in just 3 months make you a laggard? The answer: When your name is online travel agent Qunar (Nasdaq: QUNR), and the 87 percent rise makes you the worst performer among a quartet of Chinese Internet companies to make New York IPOs at the end of last year. The sudden surge in investor interest towards these companies will almost certainly lead many Chinese Internet firms to speed up their New York listing plans in the first quarter of this year, starting off with word that Tuniu, another online travel services firm, is accelerating its plans for a listing in the next few months. Read Full Post…

Ctrip Stabilizes, Growth Ahead 携程业绩企稳 利润有望恢复增长

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When is a 24 percent drop in net profit a good thing? The answer to that question should usually be “never”, but in the case of online travel agent Ctrip (Nasdaq: CTRP), the company’s latest drop in quarterly profit appears to be encouraging investors that a recent round of price wars in the sector is starting to ease. That would be good news not only for Ctrip, but also for rivals like eLong (Nasdaq: LONG) and up-and-comers like Baidu-invested (Nasdaq: BIDU) Qunar, which have been engaged in a stiff battle for market share for much of the last year.

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Qihoo Alliance Offensive Targets Baidu 奇虎掀起联姻潮 欲与百度试比高

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Qihoo 360 (NYSE: QIHU) is stepping up its challenge to Baidu’s (Nasdaq: BIDU) dominance in online search, with word that the security software specialist has formed a new alliance with leading online travel firm Ctrip (Nasdaq: CTRP). (English article; Chinese article) This new alliance appears to be part of a clever tactic by Qihoo to form new tie-ups with Internet companies that specifically want to see more competition in the Chinese search market and thus are willing to work closely with Qihoo as it embarks on a new online search initiative. Accordingly, I wouldn’t be surprised to see more such announcements in the months ahead as Qihoo tries to build up its So.com search engine as a viable alternative to Baidu’s own service that now controls around three-quarters of the market.

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Ctrip Bonds: Outspending Private Rivals 携程债券：超出私募的竞争对手

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As competition intensifies in nearly every major space on the Chinese Internet, companies are finding themselves increasingly in need of new money as their profits tumble and cash reserves dwindle. The options for new funding are particularly limited for younger private companies, whose main source of money is usually private equity and venture capital that is relatively limited. Older listed companies have more choices, since they can tap financial markets by issuing bonds or new shares to raise money. That distinction is seeing a small but growing number of older Chinese Internet firms raise money by issuing new debt to compete with their smaller but very aggressive rivals in the fight for market share. In the latest development on that front, leading online travel services provider Ctrip (Nasdaq: CTRP) has just announced plans to issue up to $140 million in convertible bonds . (company announcement)

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Jingdong Mall Tries Gaming 京东商城有意进军网游业

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When future historians look at the early days of the China Internet, Jingdong Mall will probably be remembered as a sort of hyperactive organism that had too much money and tried to do too many things, wreaking havoc on the entire web community in the process. That’s my latest assessment of this hyperactive e-commerce giant, which also calls itself 360Buy, following the latest reports that Jingdong now plans to get into the online games business. (English article; Chinese article)

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Ctrip Travels Overseas With Priceline 携程网与外国公司价格线合作

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Ctrip (Nasdaq: CTRP) has just announced a new tie-up with US travel services giant Priceline (Nasdaq: PCLN), marking the latest partnership with an overseas partner by Chinese firms looking to tap growing demand from increasingly wealthy Chinese travelers. These tie-ups are also being driven by intense competition that has recently emerged in the travel space, as up-and-coming younger firms with names like Qunar and TravelSky and new sites opened by big Internet names like Jingdong Mall look to steal market share from older established players like Ctrip and eLong (Nasdaq: LONG).

