Maverick Capital closes position in Ctrip.com
Highlights of Maverick Capital's 3Q14 positions (Part 7 of 12)
Maverick Capital and Ctrip.com
Maverick Capital added new positions in CBS Corp. (CBS), Alibaba Group (BABA), and 21st Century Fox (FOXA). The fund’s top exits were Ralph Lauren Corp. (RL), Walgreen’s (WAG), and Ctrip.com (CTRP). The fund added to its stakes in Qihoo 360 Technology (QIHU), FleetCor Technologies (FLT), and AbbVie Inc. (ABBV). Its top stake decreases were in Baidu, Inc. (BIDU) and TransDigm Group (TDG).
Maverick Capital closed its position in CTRP in 3Q14. The position accounted for 1.05% of the fund’s total portfolio in 2Q14. Its position in CTRP was initiated in 2Q14.
About Ctrip
CTRP is a leading travel service provider. It provides accommodation reservations, transportation ticketing, packaged tours, and corporate travel management in China. CTRP aggregates hotel and flight information to helps business and leisure travelers make informed and cost-effective bookings. It also helps customers book vacation packages and guided tours.
CTRP’s corporate travel management services help corporate clients effectively manage their travel requirements. Since it started in 1999, CTRP experienced substantial growth. It’s one of the best-known travel brands in China.
2Q14 revenues beat estimates
CTRP’s 2Q14 results beat estimates. Net revenue was $278 million—up 38% year-over-year, or YoY. It exceeded net revenue guidance of 30%–35%. Accommodation reservation revenues increased 47% YoY. The revenues were driven by a 64% increase in accommodation reservation volume. Transportation ticketing revenues increased 39% YoY. Ticketing revenues were driven by an 83% increase in ticketing volume. Packaged-tour revenues decreased by 21% quarter-over-quarter. This was mainly due to the seasonal cycle.
Product development expenses for 2Q14 increased by 55%—compared to 2Q13. The increase was mainly due to an increase in product development and personnel-related expenses.
CTRP’s chairman, James Jianzhang Liang said, “Both accommodation reservation and transportation ticketing services achieved strong volume growth at 64% and 83% year-over-year respectively. During the second quarter of 2014, approximately 80% of Ctrip’s total transactions were booked online or through mobile channels. Ctrip has successfully built an industry-leading mobile travel platform by offering travelers the most comprehensive products with the most competitive prices and the best user experience. The number of Ctrip Mobile App downloads has reached 200 million, growing at a rate of 60% quarter-over-quarter. Total mobile transaction value for the second quarter of 2014 more than tripled from a year ago and the peak daily transaction value exceeded Renminbi 220 million recently.”
CTRP and Priceline Group expand partnership
Priceline Group (PCLN) agreed to invest $500 million in CTRP through a convertible bond. CTRP granted PCLN permission to acquire CTRP shares in the open market over the next 12 months. Combined with the shares that are convertible under the bond, PCLN may hold up to 10% of CTRP’s outstanding shares. After PCLN purchases the convertible bond, it will acquire the right to appoint an observer to CTRP’s board of directors. This partnership will promote the accommodations inventory between the two companies.
CTRP to acquire Celebrity Century
CTRP is the largest cruise agency in China. It has more than a 10% market share in China. Celebrity Century is one of the top-tier vessels in the world. By acquiring Celebrity Century from Royal Caribbean Cruises Ltd., CTRP will strengthen its leadership in the market.
Chinese online travel market’s bullish growth
According to iResearch, China’s online travel market maintained stable growth in 3Q14. Revenues for online travel agencies, or OTAs, were 3.95 billion yuan. The revenues grew 21% year-over-year, or YoY. The domestic market was impacted by a price war. The outbound market continued to thrive despite events in Malaysia and the Philippines.
In the OTA market, CTRP accounted for 55.9%. Its peers—Elong and Tong Cheng—accounted for 16% in 3Q14. According to iResearch, CTRP continues to invest in products and corporations that grow its businesses.
The next part of this series will discuss Maverick Capital’s raised stakes during 3Q14.
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