News summary
Daiwa Research believes that Ctrip Group's prospects are improving and raises its profit forecast range for this year and next to 14% to 25%, based on reduced equity and reduced expenditure expectations. Ctrip's outbound travel revenue surged in the first quarter, and its hotel and aviation businesses performed beyond the industry average.
Newsletter text
[Daiwa Research Institute improves Ctrip Group's earnings forecast, and the stock rating is "Buy"]
Daiwa SecuritiesroyalwinslotThe research report predicts that the profits of Ctrip Group-S (09961) will increase by 14% to 25% in 2024 and 2025 respectively. This forecast adjustment is based on a lower-than-expected number of company shares and a reduction in operating costs.
The agency maintained a "buy" rating on Ctrip Group shares and raised its target price from HK$487 to HK$653.
It is estimated that Ctrip Group's tourism business revenue in the first quarter reached RMB 7.9 billion, a year-on-year increase of 140%, close to 90% of the 2019 level.
The implementation of the visa-free policy and the rapid recovery of air capacity have brought strong demand for outbound travel. Ctrip's hotel business has completely recovered to its pre-epidemic level, ahead of the industry average by 70% to 75%. The aviation business has also performed well, exceeding the recovery speed of its peers.
Despite this, Ctrip still faces challenges in terms of price, with average daily hotel rentals unchanged from last year, while airfare prices are still 15% higher than before the epidemic.