Bottom line: Ctrip’s stock could be set for strong gains over the next 12 months, thanks to strong profit growth following its recent string of equity tie-ups that have neutralized most of its major competitors.
Ctrip neutralizes rivals with string of tie-ups
In this series on my favorite China-concept stocks, leading online travel agent Ctrip (Nasdaq: CTRP) is the only one that I don’t really like in terms of corporate personality. But that fact aside, there’s still plenty for investors to like about this company that has slowly built up an enviable empire in China’s fast-growing market for travel services.
Ctrip was ahead of the curve with its establishment back in 1999 when China’s Internet and travel industry were both in their infancy. It was also one of China’s earliest Internet companies to list in the US, making a New York IPO back in 2003. Since then its prospects have soared with China’s booming travel industry, as the company faced relatively little competition for most of its first decade in business. Read Full Post…
Bottom line: China’s airlines are likely to permanently ban independent travel agents from selling on Qunar and other third-party platform operators, dealing a serious blow to their air ticketing businesses.
Dead end near for Qunar air tickets?
The bad news just keeps coming for travel agent Qunar (Nasdaq: QUNR), with word that its online sales platform could soon be banned for sale of tickets from China Southern (HKEx: 1055; Shanghai: 600029), the nation’s largest airline. Media are reporting that China Southern is preparing to roll out a wide-ranging new policy to govern the agents who sell its tickets. A key part of that will ban agents from selling China Southern’s tickets over third-party platforms like the one that Qunar operates.
This particular bad news is significant but also incremental, since China’s major airlines have been slowly freezing out Qunar this year due to complaints from people who buy their tickets over the company’s online platform. That platform allows independent travel agents to sell tickets on Qunar’s site, with a growing number of agents using deceptive or even fraudulent practices to make sales. Read Full Post…
The following press releases and news reports about China companies were carried on March 17. To view a full article or story, click on the link next to the headline.
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ZTE (HKEx: 763) Said to Appeal US Export Ban After Lobby Efforts Fail (English article)
Ctrip (Nasdaq: CTRP) Reports Q4 and Full Year Results (PRNewswire)
BAIC, BYD, Dongfeng Motor to Use LeEco (Shenzhen: 300104) Car Internet System (Chinese article)
Terra Firma Rejects HNA Bids for Jet Leasing Group AWAS – Sources (English article)
ReneSola (NYSE: SOL) Announces Convertible Note and Share Repurchases (PRNewswire)
Bottom line: China Southern’s removal of its air tickets from Qunar represents the latest boycott by a major supplier, and will further deprive Qunar of a key revenue source, causing its losses to further widen.
China Southern dumps Qunar
The bumpy ride for China’s online travel services sector continues this week, with word that leading airline China Southern (HKEx: 1055; Shanghai: 600029) is withdrawing all of its tickets from Qunar (Nasdaq: QUNR) due to a high volume of customer complaints. China Southern is just the latest airline to make such a move on Qunar’s site, following in the path of rivals Air China (HKEx: 753; Shanghai: 601111) and Hainan Airlines (Shanghai: 600221).
This particular series of boycotts marks the latest flare-up in an increasingly tense relationship between online travel sites and the airlines and hotels that are their biggest suppliers. Just last month China Southern reportedly decided to withhold its cheapest tickets from all travel agents. And major hotel operators last year formed a group to counter the increasing clout of Qunar and Ctrip(Nasdaq: CTRP), the industry’s top 2 players that are now allies after forming a major equity tie-up last year. Read Full Post…
Bottom line: China’s anti-trust regulators need to wake up to the growing clout of big nmes like Tencent and Ctrip in emerging industries and move more aggressively to stop them from engaging in anti-competitive behavior.
iKang accuses rival of monopoly behavior
A war of words broke out last week between two of China’s largest private clinic operators, as one accused the other of violating the nation’s anti-monopoly laws with a recent purchase. The case pitting iKang (Nasdaq: KANG) against larger rival Health 100 (Shenzhen: 002044) casts a spotlight on growing concerns about anti-competitive behavior in China’s vibrant private sector, which boasts many companies whose size is already approaching some of the nation’s largest state-run giants.
And yet despite the size of these companies and increasing cases of anti-competitive behavior, China’s anti-monopoly regulators have largely ignored the domestic private sector, focusing instead on big foreign and state-run firms. The validity of iKang’s accusations against Health 100 still need to be proven, since China’s private clinic sector is still very young and may not have the scale to qualify for monopoly consideration. Read Full Post…
Bottom line: Vipshop looks like a strong bet due to its position as a focused e-commerce leader among consumers who are most interested in bargains and less concerned about famous brands.
Vipshop trives on bargain focus
So far this series on my favorite Chinese stocks has focused on big names like Tencent(HKEx: 700) and Fosun International (HKEx: 656), which are sector leaders with strong, focused management. But hiding behind these giants are a field of lesser-known second- and third-largest players in their sectors offering even better growth potential because they are far smaller and at an earlier stage in their development.
