Goldman Sachs: December Airline Data Could Raise Concerns For Ctrip.com

Goldman Sachs believes the airline's lackluster December monthly traffic growth could dampen any investor expectations for a meaningful recovery in traffic demand in December following similarly mild growth in November, which might have incorporated some post-Expo slowdown. GS Chinese airlines analyst Hino Lam said he expects the slower traffic growth momentum in 4Q10 to continue into 1H11 due to more difficult comps, which could result in softer yield growth. While Air China's December domestic load factor improvement bodes well for ticket prices and is consistent with Ctrip's CTRP guidance, the benefit to Ctrip's absolute commissions will likely be offset by lower commission rates. Goldman believes the December data could refresh investor concerns for Ctrip, not only over 4Q10 results, but also over potentially slower travel market growth momentum coinciding with uncertainty over high-speed rail and online competition over the course of the year. Goldman's current estimates assume air ticketing volume yoy growth of 28% for Ctrip in 4Q10, which compares to the company's guidance for 25%-30% and 30% in 3Q10. Goldman's 4Q10 net revenue estimate of $113.8 mn is 1% below Bloomberg consensus' $114.9mn. CTRP is trading lower at $45.06