Investment Rating - Buy (Maintained) [1] Core Views - Huazhu Group's Q3 revenue was at the lower end of guidance, with operating profit down 10% YoY [2] - Domestic business net profit declined 1% YoY, while DH business narrowed its operating loss [2] - Domestic business accelerated store openings, with 774 new stores in Q3, reaching a total of 10,707 stores by Q3 2024 [3] - RevPAR declined 8% YoY due to a high base, but Q4 revenue growth guidance is 2-5%, indicating a narrowing decline [3] - Huazhu Group is a leader in the hotel industry, with competitive advantages in brand, traffic, and technology, and has expanded against the trend during the pandemic [4] Financial Performance - Q3 revenue was RMB 6.442 billion, up 2.4% YoY, at the lower end of the 2-5% guidance range [2] - Q3 net profit attributable to shareholders was RMB 1.273 billion, down 5% YoY, with adjusted net profit of RMB 1.372 billion, down 11% YoY [2] - Domestic business revenue was RMB 5.162 billion, up 1% YoY, contributing RMB 1.356 billion in net profit, down 1% YoY [2] - DH business revenue was RMB 1.28 billion, up 9% YoY, with a net loss of RMB 83 million, narrowing from the previous year [2] Store Expansion - Total stores reached 10,707 by Q3 2024, up 18.6% YoY, with 95% being franchised stores [3] - Q3 saw 774 new store openings, with a net increase of 556 stores, and a target of 2,200 new stores for the full year [3] - Domestic room count reached 1.03 million, up 20% YoY, with franchised rooms at 950,000, up 23% YoY [3] RevPAR and Occupancy - Overall RevPAR in Q3 was RMB 256, down 8.4% YoY, with occupancy at 84.9%, down 1.0 pct YoY [3] - Huazhu's RevPAR was RMB 244, down 2.4% YoY, with occupancy at 82.6%, up 0.8 pct YoY [3] - Q4 revenue growth guidance is 1-5%, implying a low single-digit decline in RevPAR, narrowing from Q3 [3] Financial Forecasts - Adjusted net profit forecasts for 2024-2026 are RMB 3.684 billion, RMB 4.065 billion, and RMB 4.481 billion, respectively [4] - PE ratios for 2024-2026 are 22x, 20x, and 18x, respectively [4] Market Data - Closing price: HKD 26.90 [7] - 52-week low/high: HKD 20.80/34.40 [7] - Price-to-book ratio: 6.86x [7] - Market capitalization: HKD 86.36 billion [7] Financial Ratios - ROE for 2023A: 33.66%, expected to decline to 18.39% by 2026E [12] - Gross margin for 2023A: 34.46%, expected to rise to 36.50% by 2026E [12] - Net profit margin for 2023A: 18.67%, expected to be 15.58% by 2026E [12]

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]

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]

Investment Rating - Maintain "Buy" rating for Huazhu Group-S (1179 HK) [1] Core Views - Huazhu Group demonstrated resilience in Q2 2024 with revenue of RMB 6 15 billion (+11 2% YoY) and net profit attributable to shareholders of RMB 1 067 billion (+5% YoY) [1] - The company achieved a milestone of 10 286 global hotels with 10 150 under the Huazhu brand including 9 558 franchised hotels [1] - Huazhu Group announced a 3-year shareholder return plan including up to $2 billion in dividends and a $1 billion share repurchase program [1] Financial Performance - Q2 2024 revenue reached RMB 6 15 billion (+11 2% YoY) at the upper end of guidance [1] - Net profit attributable to shareholders was RMB 1 067 billion (+5% YoY) [1] - EBITDA reached RMB 1 9 billion with adjusted EBITDA of RMB 2 billion (+11% YoY) [1] - Huazhu brand contributed RMB 1 033 billion in net profit (+4% YoY) while DH segment contributed RMB 34 million (+54 5% YoY) [1] Expansion and Market Position - Total hotels reached 10 286 globally with 10 150 under Huazhu brand [1] - 567 new hotels opened in Q2 with net openings of 466 [1] - Pipeline hotels increased to 3 258 [1] - Full-year new hotel opening target raised from 1 800 to 2 200 [1] Operational Metrics - Huazhu brand RevPAR was RMB 244 (-2% YoY) with OCC of 82 6% (+0 7pct YoY) and ADR of RMB 296 (-2 9% YoY) [1] - DH brand RevPAR was €82 (+4 5% YoY) with ADR of €120 (+2 7% YoY) and OCC of 68 3% (+1 2pct YoY) [1] - Q3 2024 revenue growth guidance of 2-5% [1] Shareholder Returns - 3-year shareholder return plan announced with up to $2 billion in dividends [1] - Semi-annual dividends with annual payout ratio of at least 60% of net profit [1] - $1 billion share repurchase program approved effective August 21 2024 [1] Financial Forecasts - 2024-2026 revenue forecast at RMB 23 396 million RMB 24 774 million and RMB 25 953 million respectively [2] - 2024-2026 net profit forecast at RMB 4 165 million RMB 4 438 million and RMB 4 711 million respectively [2] - 2024-2026 EPS forecast at RMB 1 30 RMB 1 38 and RMB 1 47 respectively [2] - 2024-2026 PE ratios forecast at 16x 15x and 14x respectively [2] Valuation Metrics - Current price: HK$22 65 [2] - 2024-2026 PB ratios forecast at 4 1x 3 2x and 2 6x respectively [2] - 2024-2026 EV/EBITDA ratios forecast at 11 46x 10 79x and 10 19x respectively [6]

