Core Viewpoint - H World Group reported quarterly earnings of $0.61 per share, missing the Zacks Consensus Estimate of $0.69 per share, representing an earnings surprise of -11.59% [1][2] Financial Performance - The company posted revenues of $918 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.70%, compared to $861 million in the same quarter last year [2] - Over the last four quarters, H World Group has surpassed consensus EPS estimates only once [2] Stock Performance - H World Group shares have increased by approximately 5.2% since the beginning of the year, while the S&P 500 has gained 25.5% [3] - The current Zacks Rank for H World Group is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $856.46 million, and for the current fiscal year, it is $1.83 on revenues of $3.37 billion [7] - The estimate revisions trend for H World Group is mixed, which may change following the recent earnings report [6] Industry Context - The Hotels and Motels industry, to which H World Group belongs, is currently in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [8]

Hotel Operations - As of September 30, 2024, H World Group operated a total of 10,845 hotels and 1,062,546 hotel rooms[5] - H World operated 10,845 hotels with 1,062,546 rooms in 18 countries as of September 30, 2024[49] - The total number of hotels as of September 30, 2024, was 10,707, with 2,899 hotels in the pipeline[70] - The number of manachised and franchised hotels increased to 10,137 as of September 30, 2024, with a net addition of 579 hotels in Q3 2024[68] - There are 2,925 hotels in the pipeline, indicating significant future growth potential[77] - The economy hotel segment includes 5,461 operational hotels with 449,937 rooms and 1,091 in the pipeline[77] - The midscale hotel segment has 4,344 operational hotels with 465,743 rooms and 1,238 in the pipeline[77] - The upper midscale hotel segment consists of 866 operational hotels with 119,356 rooms and 493 in the pipeline[77] - The upscale hotel segment includes 147 operational hotels with 21,693 rooms and 95 in the pipeline[77] - The luxury hotel segment has 16 operational hotels with 2,368 rooms and 3 in the pipeline[77] - In China, there are 33 operational IntercityHotels and 92 in the pipeline as of September 30, 2024[78] - MAXX has 5 operational hotels and 5 in the pipeline in China as of September 30, 2024[78] - Steigenberger Hotels & Resorts has 12 operational hotels and 5 in the pipeline in China as of September 30, 2024[78] Financial Performance - Revenue for Q3 2024 was RMB6.4 billion (US$918 million), a 2.4% year-over-year increase, aligning with the guidance of 2% to 5%[3] - Hotel turnover increased 10.7% year-over-year to RMB26.0 billion in Q3 2024, with Legacy-Huazhu segment turnover up 11.0% and Legacy-DH segment turnover up 7.8%[3] - Total revenue for Q3 2024 was RMB 6,442 million (US$ 918 million), an increase from RMB 6,288 million in Q3 2023[60] - Net income attributable to H World Group Limited for Q3 2024 was RMB 1,273 million (US$ 181 million), compared to RMB 1,337 million in Q3 2023[60] - Net income attributable to H World was RMB1.3 billion (US$181 million) in Q3 2024, unchanged from Q3 2023[3] - Income from operations in Q3 2024 was RMB1.7 billion (US$245 million), a decrease from RMB1.9 billion in Q3 2023, with the Legacy-DH segment reporting a loss of RMB40 million due to one-off restructuring costs[23] - Operating margin in Q3 2024 was 26.7%, down from 30.4% in Q3 2023, attributed to a decline in hotel RevPAR and increased share-based compensation[24] - EBITDA (non-GAAP) in Q3 2024 was RMB2.0 billion (US$286 million), compared to RMB2.1 billion in Q3 2023[29] - Adjusted EBITDA for the Legacy-Huazhu segment was RMB2.1 billion in Q3 2024, down from RMB2.3 billion in Q3 2023[7] - Adjusted EBITDA (non-GAAP) in Q3 2024 was RMB2.1 billion (US$300 million), down from RMB2.3 billion in Q3 2023[31] - The company reported a net cash provided by operating activities of RMB 1,693 million (US$ 242 million) for Q3 2024[63] - H World incurred capital expenditures of RMB 209 million (US$ 30 million) in Q3 2024[63] Cash and Debt Management - As of September 30, 2024, the total balance of cash and cash equivalents was RMB7.2 billion (US$1.0 billion) with total debt of RMB5.4 billion (US$769 million)[34] - Cash and cash equivalents increased to RMB 7,247 million (US$ 1,033 million) as of September 30, 2024, from RMB 6,946 million at the end of 2023[56] - Total liabilities decreased to RMB 49,823 million (US$ 7,100 million) as of September 30, 2024, from RMB 51,283 million at the end of 2023[56] - H World’s total current liabilities decreased to RMB 12,408 million (US$ 1,768 million) as of September 30, 2024, from RMB 17,411 million at the end of 2023[56] - Operating cash inflow in Q3 2024 was RMB1.7 billion (US$242 million), while financing cash outflow was RMB2.1 billion (US$300 million), including RMB1.4 billion in dividends paid[33] Future Outlook - H World expects revenue growth for Q4 2024 to be in the range of 1%-5% compared to Q4 2023[7] - For Q4 2024, H World expects revenue growth of 1%-5% compared to Q4 2023, excluding the Legacy-DH segment[35] Key Metrics - The average daily rate (ADR) for Legacy-Huazhu hotels was RMB301 in Q3 2024, down from RMB324 in Q3 2023[8] - The occupancy rate for all Legacy-Huazhu hotels was 84.9% in Q3 2024, compared to 85.9% in Q3 2023[8] - The average daily room rate (ADR) for leased and owned hotels decreased by 6.0% year-over-year to RMB 406 in Q3 2023[71] - The occupancy rate for leased and owned hotels was 87.8% in Q3 2023, a slight decrease of 0.3 percentage points from the previous year[71] - The company’s basic earnings per share for Q3 2024 was RMB 0.41 (US$ 0.06), compared to RMB 0.42 in Q3 2023[60] - Adjusted earnings per share (diluted) for Q3 2023 was RMB 0.47, compared to RMB 0.43 in Q3 2024[65]

