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Universal Travel Group
Corporate Presentation December 2011
Safe Harbor Statement
Certain statements in this presentation are forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from such statements expressed or implied herein as a result of a
variety of factors, including, but not limited to the Company's sales and services; the
success of the Company's commercialization strategy, the acceptance by the market of
the Company's products; competition and timing of projects and trends in the future
operating performance, as well as other factors expressed from time to time in the
Company’s periodic filings with the Securities and Exchange Commission (the "SEC"). As
a result, this presentation should be read in conjunction with the Company's periodic
filings with the SEC. The forward looking statements contained herein are made only as
of the date of this presentation, and the Company undertakes no obligation to publicly
update such forward looking statements to reflect subsequent events or circumstances.
Company Overview
• Founded in 1998, headquarter in
Shenzhen
• Leading travel services provider in
China
• Focused on the domestic and
international leisure travel markets
• Main businesses:
– Packaged Tour
– Air Ticketing
– Hotel Reservation
Equity Snapshot
Symbol NYSE: UTA
Price (April 11, 2011) $3.96
Shares Outstanding (April 11, 2011) 19.9M
Market Cap (April 11, 2011) N/A
Revenue (12 months ended September 30, 2011)* $152.6M
Net Income (12 months ended September 30, 2011)* $19.4M
Diluted EPS (12 months ended September 30, 2011)* $0.94
P/S (ttm) N/A
P/E (ttm) N/A
* unaudited
Financial Track Record
USD (million) 2011Q3 2010Q3 2011Q2 3Q / 2Q 3Q / 3Q
Revenues $41.8 $45.5 $32.9 27.2% -8.1%
Air ticketing, net $5.5 $5.7 $5.0 9.1% -4.5%
Hotel reservation, net $2.9 $4.4 $2.7 9.1% -33.2%
Packaged tours, gross $33.4 $35.4 $25.1 32.8% -5.6%
Gross margin 24.2% 25.2% 26.6% -2.4%* -1.0%*
Operating margin 18.8% 20.9% 18.8% -0.1%* -2.1%*
Net income $5.9 $7.3 $4.4 32.8% -18.9%
Diluted EPS $0.30 $0.36 $0.22 36.4% -16.7%
Cash Balance $53.0 $56.5 $41.8 26.8% -6.2%
Debt Balance $0 $0 $0 N/A N/A
Cash inflow from operations
$20.6 $16.0 $17.8 15.8% 28.6%
* Percentage points
Investment Highlights
Strong underlying consumer demand for domestic and international leisure travel services as Chinese disposable incomes continue to rise
Government support as PRC encourages shift in development model to increase domestic consumption
Leading position in Pearl River Delta with UTA’s first base of operations in Shenzhen
Geographic expansion in underpenetrated travel markets in Central and Western China—opened 2nd base of operations in Chongqing
Compelling opportunities for growth and consolidation in fast growing, yet fragmented China travel service market, especially with UTA’s International Travel License
Fast Growing Travel Market
• China’s $113 billion travel & tourism industry has grown at a 12.2% CAGR since 2005
Source: World Travel & Tourism Council: Travel & Tourism Economic Impact, China 2010.
Rapid Growth to Continue
• Over the next 10 years, China is expected to have the fastest growing travel & tourism industry in the world with and an expected annualized growth rate of 10.4%
• By 2020, China’s travel & tourism industry is projected to rank second in the world at $500 billion
Source: World Travel & Tourism Council: Travel & Tourism Economic Impact, China 2010.
Attractive Growth Driver
Strong China economy boosts local and international travel economy
• 2010 GDP per capita reached $7,600(1), a key driver of China’s tourism industry
• Domestic tourists made 2.1 billion trips in 2010, a rise of 10.6%(2)
• Chinese tourists spent approximately $48 billion worldwide outside of China(3)
PRC government has aggressive plan to stimulate domestic travel
• Increased public holiday time with the emergence of three-day weekends
• Increased investments in infrastructure (147 new airports by 2020)
Long-term drivers:
• Sustained positive impact from Beijing Olympic Games, Shanghai World Expo, and Guangzhou Asian Games and Shenzhen Universiade.
• The recent opening-up of direct flights between Taiwan and the mainland will bring the Company opportunities in the long run
• As regulations on international travel agencies become more relaxed, inbound tourists are expected to increase. The implementation of e-ticketing in China is systematically reducing the overall cost structure.
