For 3Q16, analysts are estimating Qunar’s (QUNR) revenue will fall 3% to $201 million. For 4Q16, Qunar is expected to clock revenue growth of 4% and achieve $207 million in sales.
These figures would lead to full-year 2016 revenue growth of ~9% to $6.9 billion. This growth expectation is much lower than the 15% and 33% revenue growth expected for peers Priceline (PCLN) and Expedia (EXPE). TripAdvisor’s (TRIP) revenue is expected to remain muted in 2016. However, it’s important for investors to remember that these peers aren’t strictly comparable due to the difference in geographies served. Qunar operates primarily in the fast-growing Chinese market. Ctrip.com (CTRP) is its main rival.
Analysts expect revenue growth to continue in 2017. Sales are expected to grow 34% in 2017 to $928 million. Revenue is expected to grow 30% for 2018 to $1,206 million.
It’s important to analyze analyst estimates before investing in a particular stock, as analyst estimates act as a proxy for what’s being priced into the stock. They often also serve as an effective first screener for investors.
Booming China travel industry
The online travel industry in China is expected to continue its double-digit growth for the next few years. According to iResearch, a China-based research firm, the online travel markets in China will reach $75 billion by 2017. Despite China’s slowing economy, travel and tourism continue to remain buoyant due to China’s growing middle-class population and increasing disposable income.
Outbound travel to contribute
The boom in Chinese tourism also brings in a healthy growth in outbound tourism with growth across both air and hotel segments. Chinese travelers are among the top contributors to global tourism today and their numbers are expected to surpass 160 million by 2018.
QUNR is also expected to benefit from this tremendous growth, given its huge flight offering and hotel networks.
Investors can gain exposure to the Chinese OTA (online travel agency) market by investing in the PowerShares Golden Dragon Halter USX China ETF (PGJ).