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New Stumbles from BYD, Sina, Qunar 比亚迪、新浪及去哪儿遭遇新问题

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Chinese companies are feeling the summertime heat of a slowing home economy, with new reports emerging from an array of sectors reflecting turbulence at troubled car maker BYD (HKEx: 1211; Shenzhen: 002594), and also at a year-old struggling luxury goods channel operated by leading web portal Sina (Nasdaq: SINA). Neither of these reports is too surprising for reasons I’ll soon explain; but perhaps a bit most worrisome are other reports saying up-and-coming online travel services site operator Qunar has also laid off some employees, in a sign that China’s economic slowdown is starting to affect even healthier companies.

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China’s TravelSky Joins Global Travel 信天游与美国同业Sabre结盟Rush

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I don’t usually like to commend myself, but I have to say that it appears I was correct with my recent prediction that something was happening in the normally low-profile travel sector, as we’ve seen a nonstop stream of new initiatives from the sector since then, nearly all involving new international tie-ups. (previous post) Barely a day seems to go by now without the announcement of a new tie-up between a Chinese company with a foreign counterpart in the travel space, including the latest announcement from US air and hotel ticketing giant Sabre Holdings that it is forming a new alliance with China’s TravelSky. (company announcement) The tie-up looks quite interesting, as it will instantly make the 30,000 Chinese hotels on TravelSky’s network available for booking by users of Sabre’s system, while making Sabre’s 100,000 properties available to TravelSky users. This kind of a tie-up is clearly designed to cater to both the growing number of Chinese traveling to the West, as well as the big numbers of western tourists who travel to China. The alliance also appears more aimed at bookings made by travel agencies, rather than do-it-yourself travel booking sites that cater mostly to individual consumers. As such, it won’t compete very directly with more consumer-oriented online travel booking sites like Ctrip (Nasdaq: CTRP), eLong (Nasdaq: LONG) and Qunar, which tend to focus on individual travelers in the domestic market. But if TravelSky does eventually get into the consumer market, it could instantly have a very attractive product with this new Sabre tie-up, allowing it to quickly gain share on Ctrip and the other major domestic players. The move also seems to be part of a broader one that has Chinese airlines and hotel booking firms trying to become more international. I previously wrote that this new globalization drive, which seems to have gained recent momentum, is probably being driven by Beijing, which wants all of its sectors to become more globally competitive rather than simply relying on their protected home market. Regardless of the reason for this sudden surge in global tie-ups, the recent momentum means we will probably see many more similar announcements in the months ahead, shaking up the relatively small, protected field of players, most of whom have largely relied up to now on their home China market. The looming shake-up and industry shift was apparent in another form overnight on Wall Street, where Ctrip itself announced a $300 million share repurchase program to bolster its sagging stock. (company announcement) Ctrip shares rallied about 4 percent after the announcement, but they are still at just about a third of their levels from just a year ago, amid a broader depressed market for US-listed Chinese shares following a series of accounting scandals last year. I’ve always been quite positive on Ctrip due to its industry-leading position and strong ability to focus on its core travel services business. But the company may need to follow the recent trend and look for more expansion opportunities outside China — including possible tie-ups with foreign partners — or risk losing both share and relevance to more aggressive rivals.

Bottom line: A new tie-up between a top China hotel booking service and a US counterpart is part of a growing globalization trend for Chinese providers of travel services.

Related postings 相关文章:

◙ Airlines on Global Flight, New Tie-Ups Ahead? 航空公司环球飞行，未来有新合作？

◙ China Eastern’s Budget Play: Turbulence Ahead 东方航空成立廉价航空公司：将面临动荡

◙ Ctrip Profit Slows Amid Online Travel Rush 在线旅游热潮中携程利润放缓

Ctrip Profit Slows Amid Online Travel Rush 在线旅游热潮中携程利润放缓

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A number of interesting news bits are coming from the online travel space, led by the latest quarterly results from industry leader Ctrip (Nasdaq: CTRP) that show competition is rapidly heating up in this space, where another up-and-comer named Tujia.com has just received new venture funding. After dominating China’s online travel space for years, Ctrip and eLong (Nasdaq: LONG) are getting a recent wave of new competition from others finally waking up to the potential of the online travel sector, fueled by demand from more and more Chinese who have extra money and time to spend on travel. That demand has helped to propel a new field of rivals, including online travel site Qunar, which itself received a major investment from online search leader Baidu (Nasdaq: BIDU) late last year. (previous post) Others moving aggressively into the space include e-commerce giant 360Buy, which also calls itself Jingdong Mall, and now Tujia.com, which specializes in vacation packages. (previous post) Let’s take a quick look at Ctrip’s results, which show the company’s revenue grew a respectable 19 percent in the first quarter, even as profit tumbled 28 percent. (results announcement) A look at the numbers shows that reduced commissions are partly behind the profit decline, as hotels and airlines come under pressure to boost their own profits and also have more platforms to sell their products from. But the big reason for Ctrip’s profit decline appears to be sales and marketing expenses, which jumped nearly 50 percent and now account for more than one-fifth of total revenue. Clearly Ctrip is having to spend a lot more to maintain its growth than it did in the past, reflecting the growing competition in the market that is only likely to get worse, putting further pressure on profits. For the moment at least, investors seem to like what they see in these latest results, initially bidding up Ctrip shares as much as 5 percent after the report came out, though now they are up only 2 percent in after-hours trade. From my perspective, this kind of increased sales and marketing spending will be critical for Ctrip to maintain its market-leading position, and for that reason I wouldn’t be too concerned just yet by this profit erosion. But at some point the company will have to return to profit growth, or risk being abandoned by investors. Meantime, Tujia has just landed a new round of venture funding, with Ctrip itself as one of the investors, along with US travel site operator HomeAway (Nasdaq: AWAY) and US investment firms Lightspeed Venture Partners and CDH Investments. (announcement) No terms were given in the announcement, but I would expect this round is probably in the $10-$20 million range, and the presence of so many high-profile investors means that Tujia should be well positioned to grow in its niche area of providing vacation packages, and could make a New York IPO in the next couple of years. With all these fast-rising players in the market, look for everyone to feel the heat in terms of falling margins, and perhaps even a merger or 2 involving one or more of the big names in the next couple of years.

Bottom line: Ctrip’s latest results reflect intensifying competition in the online travel space, with some consolidation likely in the next 2 years.

Related postings 相关文章:

◙ Baidu’s Qunar: Going Places 百度投资的去哪儿网：前途无量

◙ Jin Jiang Looks for Room at the Global Lodge 锦江集团寻求跻身国际高端酒店之列

◙ 360Buy Losing Focus With Travel Plan 京东商城涉足在线旅行服务业 偏离核心业务

E-Commerce: Dangdang CFO Goes, Suning’s New Trip 当当网首席财务官请辞 苏宁进军在线旅游业

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There are a couple of interesting news bits from the e-commerce space, one from e-commerce giant Dangdang (NYSE: DANG) whose CFO has just resigned, and the other on an interesting new move by an increasingly aggressive Suning (Shenzhen: 002024) into online travel services. I was originally planning to start with Suning, as that news looks the most interesting in terms of broader strategy. But then I had a look at Dangdang’s stock, and was a bit surprised to see it plunged more than 15 percent after news of the CFO resignation came out, indicating investors are clearly concerned about this development. Dangdang itself wasn’t saying much, except that CFO Conor Yang, who joined the company 2 years ago and saw it through its IPO in late 2010, tendered his resignation for personal reasons. (company announcement; Chinese article) Yang helped Dangdang raise more than $300 million in the successful IPO, with Dangdang shares initially soaring in their trading debut. But since then they have tumbled due to fierce competition in China’s e-commerce space that has led Dangdang and most of its peers deeply into the red, and now they trade at about half of their IPO level. It’s never good to lose a CFO, and it’s especially bad when your CFO leaves when the company is so deeply in the red. Such departures often imply the CFO, who is traditionally more conservative about financial matters, may believe his bosses are pressuring him to understate the nature of bad news like big losses. If that’s the case, look for more turbulence for this already-battered stock as its accounting comes under increasing scrutiny. Meantime, Suning, which has aggressively moved into e-commerce over the past year and is now the country’s fourth-biggest player, announced it is getting into the online travel business by selling airplane tickets and hotel reservation services. (English article) This move looks interesting as the online travel space is already quite crowded, dominated by established players like Ctrip (Nasdaq: CTRP) and eLong (Nasdaq: LONG) and recent entries to the space by e-commerce rival 360Buy and search giant Baidu (Nasdaq: BIDU). (previous post) Suning seems to be quite good at executing its new business strategies, and thus could offer a serious product in the space in a relatively short time. If that happens, along with all these other new initiatives, look for the online travel sector to see a serious jump in competition — and profit erosion — in the next 2 years.

