Bottom line: Ctrip’s offline travel alliance campaign looks like a shrewd move with good chances of success, while Tongcheng’s move back into profits shows the sector is heading into a new stable period.
Tongcheng travels back to profits
A couple of travel-related stories are in the headlines today, led by a blitz into the offline realm by leading online agent Ctrip (Nasdaq: CTRP). The other item has smaller rival Tongcheng reporting its first profit in four years, as it becomes the latest to emerge from a prolonged price war that bloodied the entire industry and sent most companies into the loss column.
Neither of these stories is huge, which partly reflects the fact that this industry is finally emerging from a brutal period to a new one of relative calm. But Ctrip is clearly looking for its next battle front, after consolidating its position by taking over most of its major rivals, including Qunar and eLong, to end the price wars. Read Full Post…
The following press releases and news reports about China companies were carried on October 15-17. To view a full article or story, click on the link next to the headline.
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ChemChina, Sinochem in Talks on Possible $100 Bln Merger: Sources (English article)
Tencent (HKEx: 700) to Sign $3.5 Bln Loan to Finance Supercell Purchase (Chinese article)
Weibo (Nasdaq: WB) Has Nearly Eclipsed Twitter (NYSE: TWTR) by Market Value (English article)
Smartisan Denies Rumors to be Aquired by NetEase (Nasdaq: NTES) (Chinese article)
Tongcheng Eyes IPO in 3 Years After Merger with Wanda Travel (Chinese article)
Bottom line: Tongcheng’s merger with Wanda’s travel unit could create a strong new rival to counter Ctrip, and could become even stronger through a potential future tie-up or merger with HNA-backed Tuniu.
Tongcheng merges with Wanda Travel
For more than a year Internet giant Ctrip(Nasdaq: CTRP) has seemed almost invincible, buying up most of its major rivals one by one to consolidate its position as the nation’s leading travel agent. But the company may finally be coming up against a major rival in its bid to dominate the lucrative sector, with word that real estate and entertainment giant Wanda has bought up Tongcheng, one of Ctrip’s last remaining major rivals.
This particular tie-up is slightly unusual, as Ctrip previously invested around $200 million for a stake that was reportedly as high as 30 percent in Tongcheng, according to media reports a couple of years ago. (previous post) That would have valued Tongcheng at about $650 million, which is a fraction of the valuation of more than 20 billion yuan ($3 billion) that Tongcheng was worth, based on the latest investment by Wanda. Read Full Post…
Bottom line: Ctrip’s new alliance with China Eastern continues its strategy of using equity tie-ups to further cement its position as China’s dominant provider of travel products and services.
Ctrip ties with China Eastern
In what looks like a first for private sector Chinese companies, leading online travel agent Ctrip (Nasdaq: CTRP) has just announced it will invest 3 billion yuan ($460 million) in China Eastern (HKEx: 670; Shanghai: 600115; NYSE: CEA) as part of a new strategic tie up with one of the nation’s top 3 airlines. The deal comes less than a year after US giant Delta Air Lines (NYSE: DAL) invested a similar amount in the Chinese carrier, and provides an important ally for Ctrip with one of its major suppliers.
This deal also comes as Ctrip’s former foe and new ally Qunar (Nasdaq: QUNR) remains locked in its own battle with China’s major airlines in a separate dispute tied to unruly third-party travel agents on its open platform. (previous post) Unlike Ctrip, which sells most of its plane tickets directly to travelers, Qunar’s open platform is home to hundreds of third-party travel agents who are harder to control and sometimes engage in deceptive practices when selling their products and services. As a result, many airlines have recently stopped allowing the sale of their tickets on Qunar’s website. Read Full Post…
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 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: 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: New acquisitions by China Lodging and Tongcheng reflect consolidation in China’s travel industry, which is likely to accelerate in 2016 as the nation’s economy slows.
China Lodging goes upmarket with new buy
Two smaller acquisitions from the travel realm are in the headlines as we close out 2015, with China Lodging (Nasdaq: HTHT) and Tongcheng both buying domestic companies. The first deal will see China Lodging, operator of the HanTing budget hotel chain, purchase a smaller operator called Hotel Home. The other comes in the related travel services space, and has Tongcheng buying a smaller rival called Shanghai MCTS.
Neither of these deals looks extremely exciting as both are quite small, but both do reflect a recent wave of consolidation that is sweeping China’s fragmented travel industry. Industry veteran Ctrip (Nasdaq: CTRP) is emerging as the clear leader and top consolidator in the travel services space. The hotel space is a bit less clear, with China Lodging, Homeinns (Nasdaq: HMIN) and Jin Jiang (HKEx: 2006; Shanghai: 600574) all jockeying for position in that space. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 26-28. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Invests $1.25 Bln in Ele.me, Becomes Largest Stakeholder (Chinese article)
The following press releases and media reports about Chinese companies were carried on December 11. To view a full article or story, click on the link next to the headline.
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Bottom line: Tuniu’s new tie-up with HNA looks like a smart move that could position it as a leading provider of resort vacation packages, and could also signal the rise of a meaningful rival to industry leader Ctrip.
Tuniu travels to Hainan with HNA
Leading online travel site Ctrip(Nasdaq: CTRP) has emerged as the loser in a recent bidding war for a stake in smaller rival Tuniu (Nasdaq: TOUR), which has just announced a new alliance that will see it receive a $500 million investment from one of China’s top traditional travel companies. This latest in a recent flurry of deals from the travel space will see HNA Tourism get about a quarter of Tuniu’s shares for its investment, making it Tuniu’s largest shareholder.
HNA Tourism is a unit of HNA Group, one of China’s more dynamic state-run investors that is also parent of Hainan Airlines (Shanghai: 600221), one of the country’s best-run airlines. Based in the tourism-friendly island of Hainan, HNA certainly looks like a logical and well-connected partner for Tuniu, even though media were reporting last week that the more entrepreneurial Ctrip was in talks for a similar deal. (previous post) Read Full Post…
