Piper Jaffray Gives Color On Ctrip.com, Air Traffic Growth

Air traffic growth from 2 of the 3 top airlines in China was +5.1% y/y in February, a deceleration from +10.3% y/y in January and +8.5% y/y in 4Q10. Piper Jaffray notes that YoY air traffic comparisons became more difficult in Feb, but believe the air traffic deceleration seen in Jan/Feb is an indication that Ctrip's +20% y/y revenue growth guidance for Q1 is conservative.

Ctrip.com's CTRP organic revenue growth was +31% y/y in Q4 and our Q1 revenue estimate of $116.0M assumes organic revenue growth deceleration sequentially to +20-25% y/y when factoring in the inclusion of Wing On travel acquired 5/27/10. Ctrip typically guides conservatively and has beaten the midpoint of its revenue growth guidance by ~1200 basis points (on avg) since 2Q07.

Risks to the target price include competition, deceleration of economic growth in China and loss of key partners.

Piper Jaffray has a $50 PT and Overweight rating on CTRP

CTRP closed Monday at $39