（1）CIA – The World Factbook; (2) National Tourism Administration; (3) World Tourism Organization
Multi-Channel Sales
Sales Channels:
• 24-hour call centers in Shenzhen
and Chongqing
• Website: www.cnutg.com
• Owned & franchised sales offices
• Wholesaler relationships
Key Business Segments
Packaged Tour
Focus on domestic tourism market for leisure and corporate travel
People served: 810,000 people days in 2009, 1,260,000 people days in 2010
Nationwide expansion through strong local contacts and networks established
through subsidiaries
Focus on the more profitable direct sales of packaged hotel products.
Air Ticketing / Hotel Reservation
Commissions from all domestic airlines and 34 international airlines
9,000 hotels directly and 200,000 hotels indirectly
32 company owned offices, 1,000 alliances and 8 franchisees
Ticketing: 2.4 mil tickets in 2009, 3.0 mil tickets in 2010
Hotel: 2.3 mil room nights in 2009, 3.0 mil room nights in 2010
Focus on more profitable direct sales and hotel packaged products
Segment Financials Analysis
2011Q3 Revenue Composition 2011Q3 Gross Profit Composition
13%
7%
80%
Air ticketing
Hotel reservation
Package tour
33%
27%
40%
Segment Revenue Recognition
* Company contracts with traffic service providers, accommodation providers and leisure service providers to purchase air tickets, train and coach tickets, accommodation and leisure or entertainment packages in bulk and then resell them to its customers with a mark-up.
The difference in gross profit margin is mainly due to the difference in revenue recognition for each of these segments:
1) Air-ticketing: commissions rendered are recognized on a net basis, a certain percentage
of the value of the tickets sold, after sharing the commissions to franchisees
2) Hotel reservations: commissions rendered are recognized on a net basis, a certain
percentage of the value of the rents, after sharing the commissions to certain franchisees
3) Package tours*: fees generated are recognized on a gross basis. The Company generally
assumes the majority of the business risk. We recognize the revenues when the package
tour is completed and collections are reasonably assured
Competitive Landscape
cnUTG.com Diversified travel services, online and call centers, plus offline branches: – Focus on leisure travelers
(60%)
– Branch offices operating and marketing in city areas
– Dual call centers (Shenzhen & Chongqing) for more stable customer service
&
Ctrip.com & eLong.com
Hotel and air-ticketing, online and call center:
– Target corporate travelers
(80%)
– Marketing focused at airports
and train stations
– Operate via centralized call
center
Competitive Landscape
% of Revenues 2011Q3 Universal Travel
Group** cTrip.com*** eLong.com****
Package Tours 79.9% 16.5% -
Air-ticketing Services 13.1% 37.1% 19.2%
Hotel Reservation 7.0% 39.5% 72.0%
Other - 7.0% 8.8%
Financial Metrics
Market Cap (December 1, 2011) N/A $3.8B $507.4M
Diluted EPS (ttm) $0.94 $1.16 $0.15
P/E (ttm) N/A 22.84 98.42
(*) Adj. Diluted EPS and Adj. P/E. Operating income, net income and EPS exclude non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.
Expansion Strategy
Partnership
Leverage local travel agencies’ platforms to offer UTA’s superior services, such as air ticketing, hotel reservations,
etc.
Expand travel options to increase customer satisfaction
Granted our franchise to twenty four local travel agencies in Shenyang, Dalian and Qingdao
Integrate our offline businesses with our online platform
International Travel License Franchise
Stringent selection of franchisee
Lower cost and lower risk in comparison to acquisition
Franchisee will adopt UTA’s logo to its existing logo
Numerous storefronts and locations in one city
Establishing more franchise offices and set up call centers
Franchised our license to eight local travel agencies in Chongqing,
Hainan, Beijing, Dalian, Liaoning, Yichang, Wenzhou, and Qingdao
Providing training to and internal control testing for the 13 new franchisees
and advertising all the 21 franchisees
Cost and revenue structure:
Limited cost: renovation, telephone operators
Up front franchise fee
Revenue per traveler upon each booking
Rapid Growth in Financials
Revenues ($Millions) Net Income ($Millions)
*Operating income, net income and EPS exclude non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.
32.6
65.8
95.8
153.3
33.8 32.941.8
0.0 20.0 40.0 60.0 80.0
100.0 120.0 140.0 160.0 180.0
FY 2007 FY 2008 FY 2009 FY 2010 Q1 2011 Q2 2011 Q3 2011
8.7
14.5
10.7
22.0
4.5 4.4 5.9
0.0
4.0
8.0
12.0
16.0
20.0
24.0
28.0
FY 2007 FY 2008 FY 2009 FY 2010 Q1 2011 Q2 2011 Q3 2011
Income Statement Highlights
*Operating income, net income and EPS exclude non-cash charges related to the change in fair value of derivative liabilities and stock-based compensation.
