Max Hu presented his in-depth investment thesis on Ctrip.com (China: CTRP) at Asian Investing Summit 2017. Max Hu also commented extensively on the macro and political backdrop for value investing in China.
CTRIP.COM (China: CTRP) just transformed into a Chinese monopoly OTA (Online Travel Agency) business, after its surprising but successful acquisition of its two leading competitors, Qunar.com and Elong.com in 2016 and 2015. Ctrip now holds more than 70% market share in China’s OTA business. The new market position will allow the firm to expand operating margin from currently below 10% to 20% within next two years, on track to match Priceline’s 30% operating margin in the long term. Revenue and earnings are projected to grow at a rate between 40% to 50% within next five years. The shares recently traded on a 2018 forward P/E multiple of 28, not cheap. Max suggests considering the puttable convertible bonds with a floor of 100, recently trading at 116. The convertible bonds provide similar upside as the common stock but with better downside protection.
About the instructor:
Max serves as portfolio manager at Tyee Capital Group, a leading asset management platform with offices across Hong Kong, Beijing, Shanghai, and Shenzhen. Previously, Max was the founder and portfolio manager of Tempus Capital Limited, a Hong Kong based investment firm. Max’s investment approach is contrarian, value-driven and focused. His investments have been focused on easy to understand, wide-moat businesses with solid long-term growth prospects. He has worked at Deutsche Asset Management and is a CFA Charterholder. Max graduated from Tsinghua University in China, with a degree in physics and mathematics. He has done PhD research in Financial Economics at ETH Zurich and holds a Masters’ degree from University Heidelberg.
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