Ctrip.com International Ltd., China’s largest travel booking website, tumbled the most in 10 months in New York after saying increased competition is eroding profit margins.
The American depositary receipts fell 10 percent to $52.59 at 12:52 p.m. Trading volume of 10.1 million shares was 5 times the full-day average of the past three months. Qunar Cayman Islands Ltd, a major competitor of Ctrip, halted a three-day gain. 21Vianet Group Inc. dropped 9.7 percent after the data- center operator’s third-quarter earnings trailed analysts’ estimates. The Bloomberg China-US Equity Index rose 1.8 percent.
Ctrip said adjusted operating margin for the fourth quarter will drop by 35 percentage points from a year earlier to about 15 percent, after it narrowed in previous three months. Chief executive James Liang said revenue growth will slow as the company seeks to lure second-tier city consumers amid intensified competition. UBS AG and Raymond James & Associates cut the stock to the equivalent of hold from buy.
“People kind of hoped the worst of the competition had passed, and that doesn’t seem like the case,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $1.5 billion in assets, said by phone from Lisle, Illinois. “Ctrip’s margin pressure largely is from competition that it has to match different prices from competitors like Qunar.”
Ctrip’s drop cut its gain this year to 6.1 percent. 21Vianet slid to $18.77. Qunar retreated from a three-week high to $26.01. The Bloomberg index of the most-traded Chinese stocks in the U.S. advanced to 111.63.
Ctrip’s hotel reservation business, which accounts for two fifths of the sales, rose 56 percent to $155 million in July to September while transportation ticket service almost doubled in volume, according to its earnings statement.
TheiShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., jumped 3.2 percent to $40.96. The Hang Seng China Enterprises Index rose 2.5 percent to a two- month high. The Shanghai Composite Index climbed 1.4 percent to 2,604.35, the strongest level since August 2011.
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