Bottom line: Dangdang’s CFO resignation could point to accounting issues, while Suning’s entry to online travel services will further heat up this increasingly crowded space.

Related postings 相关文章:

◙ Dangdang Loss Balloons In E-Commerce Wars 当当网在电子商务大战中亏损严重

◙ Dangdang and Gome: Marriage Ahead? 当当和国美：联姻前夕？

◙ Baidu’s Qunar: Going Places 百度投资的去哪儿网：前途无量

360Buy Looks Around to Real Estate 京东商城试水房地产

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I have no idea what’s happening behind the scenes at 360Buy, but a growing number of mixed signals from this online retailing giant seem to portray a company sinking into turmoil, including the latest news that it is now getting into the real estate services business. (English article) According to the latest reports, 360Buy, which also goes by the name of Jingdong Mall, has teamed up with a Beijing real estate company called Tianheng as a potential prelude to entering the online home shopping business. While homes are also a consumer retail product, selling such major items online is far different from 360Buy’s core retail business of selling everyday products like electronics, clothing and books. What’s more, 360Buy has no experience in this kind of transaction, which is far more complex than buying a tube of toothpaste over the Internet. This new initiative is just the latest sign of a company that is losing focus as big new investors who pumped more than $1 billion into it last year seem to be looking for any and every new business opportunity they can think of. The company entered the highly competitive online book selling business in January (previous post), and in February it made a strange move into the online travel business, putting it into direct competition with well established players like Ctrip (Nasdaq: CTRP) and eLong (Nasdaq: LONG). (previous post) The steady stream of new initiatives comes not long after the investor group that included Russia’s Digital Sky Technologies made the $1 billion-plus investment about a year ago, leading me to believe this group is at least partly behind these moves as its members anxiously look to justify their huge investment. Amid the stream of new business initiatives, increasing signs have emerged of a behind-the-scenes battle over the timing of an initial public offering by the company. 360Buy’s founder Liu Qiangdong has repeatedly said that no such offering is in the works for at least the next 2 years. But at the same time, another steady stream of reports that appear to be coming from the banking world keep emerging that say the company has hired an investment bank as it prepares to make a multibillion-dollar IPO. (previous post) The increasingly mixed signals look like a worrisome trend for potential investors, indicating this company is rapidly losing direction and focus as a number of major stakeholders all try to take control. Presumably the company still has lots of cash and doesn’t urgently need to raise money through an IPO after its big fund raising last year. Still, if it does go ahead with a public offering, I would caution investors to be very wary of buying into this company until it can regain some of its focus and concentrate on becoming profitable.

Bottom line: 360Buy’s move into real estate services is the latest mixed signal from the company, which appears to be losing focus as stakeholders and managers battle for control.

Related postings 相关文章:

◙ Message to 360Buy: Make Up Your Mind! 京东商城IPO“暗战”

◙ 360Buy Losing Focus With Travel Plan 京东商城涉足在线旅行服务业 偏离核心业务

◙ 360Buy Heats Up E-Books, People’s Daily Goes to Market 京东商城高调进军电子书,人民网开启上市进程