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Ctrip.com Takes Investors On Good Trip

Chinese online travel service provider Ctrip.com's (CTRP) unaudited financial results for the quarter ended September 30, 2006 show total revenues of US$28 million, representing a 47% increase from the same period in 2005 and a 10% increase from the second quarter of 2006.

Hotel reservation revenues amounted to US$16 million for the third quarter of 2006, representing a 30% increase from the same period in 2005 and a 6% increase from the previous quarter. The total number of hotel room nights booked was approximately 1.82 million in the third quarter of 2006, compared to approximately 1.44 million room nights for the same period in 2005 and approximately 1.70 million room nights in the previous quarter.

The average commission per room night was US$9 in the third quarter of 2006, compared to US$8 in the same period in 2005 and remained consistent with the amount in the previous quarter.

Min Fan, Chief Executive Office of Ctrip, said: "I am very proud of the results Ctrip has achieved during the third quarter of 2006. We have demonstrated strong execution capability and excellent leadership during the transition period from paper tickets to e-tickets. We expect to continue our solid business growth going forward."

Air ticket booking revenues for the third quarter of 2006 were US$10 million, representing a 73% increase from the same period in 2005 and a 11% increase from the previous quarter. The total number of air tickets sold in the third quarter of 2006 was approximately 1.72 million, compared to approximately 1.02 million for the same period in 2005 and approximately 1.49 million in the previous quarter.

The average commission per air ticket was US$6 in the third quarter of 2006, increased from US$6 in the same period in 2005 and decreased slightly from US$6 in the previous quarter.

Packaged-tour revenues for the third quarter of 2006 were US$2 million, up 97% from the same period in 2005 and 49% from the previous quarter due to increased FIT (Frequent Independent Travelers) tour packages.

For the third quarter of 2006, net revenues were US$26 million, a 47% increase from the same period in 2005. Net revenues increased by 10% from the second quarter in 2006.

The gross margin was 79% in the third quarter of 2006, compared to 83% for the same period in 2005 and 81% in the previous quarter. This decrease was largely due to the relatively higher cost of services as a result of increased revenue contribution from air ticketing and packaged tours, as well as incremental cost incurred in connection with the industry transition from paper tickets to e-tickets.

Product development expenses for the third quarter of 2006 increased by 94% to US$3 million from the same period in 2005 and increased by 11% compared to the previous quarter, primarily due to hiring of additional product development staffs. Excluding share-based compensation charges (non- GAAP), product development expenses accounted for 11% of the net revenue, remained relatively consistent with 10% in the same period last year and 11% in the previous quarter.

Sales and marketing expenses for the third quarter of 2006 increased by 61% to US$6 million from the same period in 2005 and 15% from the previous quarter, primarily due to hiring of new sales and marketing staffs. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 22% of the net revenue, remained consistent with 21% for both the same period last year and the previous quarter.

General and administrative expenses for the third quarter of 2006 increased by 141% to US$3 million from the same period in 2005, primarily due to the hiring of additional staffs and the incurrence of US$1 million for share-based compensation charges. General and administrative expenses increased by 14% from the previous quarter primarily due to the hiring of additional staffs. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, remained consistent with 7% for both the same period last year and the previous quarter.

Income from operations for the third quarter of 2006 was US$8 million. Operating margin was 31% in the third quarter of 2006. Excluding share- based compensation charges (non-GAAP), operating margin was 38% compared to 45% in the third quarter of 2005 and 42% in the previous quarter.

Net income for the third quarter of 2006 was US$8 million. Excluding share-based compensation charges (non-GAAP), net income was US$10 million, representing a 20% increase from the same period in 2005 and a 7% increase from the previous quarter.

Net margin was 31% in the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), net margin was 38%, compared to 47% for the same period in 2005 and 39% in the second quarter of 2006.

As of September 30, 2006, the cash balance was US$97 million.

For the fourth quarter of 2006, Ctrip expects to continue the year-on-year net revenue growth at a rate of approximately 40%.

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