Caissa Travel:A high-end outbound brand with vertical integration;initiating with Buy发布时间：2016-09-29 研究机构：德意志银行
One of the largest and most reputable high-end outbound travel agencies.
Vertically integrated from sourcing to retail We initiate coverage of Caissa with a Buy rating and target price of RMB28, implying upside potential of 50%. Newly listed in 2015, Caissa Travel is one of the largest and most reputable outbound travel agencies in China. However, we think the company’s core strength lies in its presence along the full value chain of the travel business. Supported by HNA Group, it has successfully consolidated from upstream to downstream, which has allowed Caissa to capture higher margins than its peers, UTour, CITS and CYTS. We estimate a CAGR of 56% in 2015-18 and initiate with a Buy.
Vertically integrated from sourcing to retail.
Caissa derives 63% of its total revenue from its outbound retail business. The weight of this segment has increased from 55% in 2014. Based on the tourism resources of HNA Group, Caissa has full exposure to the outbound travel industry chain, including ground tour operations, a product distribution platform and travel product design and supply. Therefore, we believe that Caissa’s margins should continue to increase, benefiting from its strong retail brand and solid market share in the European, Japanese and Korean markets.
Premium product portfolio includes charter flights and cruise products.
Caissa provides abundant and high-quality cruise travel experiences to customers. It operates the largest polar region cruise business in China, with a 28.6% market share in 1H16. Using flights sourced from airline companies, including HNA Airlines and Capital Airlines, Caissa’s charter flight tours also boost its travel business. We believe that these upgraded products will eventually increase Caissa’s margins as they usually carry 5-7% higher margins than mass travel products.
Valuation and risks.
Caissa is trading at 37x our 2017E EPS, with RMB1.7bn net cash expected in 2017. Our DCF valuation, (9.6% WACC and a 3% terminal growth rate), implies a target PER of 54x and a PEG of 1x (two-year CAGR of 56%), which we believe is justified. Risks include a lower-than-expected number of outbound travelers, policy changes, and negative events such as terrorist attacks (p.22)