Executive Summary

• Ctrip reported 4Q16 revenue of ¥5.1 billion, up 76% year over year, beating consensus by 2%. Non-GAAP operating margin was 16%, better than guidance of 8%–10%. The increase in revenue is primarily due to the consolidation of the financial results of Qunar since December 31, 2015.
• Hotel and other accommodations grew by over 50% year over year, thanks to strong execution. The ticketing business saw year-over-year growth of 97%, benefiting from wider coverage and fast growth of the China travel market.
• Management guided for 1Q17 revenue growth of 40%–45% year over year, taking into account consolidation of the newly acquired company Skyscanner, which was completed in December 2016. Non-GAAP operating income is expected to be ¥750–¥800 million, representing an OPM of 12%–13%.
• With a solid leading position in the China travel industry, Strip appears to be stepping up its globalization efforts through acquisitions of various overseas online travel agents. Synergies from newly added companies will be the key to growth in 2017.