Ctrip looks to tap overseas cash stash for deals

Update: 2017-05-17

“We are actively looking for opportunities in China and abroad,” said Finance Chief Cindy Xiaofan Wang in an interview with WSJ. “I don’t think they [the capital controls] will limit Ctrip in any way,” Ms. Wang said.

China tightened its rules on moving cash out of the country last year, spurring Chinese companies to tap foreign debt markets and cut back on overseas deals. Ctrip joined the fray, raising USD 2 billion in the fall to spend USD 1.7 billion on U.K. flight search engine Skyscanner last November.

The Nasdaq-listed company has the freedom to continue to shop around both domestically and overseas because part of the company’s USD 5 billion cash pile is stored in Singapore, UK, and Hong Kong. 

Ms. Wang declined to disclose exactly how much of the company’s cash is held outside of China.

Ctrip only pursues targets in the online travel industry, with a focus on firms with unique technological solutions, strategic resources and those that are based overseas, Ms. Wang said.

Still, as the company turns its sights to new opportunities in 2017, many potential targets look too expensive, Ms. Wang said. “We are very cautious in terms of the valuation of a company, and we can be very patient,” she said, adding that Ctrip would only raise fresh capital for a “very significant acquisition.”

Ctrip still lags behind its U.S. counterparts in terms of its operating profit margin, in part due to a bruising price war with its Chinese competitors.

The company on Wednesday reported an operating profit margin of 15% for the first quarter of 2017. The target is to get it back to more than 20% during the next two to three years, Ms. Wang said.

This compares to a profit margin of around 30% to 40% for Priceline Group Inc., the U.S. travel search company, according to Ming Xu, an equity analyst at UBS Group AG.


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