IPO Report: Qunar Cayman Islands (QUNR)

Francis Gaskins  |

Qunar Cayman Islands ($QUNR) is the leading search-based commerce platform for the travel industry in China.

Eight other company IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

QUNR is based in Beijing, China, and scheduled a $117 million IPO with a market capitalization of $1.2 billion price range midpoint of $10.50 for Friday, November 1, 2013.

F-1/A filed October 18, 2013.

Managers, Co-Managers: Goldman Sachs (Asia), Deutsche Bank, Stifel

Co-managers: Pacific Crest, China Renaissance Securities (Hong Kong) Limited

QUNR is 61% owned by Baidu (BIDU) pre-IPO.  BIDU is the ‘Google” of China and has a market cap of $56 billion.

QUNR’s revenue was up 53% for the September ’13 quarter vs a year ago.  Gross margin was in the same range, at 79%, but QUNR’s was 21% of revenue.  The loss rate for the six months ended June 30, 2013 was -5%.


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Buy QUNR based on the top line revenue surge, the high gross margin of 79-80%, QUNR’s #1 position in its market segment, and sponsorchip by Baidu.  The increase in loss rate for the September ’13 quarter, however, is somewhat concerning.


QUNR is the leading search-based commerce platform for the travel industry in China.

QUNR enables people to find best-value deals by aggregating and processing highly fragmented travel product information from tens of thousands of travel service providers, or TSPs, into an organized and user-friendly display through its proprietary technology.

QUNR Ranked No. 1

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According to iResearch, QUNR ranked No. 1 among all non-state-owned online travel companies in China in terms of monthly unique visitors since November 2010. QUNR was the most visited travel website in China among online travel users, according to a report released by Nielsen in June 2012.

QUNR optimizes users’ travel experience by enabling them to easily identify and compare their desired travel products anytime and anywhere through its website and mobile applications.

QUNR retrieves and displays real-time information about air tickets, hotels, vacation packages and other travel products based on user search queries.

Its comprehensive and accurate search results are sourced from third-party travel websites as well as its proprietary software-as-a-service, or SaaS, system, on which QUNR hosts the web outlets for a large and growing number of TSPs.

Its platform is designed to facilitate and enhance convenience, data accuracy, and transaction security for its users. As a result of its focus on user experience, QUNR has attracted a large and rapidly expanding user base.

User growth

The number of its web users grew from 71.7 million in 2010 to 187.3 million in 2012. The number of its web users was 203.2 million in the 12-month period ended June 30, 2013.

In addition, the number of its mobile users grew from 0.2 million in 2010 to 21.9 million in 2012. The number of its mobile users was 39.6 million in the 12-month period ended June 30, 2013.

In addition, the number of its mobile users grew from 0.2 million in 2010 to 21.9 million in 2012. The number of its mobile users was 39.6 million in the 12-month period ended June 30, 2013.

New services

As part of its growth strategy, QUNR intends to develop and offer new services to satisfy the evolving needs of its users and customers.

In 2011 and 2012, QUNR launched travel group buying services and new hotel promotion services, such as “last-minute sale” promotion and “opaque booking” reservations.

These and other new services QUNR may offer in the future present operating and marketing challenges that are different from those QUNR currently encounters.

In addition, the market for some of these new services, such as the group buying services, is highly competitive due to a number of factors, such as the relatively low barriers to entry, the continued growth of e-commerce in China and the growing acceptance of online shopping by Chinese Internet users.


Total revenue of China’s travel industry grew from RMB1.16 trillion in 2008 to RMB2.57 trillion in 2012, representing a compound annual growth rate, or CAGR, of 22.0%, according to iResearch.

Online travel market China:  37% CAGR

The online travel market in China grew from RMB48.6 billion in 2008 to RMB170.9 billion in 2012, representing a CAGR of 36.9%, and shows significant growth potential driven by a growing number of Internet users and increasing use of the Internet for travelers to search and purchase travel products, according to iResearch.


Advertising revenues are affected by seasonality and are generally higher in the second half of each year due to the fact that higher advertising budgets are typically spent in the last quarter of the year.

Intellectual Property

QUNR relies on a combination of patent, trademark, copyright and trade secret protection laws in the PRC and other jurisdictions, as well as confidentiality procedures and contractual provisions with its employees and other parties to protect its intellectual property and its brand.


QUNR operates in the highly competitive and rapidly evolving travel industry in China.

In the online travel sector, QUNR competes primarily with other service providers that also provide online flight and hotel booking services, such as Ctrip.com and e-commerce websites, such as the travel channel of Taobao.com.

QUNR also competes with other travel search providers and traditional travel agencies.

5% stockholders

Baidu Holdings Limited, 61%

Forlongwiz Holdings Limited, 7%

GSR funds, 6%

Use of proceeds

QUNR expects to receive $108 million from its IPO.   QUNR anticipates using the net proceeds for the following purposes:   

30%, or US$32.5 million to invest in technology, infrastructure and product development efforts;

20%, or US$21.7 million to expand sales and marketing efforts; and

The remaining amount is allocated for general corporate purposes, including working capital needs and potential acquisitions.


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