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Online Travel Portals See Strong Results

Two NASDAQ-listed Chinese online travel service providers -- Ctrip and eLong -- both reported strong results in the second quarter with increasing custom and a seasonal rebound of travels by the Chinese people.


Shanghai-based Ctrip.com International Ltd said on Friday its net profits increased by 80 per cent year-on-year and 43 per cent quarter-on-quarter to US$6.8 million. Its diluted earnings per American depository share (ADS) were 42 US cents in the second quarter, compared with 30 US cents in the first quarter.


James Liang, chairman and chief executive officer of the biggest Chinese online travel service provider, called the quarterly results "terrific."


Ctrip's ADS on the NASDAQ rose by 3.51 per cent on Thursday US time to US$59 in after-hours trading after the results were announced.


The company's revenues in the second quarter rose to US$16.6 million, 60 per cent higher than during the same period last year and one third higher than in the March quarter.


Liang attributed robust growth to more marketing activities, more product offerings, and a seasonal rebound in the second quarter.


Ctrip's package tour business witnessed a 167 per cent growth over the June quarter of 2004 to US$701,000, while hotel and air ticket booking businesses grew by 34 per cent and 178 per cent over the second quarter of 2004 to US$11.1 million and US$4.4 million respectively.


The firm also said on Friday that its founder, president and chief financial officer Neil Shen will leave the company for the venture capital firm Sequoia Capital, but will remain at his current posts for three months until Ctrip finds a successor.


Ctrip estimates its revenues for this quarter will grow by about 40 per cent over the same period of last year which recorded an income of US$10.9 million. This may however be lower than results in the second quarter due to an unexpected slow-down in June, Ctrip said.


Ctrip's minor competitor eLong Inc in Beijing also reported its second quarter results on Thursday evening.


The Beijing-based eLong, controlled by the US online travel service giant IAC/Interactive, said its revenues rose by 55 per cent year-on-year and 33 per cent quarter-on-quarter to US$6.3 million in the second quarter.


"We are pleased with these second quarter results that reflect tangible progress in our financial and operational results," said Justin Tang, chairman and chief executive officer with eLong.


Tang attributed the growth of his company to an increase in consumers, more effort in marketing, partnership with the country's biggest Internet portal Sina Corp, and a seasonal rebound.


Despite the growth, eLong was still in the red with a net loss of US$396,000, compared with net losses of US$1.3 million in the period of one year ago and US$1.2 million in the first quarter.


The company estimated its revenues in this quarter to be between US$6.5-7.3 million.


Michael Yin, a Shanghai-based Internet analyst, said the increase in Chinese people's interest in travel is the biggest driving force behind the growth of online travel service companies and package tours with air tickets and hotel rooms providing a welcome boost to their profits.


"The market is still very small and there are many smaller players, but in the long run, more and more people will choose to travel by themselves purchasing tickets and hotel rooms online," said Yin.


Shanghai-based online job recruitment company 51job Inc also reported its financial results for the quarter on Friday, saying the company beat its guidance for the quarter.


The company said its revenues grew by 26.2 per cent over the June quarter of 2004 to US$17.8 million, outstripping a previous guidance figure of US$16.30-17.51 million.


However, its net profits fell by 3 per cent over the June quarter of 2004 to US$1.9 million, or 7 US cents per share.


Its ADS on the NASDAQ also fell by 76 per cent after the results were announced.


(China Daily August 8, 2005)


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