Investment Rating - The report maintains a "Buy" rating for Huazhu Group-S (01179 HK) and Huazhu (HTHT O) [4] Core Views - Huazhu Group reported strong Q2 2024 results with revenue of 6 15 billion CNY (+11 2% YoY) and adjusted net profit of 1 25 billion CNY (+16 9% YoY) [1] - Domestic occupancy rate (Occ) outperformed ADR while international markets saw growth in both volume and price [1] - Operational efficiency improved with reductions in rent depreciation and consumables costs [1] - The company achieved a milestone of 10 000 domestic hotels and raised its full-year store opening guidance from 1 800 to 2 200+ [1] Financial Performance - Q2 2024 domestic RevPAR was 244 CNY (-2% YoY) with ADR at 296 CNY (-3% YoY) and Occ at 82 6% (+1pp YoY) [1] - International RevPAR grew 5% YoY to 82 EUR with ADR at 120 EUR (+3% YoY) and Occ at 68 3% (+1pp YoY) [1] - H1 2024 revenue reached 11 43 billion CNY (+14 1% YoY) with adjusted net profit of 2 03 billion CNY (+39 0% YoY) [1] Store Expansion - Q2 2024 saw a net increase of 466 domestic hotels (567 new openings) bringing the total to 10 150 [1] - The pipeline of hotels under development increased to 3 294 (3 266 domestic) up by 156 from Q1 2024 [1] - H1 2024 saw 1 136 new openings with 1 064 remaining to meet the revised full-year target [1] Valuation and Forecast - The report forecasts 2024-2026 net profits of 4 2/4 8/5 4 billion CNY respectively [2] - A 24x PE valuation for 2024 implies a fair value of 35 29 HKD/share for HK-listed shares and 45 38 USD/ADS for US-listed shares [2] Financial Ratios - 2024E revenue growth is projected at 10 7% with EBITDA of 7 287 million CNY [3] - ROE is expected to be 25 6% in 2024E declining to 19 9% by 2026E [3] - Net profit margin is forecasted at 17 5% in 2024E increasing to 18 8% by 2026E [3]

Investment Rating - The report assigns a rating of "Accumulate" for the company [4][5]. Core Insights - The company's performance meets expectations, with macroeconomic fluctuations causing a slowdown in growth. However, the company has raised its store opening guidance, indicating an expansion in market share [4][5]. - The adjusted net profit for 2024 has been increased to 4.488 billion RMB (+2.58 billion), while the adjusted net profit for 2025 and 2026 has been lowered to 4.978 billion and 5.943 billion RMB respectively [5]. - The target price is maintained at 42.50 HKD based on an industry average PE of 25x for 2025 [5]. Financial Summary - Revenue for 2023 is projected at 21.882 billion RMB, with a year-on-year growth of 57.86%. The adjusted net profit for 2023 is expected to be 4.085 billion RMB [4]. - The company’s revenue for Q2 2024 is reported at 6.148 billion RMB, reflecting an increase of 11.18%, with adjusted net profit at 1.254 billion RMB (+17.42%) [5]. - The RevPAR for Q2 2024 shows a slight decline of 2.0% year-on-year, with ADR down by 2.9% and occupancy rate up by 0.7 percentage points [5].

浦银国际研究 公司研究 | 消费行业 华住集团（1179.HK/HTHT.US）：境内业 务高基数下增长放缓，上调开店指引 2Q24 在高基数下达成收入指引上沿：尽管面对高基数影响，华住集 团 2Q24 仍达成了公司的收入增长指引的上沿（营收同比增长 7%- 11%）。2Q24 集团营收为人民币 61.5 亿元，同比增长 11.2%，不包括 境外业务（Legacy DH）营收同比增长 11.1%。2Q24 经调整归母净利 润实现 12.5 亿元，同比增长 16.9%。 境内经营指标有所转弱，但好于市场：华住集团 2Q24 境内业务 （Legacy-Huazhu）RevPAR 为 244 元，同比下降 2%。其中，ADR 同比 下降 3%，主要是由于上年爆发式出行以及酒店行业供给不足拉高了 基数，而公司 OCC 同比提升 0.7ppt，抵消了部分 ADR 下降的负面影 响。管理层表示，今年 7-8 月在市场 RevPAR 下降 10%的情况下，华 住 RevPAR 同比仅下降中个位数，跑赢市场。我们认为，在高基数、 恶劣天气和宏观环境不振的情况下，酒店行业 2024 年 RevPAR 同比 下降的趋势较难逆转， ...

