Poetic Portfolios

Up until the financial crisis, long-time investors knew not to trust Ctrip’s management when they provided guidance of 25% growth. Inevitably, the company produced earnings and revenue growth well in excess of 25%. In their most recent quarter, Ctrip seems to have resumed their phenomenal growth. For their fiscal third quarter, they produced net revenue growth of 47% on a year-over-year basis. Excluding the impact of the ezTravel acquisition, net revenues grew at a 40% year-over-year rate. Earnings growth was even more impressive, growing 80% on a year-over-year basis to $28 million. (more…)

Similar to my recent post on Apple (AAPL), I have to wonder if Ctrip (CTRP) is worth selling. The stock hit a new 52-week high yesterday, and appears to be selling at quite a premium. The stock trades at over 62x trailing twelve-month earnings. This looks rich even for a company that continues to grow at over a 25% year-over-year rate. (more…)

As the Chinese economy has slowed, so has the remarkable growth of Ctrip. Gone are the days when Ctrip management guided conservatively to 35% net revenue growth while reporting net revenue growth over 50%.

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Ctrip just reported their fourth quarter earnings. They beat analyst estimates by $0.06 per share, and outpaced my growth projections. I thought they represented a good value before this announcement. Now I’m looking forward to crunching these numbers and updating my models to determine a new range of values.

Disclosure: Long Ctrip

Ctrip has been the fuel for much of the gains achieved in the Two Roads Diverged Portfolio since it was purchased in February 2006. Much of the rise in the company’s share price has been fueled by some pretty remarkable growth in revenue and earnings. The market has come to expect these numbers on a quarterly basis despite management’s attempt to temper expectations.I was drawn to Ctrip because I wanted to diversify my holdings to companies outside the U.S., and also because it does all of its business in China. I believe that the company is fairly easy to understand. Expedia and Ctrip provide a comparable service, but Ctrip has the market potential of anyone who has enough money to travel in China. In my mind, that is a pretty amazing market opportunity. The key after this initial attraction is to avoid paying too much for this business that looks extremely expensive on the surface. I want to buy their growth at a reasonable price. (more…)