Citigroup 花旗：中国在线旅游行业研究 04.17

17 April 2007 | 5 pages

China Online Travel Mangocity enters at distant #3; Ctrip remains undisputed #1

 Online competitor Mangocity still loss-making — China Travel International
(“CTI”), which operates Mangocity, reported FY06 results on April 13th.
Although CTI management were reluctant to disclose specific financials, they
indicated that Mangocity, which officially commenced operation on 31 March
2006, is still (unsurprisingly) loss-making due to high startup and marketing
costs. They did not provide a timetable for breakeven.
 Mangocity considered #3 in Tier 1 cities — CTI management stated that
Mangocity is now #3 in major cities, behind #1 Ctrip and #2 eLong, and in some
cases even surpassing eLong. They explained Mangocity’s competitive
advantage rests on its ability to leverage CTI’s existing resources and physical
travel agency network in HK, mainland China and overseas, as well as
management’s experience with the travel business in China (with CTI parent
China Travel Services Hldgs celebrating its 80th anniversary next year).
 Mangocity financials are unclear — CTI management elaborated that Mangocity
was about one quarter the size of eLong, implying revenues of HK$65m in FY06,
significantly less than the HK$236m calculated from the results announcement,
as Mangocity includes some existing travel agency businesses. The majority of
revenues came from Air Ticketing rather than Hotel Bookings.
 Aggressive marketing set to continue into 2007 — In FY06, Mangocity spent
about HK$50-60m on marketing, concentrating on the four Tier 1 cities
(Beijing, Shanghai, Guangzhou and Shenzen). They expect to increase
marketing spend steadily in 2007, to expand Mangocity’s brand presence into