Core Insights - H World Group Limited reported a total of 10,845 hotels and 1,062,546 rooms in operation as of September 30, 2024, with a hotel turnover increase of 10.7% year-over-year to RMB26.0 billion in Q3 2024 [1][2][3] - The company achieved a revenue increase of 2.4% year-over-year to RMB6.4 billion (US$918 million) in Q3 2024, aligning with its previously announced guidance [1][2][9] - Net income attributable to H World Group Limited remained stable at RMB1.3 billion (US$181 million) in Q3 2024, with a notable net loss from the Legacy-DH segment due to restructuring costs [1][2][23] Financial Performance - Revenue from the Legacy-Huazhu segment increased by 1.0% year-over-year to RMB5.2 billion, while the Legacy-DH segment saw an 8.9% increase to RMB1.3 billion [1][10][11] - EBITDA (non-GAAP) for Q3 2024 was RMB2.0 billion (US$286 million), a decrease from RMB2.1 billion in Q3 2023 [1][24] - Adjusted EBITDA (non-GAAP) was RMB2.1 billion (US$300 million) in Q3 2024, down from RMB2.3 billion in Q3 2023 [1][25] Operational Highlights - The Legacy-Huazhu segment opened 774 hotels in Q3 2024, while closing 217 hotels, resulting in a total of 2,899 unopened hotels in the pipeline [3][4] - The average daily rate (ADR) for Legacy-Huazhu hotels was RMB301, down from RMB324 in Q3 2023, with an occupancy rate of 84.9% [5][6] - Legacy-DH hotels reported an ADR of EUR117, with an occupancy rate of 69.8% in Q3 2024 [8] Guidance and Future Outlook - For Q4 2024, H World expects revenue growth in the range of 1%-5% compared to Q4 2023, also excluding the Legacy-DH segment [1][29] - The company aims to continue expanding its presence in lower-tier cities in China and focus on sustainable high-quality growth [9]