One such name is Vipshop (NYSE: VIPS), which has carved out a place as China’s third largest e-commerce company by honing in on shoppers who are more interested in bargains and less concerned with big-name brands. While some may call this area a niche, it’s really more of a focus since it encompasses quite a large segment of the Chinese shopping population. Read Full Post…
Bottom line: Qunar’s new airline investment is unlikely to offset its shrinking access to tickets from major airlines, while Ctrip’s new purchase of a strategic stake in Uzai.com extends its strategy to eliminate competitors through such tie-ups.
Ctrip invests in Uzai.com
China’s rapidly consolidating travel services sector is taking an interesting new twist onto the runway, with word that number-two website Qunar (Nasdaq: QUNR) is joining a group launching a new airline. At the same time, separate media reports are saying that industry industry leader Ctrip(Nasdaq: CTRP) has just neutered another rival using its recent approach of buying a strategic stake in the company.
Both of these stories point to the growing clout of Ctrip and Qunar, which were once bitter rivals but became a de facto single company last year after a landmark equity tie-up. I have long called for consolidation in China’s highly fragmented travel services sector, but now sense that Ctrip is looking increasingly like a monopoly after its recent buying spree that has seen it buy up strategic stakes in most of its major rivals. Read Full Post…
Bottom line: China Southern’s new move to stop offering heavily discounted tickets through travel agents looks aimed at the growing clout of Ctrip, and other carriers could follow with similar policies.
China Southern takes aim at Ctrip
China’s largest airline has joined a growing uprising against increasingly dominant online travel agent Ctrip(Nasdaq: CTRP), with reports that China Southern (HKEx: 1055; Shanghai: 600029) will no longer offer its most heavily discounted tickets via third-party agents. The actual move will see China Southern offer tickets with discounts of 60 percent or more only on its own website.
The move is the latest by travel products and services providers who are unhappy with Ctrip’s growing clout in the market, following a string of deals last year that saw the company purchase strategic stakes in most of its major rivals. Since that has happened, a growing number of hotels, airlines and other travel services companies have complained they are getting squeezed by a group including Ctrip and its partners, whose position looks increasingly like a monopoly. Read Full Post…
Bottom line: A strong reception for Apple Pay from consumers, banks and merchants bodes well for the service, which should attract a major audience among iPhone users but won’t pose a major threat to rival services from Alipay and WeChat.
Apple Pay launches in China
The launch of Apple Pay in China is buzzing through the local headlines a day after the roll-out, in a move that looks certain to shake up a stodgy industry dominated by homegrown names like Alipay. The most revealing headlines report on the rush by everyone, from consumers to banks and merchants to jump onto the Apple Pay bandwagon. That reflects the buzz that any major move by Apple (Nasdaq: AAPL) can create in the world’s largest smartphone market.
Local consumers are undoubtedly pleased that Apple chose China for the Asia launch of Apple Pay, selecting their market over more traditional candidates like Japan and South Korea. China is only the fifth global market for Apple Pay, following launches in the US, Canada, Britain and Australia. The pride element at being first in Asia, combined with Apple’s existing premium image here, will draw a big majority of Chinese iPhone and iPad users to try out Apple Pay on their devices. Read Full Post…
Bottom line: A growing strategy by retailers like Macy’s and Suning to target Chinese tourists traveling abroad looks smart, drawing on Chinese consumers’ growing taste for imported goods and distrust of domestically made products.
Macy’s targets Chinese shoppers in US
Traditional retailing giant Macy’s (NYSE: M) is rapidly discovering a new fondness for China, with its announcement of a series of special promotions at its main US department stores targeting Chinese traveling abroad for the Lunar New Year. Macy’s new move comes just a half year after the company announced a major new China joint venture aimed at tapping the nation’s booming markets for traditional retailing and e-commerce.
At the same time, domestic Chinese retailing powerhouse Suning (Shenzhen: 002024) is targeting similar consumers traveling over the holiday to Japan, offering its own promotions using a local Japanese electronics chain it purchased last year. Read Full Post…
Bottom line: Shanghai Disneyland’s ticket pricing and proactive efforts to stop scalpers are being well received by media and local Chinese, boding well for a broadly positive launch when the park opens in June.
Shanghai Disneyland prices tickets
It’s still 4 months until Shanghai Disneyland (NYSE: DIS) formally opens its doors to the public, but already the park operator is fixating on its entrance tickets that are almost certain to become a hot commodity when they start hitting the market next month. The announcement of pricing for Shanghai Disneyland tickets, which was quickly followed by measures the company is taking to avoid scalpers, are part of a barrage of hype that will only accelerate as the park charges towards its opening date in mid June.
I’m usually a bit cynical about this kind of thing, since companies like Disney are masters at creating news just to keep their names in the headlines ahead of a big event, even if there’s no real news to report. But in this case the opening of the Shanghai Disneyland really does seem worthy of the buzz, since the new park marks a major milestone for both China and Disney itself. Read Full Post…
