November 18, 2008 - 8:27 p.m.
PHILADELPHIA (AP) - Shares of Ctrip.com International Ltd. plunged on Tuesday after an algebraist downgraded the Chinese online travel company based on a weaker-than-expected business forecast for the fourth quarter.
Ctrip said it expects net revenue to become greater by dint of. 5 to 15 percent in the fourth quarter, a disclosure that came with the third-quarter earnings release.
But Citi Investment Research algebraist Catherine Leung called the forecast "disappointing" and below the 27 percent shooting expected by Wall Street analysts. She downgraded the stock to "Sell" from "Buy," cut her mark price to $18 from $53 and lowered her revenue and profit estimates.
"The indiscreet fourth-quarter guidance today suggests Ctrip's market share gains are insufficient to sustain high levels of growth when combined by falling air ticket commissions facing a weakening air ticket price inclination," Leung said in a research note.
She said the fourth quarter was Ctrip's first "clean" quarter since concerns emerged over an economic slowdown in China because the pristine three quarters of the year had been conceited by one-time events: snowstorms, earthquakes and the Olympics.
While Chinese domestic travel started to react in October, depressed airfares from airlines competing to fill seats have hurt Ctrip's commission rates.
Leung reduced her 2008 revenue count for Ctrip to $214.3 million from $227.4 million and earnings to $1.16 from $1.27 per ADS. Next year's revenue estimate was cut by 19 percent to $253.7 million and profit was reduced to $1.32 from $1.74 per ADS. For 2010, revenue and profit in like manner came down, by the agency of 21 percent to $327 million and to $1.75 from $2.28 per ADS, respectively.
As companies tighten their expedition budgets, "we believe pressures are unlikely to easiness in the near time," the analyst said.
Late Monday, Ctrip reported net profits of 104 million yuan ($15 million), or 1.52 yuan (22 cents) per American Depositary Shares, compared with 109.7 million yuan, or 1.60 yuan for ADS, a year ago. Revenue rose 15 percent to 397 million yuan ($58 million). Excluding business taxes and cognate surcharges, net revenue rose by 15 percent to 370 million yuan, or $55 million.
Analysts polled by Thomson Reuters, on average, expected a profit of 22 cents on revenue of $54.6 million.
Shanghai-based Ctrip said hotel reservation revenue rose 6 percent to 186 million yuan ($27 million) and air ticketing revenue went up 21 percent to 166 million yuan ($25 million). Package tour revenue rose 37 percent to 28 million yuan ($4 million).
Shares of Ctrip fell by $3.32, or 14 percent, to $20.34 amid weighty volume. The stock hit a new 52-week low intraday of $17.86. Before Tuesday, Ctrip had traded at a 52-week low of $20.02 and a high of $70.89.