Hotel Operations - As of September 30, 2024, the company operated 10,845 hotels with a total of 1,062,546 rooms[12] - The company opened 774 hotels in Q3 2024 and closed 217 hotels during the same period[12] - As of September 30, 2024, there were 2,925 hotels in the pipeline, including 2,899 from Legacy-Huazhu[12] - As of September 30, 2024, Legacy-DH operates 138 hotels with a total of 27,687 rooms, including 15,700 rooms under lease and 11,987 under management and franchising[17] - The company operates 4,057 Hanting hotels, with 355,690 rooms currently in operation[79] Financial Performance - In Q3 2024, hotel operating revenue increased by 10.7% year-over-year to RMB 26 billion, with Legacy-Huazhu revenue growing by 11.0% and Legacy-DH revenue increasing by 7.8%[5] - Revenue for Q3 2024 rose by 2.4% year-over-year to RMB 6.4 billion (approximately $918 million), aligning with previous guidance of 2% to 5% growth[5] - Net profit attributable to the company for Q3 2024 was RMB 1.3 billion (approximately $181 million), consistent with Q3 2023 results[6] - Adjusted EBITDA for Q3 2024 was RMB 2.1 billion (approximately $300 million), down from RMB 2.3 billion in Q3 2023[7] - Total revenue for Q3 2024 was RMB 6.442 billion (approximately $918 million), representing a year-over-year increase of 2.4% and a quarter-over-quarter increase of 4.8%[19] - Operating profit was RMB 1.7 billion (approximately USD 245 million), compared to RMB 1.9 billion in Q3 2023 and RMB 1.6 billion in the previous quarter[27] - The operating profit margin for Q3 2024 was 26.7%, down from 30.4% in Q3 2023 and 25.6% in the previous quarter[28] - Cash flow from operations in Q3 2024 was RMB 1.7 billion (approximately USD 242 million)[32] - The company reported a net loss of RMB 83 million from the Legacy-DH segment in Q3 2024, including one-time restructuring costs of RMB 81 million[29] Revenue Breakdown - Revenue from the Legacy-Huazhu segment in Q3 2024 was RMB 5.2 billion, a year-over-year increase of 1.0% and a quarter-over-quarter increase of 6.9%[19] - Revenue from management and franchised hotels in Q3 2024 was RMB 2.6 billion, a year-over-year increase of 14.7% and a quarter-over-quarter increase of 11.5%[20] - Legacy-DH's average revenue per available room (RevPAR) in Q3 2024 was €82, compared to €79 in Q3 2023 and €82 in the previous quarter[17] - The revenue from management franchise and licensed hotels for the quarter ended September 30, 2023, was RMB 2,238 million, compared to RMB 2,305 million in the same quarter of 2024, indicating a decrease of 2.9%[66] Cost and Expenses - Operating costs for hotels in Q3 2024 were RMB 3.8 billion, compared to RMB 3.6 billion in Q3 2023, primarily due to increased personnel costs from network expansion[23] - General and administrative expenses in Q3 2024 were RMB 672 million, up from RMB 539 million in Q3 2023, mainly due to an increase in employee numbers and stock incentives[25] Market Trends - Average daily rate for Legacy-Huazhu hotels in Q3 2024 was RMB 301, down from RMB 324 in Q3 2023[13] - Occupancy rate for all operating Legacy-Huazhu hotels in Q3 2024 was 84.9%, compared to 85.9% in Q3 2023[13] - The occupancy rate for all operating Legacy-DH hotels in Q3 2024 was 69.8%, up from 69.0% in Q3 2023 and 68.3% in the previous quarter[17] - The occupancy rate for managed and franchised hotels improved to 65.5%, an increase of 1.1 percentage points year-over-year[77] Cash and Debt - As of September 30, 2024, total cash and cash equivalents amounted to RMB 7.2 billion (approximately USD 1 billion)[32] - The company had total debt of RMB 5.4 billion (approximately USD 769 million) as of September 30, 2024[32] Non-GAAP Measures - EBITDA is emphasized as a key financial metric, reflecting operational performance before financing and tax impacts, and is widely used in the hospitality industry[40] - Adjusted EBITDA is used to assess the operating performance of hotels, excluding stock-based compensation and other non-operational gains or losses[40] - The company believes that non-GAAP financial measures, such as adjusted EBITDA, provide meaningful supplemental information for evaluating performance[42] - The company acknowledges the limitations of EBITDA and adjusted EBITDA, as they do not reflect depreciation, interest, and tax expenses[41] Future Outlook - The company expects Q4 2024 revenue to grow between 1% and 5% compared to Q4 2023, excluding Legacy-DH[11] - The company plans to temporarily close 12 hotels for brand upgrades or business model changes in the third quarter of 2024[69] - The company plans to open 1,091 new economy hotels, indicating a strong growth strategy in the budget segment[79]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for H World Group, driven by higher revenues, with a focus on how actual results will compare to estimates [1][2] Earnings Expectations - The earnings report is expected on November 26, 2024, with an anticipated EPS of $0.69, reflecting a 23.2% increase year-over-year [3][4] - Revenues are projected to reach $933.86 million, marking an 8.5% increase from the previous year [4] Estimate Revisions - The consensus EPS estimate has been revised 3.13% higher in the last 30 days, indicating a collective reassessment by analysts [5] - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [11][12] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likelihood of actual earnings deviating from consensus estimates, with a strong predictor for positive readings [8][9] - H World Group currently holds a Zacks Rank of 3, complicating predictions of an earnings beat [13] Historical Performance - In the last reported quarter, H World Group's actual earnings of $0.46 per share fell short of the expected $0.52, resulting in a surprise of -11.54% [14] - Over the past four quarters, the company has exceeded consensus EPS estimates twice [15] Conclusion - While H World Group does not appear to be a strong candidate for an earnings beat, investors should consider other influencing factors before making decisions [18]

