Monday, March 22, 2010

China Trip: Universal Travel Group

By Eric Jackson
RealMoney Contributor

3/22/2010 12:00 PM EDT
Click here for more stories by Eric Jackson

I just landed in Hong Kong for the start of a two-week tour of China, meeting with management teams of emerging Chinese growth companies. During the trip, I'll be meeting with China Agritech (CAGC -commentary - Trade Now), Origin Agritech (SEED - commentary - Trade Now), China Mass Media (CMM- commentary - Trade Now), Shengkai Innovations (SHE - commentary - Trade Now), Oriental Paper(ONP - commentary - Trade Now), Puda Coal (PUDA - commentary - Trade Now), China Wind Systems(CWS - commentary - Trade Now), China-Biotics (CHBT - commentary - Trade Now) and -- just confirmed --Fuqi International (FUQI - commentary - Trade Now) (see my article from last week). I'll be reporting on my meetings and my impressions of the companies in the coming weeks here on RealMoney. However, my first meeting this week will be with Universal Travel Group (UTA - commentary - Trade Now).

UTA books travel reservations, trips and junkets, and sells online travel tickets to the mainland Chinese. It is aiming to be the leading travel services provider in the country. It was founded as Shenzhen Yu Zhi Aviation Services in 1998 and went public on the OTC market in the US in 2006. Last year, it upgraded its listing in the US to the NYSE.

It has had an assortment of businesses under its roof over the years. It has owned and operated an air-cargo business (which it sold off last year) and has run an online e-commerce website and call center-oriented tour-package reservation service. Even its home base has been a bit split. Its main headquarters since foundation has been in Shenzhen, a short hop to the mainland from Hong Kong. However, last year, the company decided to open a second headquarters inland in the town of Chongqing, where it has also invested in a larger call-center operation.

The main reason for any casual investor to be interested in UTA is that the company is relatively under-valued in the booming Chinese tourism sector. China's tourism industry is one of the fastest-growing industries in the country. Most travel agencies are domestically owned. Only 10-15% of the country's travel agencies are international. The market in China is highly fragmented, with the largest player having only an 8% market share. By 2020, China will become the single largest source of international tourism and will be the largest domestic tourism market in the world.


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