($ millions) 2007 2008 2009 2010 2011 Q1 2011 Q2 2011 Q3
Revenues 32.6 65.8 95.8 153.3 33.8 32.9 41.8
Cost of Services 20.6 43.3 66.6 112.2 24.9 24.1 31.7
Gross Profit 11.9 22.5 29.2 41.1 8.9 8.7 10.1
Operating Income 9.2 17.9* 24.2* 29.4 5.9 6.2 7.9
Net Income 8.7 14.5* 10.7* 22.0 4.5 4.4 5.9
Outstanding shares-Diluted
11.2 m 12.9 m 15.3 m 19.4m 20.6m 19.9m 20.0m
Diluted EPS ($) 0.78 1.12* 0.70* 1.13 0.22 0.22 0.30
Strong Balance Sheet
($ millions) 9MO2011 2010 2009
Cash and cash equivalents 53.0 39.6 36.6
Current assets 132.9 110.8 70.5
Total assets 161.6 140.1 85.7
Current liabilities 11.7 10.4 6.3
Total liabilities 12.5 11.8 8.1
Stockholders’ equity 149.1 128.3 77.6
Current ratio 11.4 10.7 11.2
Experienced Management Team
Ms. Jiangping JIANG, Chairperson of the Board and Chief Executive Officer
Started Career at Chengdu Airport from 1979 to 1982; Planning General Officer of Chongqing Municipal Government Planning Committee from 1982 to 1991; Manager of Shenzhen International Airlines Sales Agency from 1991 to 1998.
Founder of Shenzhen Yu Zhi Lu Aviation Service Company Ltd in March 1998.
Member of Shenzhen CPPCC, Most Influential Figure in the Travel Industry in Greater China (2010), Leading Figure of China Civil Aviation (2007)
Leading the company to grow, completed 4 acquisitions in 2007, achieved fast growth in the past decade and upgraded the company to NYSE on Oct 27, 2009.
Mr. Jing XIE, Interim CFO, Secretary of the Board & Vice President
Joined the Company in 2005 and appointed Deputy General Manager in July 2005 and
Secretary of the Board and Vice President in December 2006; Chief Financial Officer
from Feb 2009 to August 2009; remains as Secretary of the Board & Vice President.
Doctor of BA from People‘s University of China; Bachelor of Commerce from University
of Sydney, Australia, and member of Association of Credited Chartered Accountants
(ACCA).
Experienced Management Team
Mr. Lawrence LEE, Independent Director and Audit Committee Chairperson
Joined the Company in 2009 and served as Chief Financial Officer of Synutra International, Inc.
Has CFO experiences in Warburg Pincus investments
Mr. Lee is an associate member of the Association of Chartered Certified Accountants (ACCA).
Mr. Lizong WANG, Independent Director
Strategic consultant with over 10 years of experience as an independent director
Independent director of the Rui De Feng Agrochemical Company, Ltd. and 3NOD Co., Ltd., the first KOSDAQ Chinese company
Since 2001, he has also been serving as Secretary General of Guangdong High Tech Industry Chamber of Commerce, Deputy Secretary General of Guangdong Private Enterprise Cultural Association, and Deputy Secretary General of Shenzhen Tax Administration
Mr. Wenbin An, Independent Director
Deputy consul general in the PRC Consulate in Los Angeles from 1987 to 1994. Holds both a Qualification Certificate of Ciceroni in China and a Travel Agency Manager Qualification Certificate.
In 1995, after returning to Beijing, Mr. An served as the Ministry of Foreign Affairs’ Chief Protocol for several years and served as a business consultant to several PRC companies
Contact Information
Christensen
Kimberly Minarovich
Phone: +1 (917) 533 3268
Jenny Wu
Phone: 852 22323 955
Universal Travel Group
Jing Xie, DBA, ACCA,
Secretary of Board & Interim Chief Financial Officer
Phone: +86 755 8631 9549
Fax: +86 755 863 19348
Website: us.cnutg.com
Legal Counsel: Sichenzia Ross Friedman Ference LLP. Auditor: EFP Rotenberg Co, LLP
Thank you!
Universal Travel Group