Core Viewpoint - H World Group Limited, a significant player in the global hotel industry, is set to release its unaudited financial results for Q3 2024 on November 26, 2024, after market hours in Hong Kong and before the U.S. market opens [1]. Company Overview - H World Group Limited operates 10,286 hotels with a total of 1,001,865 rooms across 18 countries as of June 30, 2024 [5]. - The company’s hotel brands include Hi Inn, Elan Hotel, HanTing Hotel, JI Hotel, Starway Hotel, Orange Hotel, Crystal Orange Hotel, Manxin Hotel, Madison Hotel, Joya Hotel, Blossom House, Ni Hao Hotel, CitiGO Hotel, Steigenberger Hotels & Resorts, MAXX, Jaz in the City, IntercityHotel, Zleep Hotels, Steigenberger Icon, and Song Hotels [5]. - H World holds master franchise rights for Mercure, Ibis, and Ibis Styles, along with co-development rights for Grand Mercure and Novotel in the pan-China region [5]. Business Model - H World employs a mixed business model that includes leased and owned, manachised, and franchised hotels [5]. - As of June 30, 2024, 10% of hotel rooms were operated under the lease and ownership model, while 90% were under the manachise and franchise model [5].

Group 1 - H World Group Limited (HTHT) is experiencing significant activity in the options market, particularly with the Jan 17, 2025 $15.00 Call option showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a substantial rally or sell-off [2] - Currently, H World Group holds a Zacks Rank 3 (Hold) in the Hotels and Motels industry, which is in the bottom 17% of the Zacks Industry Rank, with no analysts increasing their estimates for the current quarter and one analyst revising downward [3] Group 2 - The high implied volatility for H World Group may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Investment Rating - The report assigns a "Buy" rating to Huazhu Group-S (01179) for the next 6 months [1] Financial Performance - Q2 2024 revenue reached RMB 6.15 billion, up 11.2% YoY [1] - Net profit attributable to shareholders was RMB 1.1 billion, increasing 5.1% YoY [1] - Operating profit margin improved to 25.6%, up 0.6 percentage points YoY [1] - Domestic hotel revenue grew 11.1% YoY to RMB 4.8 billion [1] - Deutsche Hospitality revenue increased 11.6% YoY to RMB 1.3 billion [1] - Direct-operated revenue rose 2.5% YoY to RMB 3.7 billion [1] - Franchise revenue surged 25.8% YoY to RMB 2.3 billion [1] Operational Metrics - Domestic RevPAR declined 2.0% YoY to RMB 244, with recovery rate at 118.4% compared to 2019 levels [1] - Domestic ADR decreased 3.0% YoY to RMB 296, representing 125% of 2019 levels [1] - Domestic occupancy rate improved 0.7 percentage points YoY to 82.6%, reaching 95.1% of 2019 levels [1] - Deutsche Hospitality RevPAR increased 4.5% YoY to €82, with recovery rate improving 17.2 percentage points to 115% [1] Expansion Strategy - Opened 572 new hotels in Q2 2024, including 567 domestic properties [1] - Achieved 64% of annual new hotel target in H1 2024 [1] - Total domestic hotel count reached 10,150, with 136 international properties [1] - Raised full-year new hotel guidance to 2,200 from previous 1,800 [1] Valuation and Outlook - Forecasts net profit of RMB 4.0/4.6/4.9 billion for 2024-2026 [1] - Current PE ratios stand at 24x/21x/20x for 2024-2026 [1] - Expects Q3 2024 revenue growth of 2%-5% [1] Industry Analysis - The company operates in the non-essential consumer sector, specifically tourism and leisure facilities [1] - Huazhu Group demonstrates leading scale advantages and operational efficiency in the hotel industry [1]

Core Insights - H World Group Ltd (HTHT) shares increased by 4.28% on October 2, reaching an intraday high of $41.61 before closing at $40.52, which is 4.00% below its 52-week high and 49.91% above its 52-week low [1][2] Group 1: Stock Performance - The trading volume for H World Group Ltd was 1,656,441 shares, representing 83.3% of the average daily volume of 1,988,006 [1] - The stock's current price of $40.52 is 4.00% below its 52-week high of $42.21 and 49.91% above its 52-week low of $27.03 [1] Group 2: Analyst Forecasts - The average target price for H World Group Ltd, based on estimates from 15 analysts, is $45.10, indicating an upside of 11.29% from the current price [2] - The consensus recommendation from 19 brokerage firms gives H World Group Ltd an average rating of 1.6, suggesting an "Outperform" status [2] - GuruFocus estimates the GF Value for H World Group Ltd at $58.31 in one year, suggesting a potential upside of 43.9% from the current price [2]

H World Group (HTHT) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, HTHT broke through the 200-day moving average, which suggests a long-term bullish trend.The 200-day simple moving average is a useful tool for traders and analysts, establishing market trends for stocks, commodities, indexes, and other financial instruments over the long term. The marker moves higher or lower along with longer-term price moves, and serves as a support or r ...