China's travel market is booming but you wouldn't guess so from the recent performance of London-listed ET-China, whose shares have lost almost 40% in less than two months.
With hindsight, ET-China didn't pick a good time to join Aim, London's junior market, in early August. The turbulence of the past month has reduced the risk appetite for western investors and little-known Aim-listed companies have been have been hard hit by the fall-out from the sub-prime crisis.
But unlike some of the more speculative Aim-listed China plays, ET-China seems a pretty safe bet. The seven-year-old company claims to the largest travel company in south China, the most prosperous part of the country, where it has 120 shops. It specialises in corporate and independent travel, and sells via the internet and through call centres.
In addition, it has a majority stake in a traditional travel agency business, GZL,which sells packaged holidays through its shops and call centre. GZL was reincorporated from Guangzhou Travel Company which was established in 1980 by the Guangzhou government.
ET-China has also set up a JV with China Southern Airlines for e-ticketing, which is a relatively new idea in China and could grow substantially. Et-china has 49% of the JV but manages it and has the right to appoint the general manager. This agreement was recently extended to 2018.