证券研究报告 | 2024年08月22日 华住集团-S（01179.HK） 优于大市 二季度经调整净利润增长 17%，上修全年开店指引 2024 年第二季度收入增速处此前指引上限，经调整净利润同增 17%。2024Q2， 公司收入 61 亿元/+11.2%，处指引上限（7-11%）；其中来自境内华住的收 入 48.3 亿元/+11.1%（此前指引 7-11%）；DH 收入 13.2 亿元/+11.6%。Q2 归 母净利润 10.67 亿元/+5.1%，经调整净利润 12.54 亿元/+16.9%，经调整 EBITDA 20.4 亿元/+15.1%，国内/海外经调整 EBITDA 各+14.0%/35.1%。 第二季度公司国内 REVPAR 同比-2%，环比走弱，但仍优于行业平均。2024Q2， 境内综合 RevPAR 同比-2%，其中 ADR-2.9%，OCC+0.7pct；同店 RevPAR -3.6%； 环比 Q1 综合/同店+3.1%/+0.9%走弱。但参考酒店之家等行业数据，2024Q2 国内酒店 REVPAR 下滑约 7-8%左右，公司 Q2 同店 RevPAR 在高基数下仍优于 行业整体，彰显公司 ...

证券研究报告 港股公司|公司点评|华住集团-S（01179） 收入处于指引上限，上调全年开店目标 请务必阅读报告末页的重要声明 glzqdatemark1 2024年08月21日 证券研究报告 |报告要点 我们预计公司 2024-2026 年营收分别为 242.4/260.5/280.3 亿元，对应增速分别为 10.7%/7.6%/7.6%；归母净利润分别为 42.5/49.1/56.7 亿元，3 年 CAGR 为 11.6%，对应 PE 分别为 15x/13x/11x。鉴于公司龙头地位稳定，品牌、运营实力强劲，国内门店下沉、品牌向 上与全球化仍有较大空间，维持"增持"评级。 |分析师及联系人 邓文慧 曹晶 SAC：S0590522060001 SAC：S0590523080001 请务必阅读报告末页的重要声明 1 / 5 港股公司|公司点评 glzqdatemark2 2024年08月21日 华住集团-S(01179) 收入处于指引上限，上调全年开店目标 | --- | --- | |------------|-------------------| | 行 业： | 社会服务/酒店餐饮 | | 投资评级： ...

Investment Rating - Buy (Maintained) [1] Core Views - Q2 revenue slightly exceeded guidance with an 11.2% YoY growth, driven by the turnaround of overseas business DH, contributing to a net profit of RMB 1.067 billion, up 5% YoY [3] - Mainland business revenue grew 11.1% YoY, contributing RMB 1.033 billion in net profit, while DH segment revenue grew 11.6% YoY, turning a profit of RMB 34 million compared to a loss of RMB 174 million in the same period last year [3] - Adjusted EBITDA for Q2 was RMB 2 billion, up 11% YoY, and adjusted net profit was RMB 1.25 billion, up 17% YoY [3] - Mainland store openings exceeded expectations, with 10,150 stores by the end of Q2 2024, up 18% YoY, and a record high of 3,258 reserve stores [3] - RevPAR declined 2.4% YoY in Q2 due to a high base, with Q3 revenue growth guidance of 2-5% [3] - The company announced a USD 1 billion share repurchase plan over five years in July [3] Financial Forecasts and Valuation - Revenue is projected to grow from RMB 23.945 billion in 2024E to RMB 28.845 billion in 2026E, with a CAGR of 9.43% to 9.74% [2] - Net profit attributable to shareholders is forecasted to be RMB 3.702 billion in 2024E, RMB 4.068 billion in 2025E, and RMB 4.484 billion in 2026E [2] - EPS is expected to be RMB 1.15 in 2024E, RMB 1.27 in 2025E, and RMB 1.40 in 2026E [2] - P/E ratios are projected at 17.91x for 2024E, 16.30x for 2025E, and 14.79x for 2026E [2] Mainland Business Performance - Mainland store count reached 10,150 by Q2 2024, with 94% being franchised stores [3] - Q2 saw 567 new store openings and 466 net openings, with the full-year new store target revised upward from 1,800 to 2,200 [3] - Mainland room count reached 974,000, up 19% YoY, with franchised rooms accounting for 889,000, up 21.6% YoY [3] RevPAR and Revenue Guidance - Q2 RevPAR was RMB 244, down 2.4% YoY, with occupancy rate (OCC) at 82.6%, up 0.8 ppts YoY, and ADR at RMB 296, down 3.0% YoY [3] - Q3 revenue growth is guided at 2-5%, with RevPAR expected to decline by high single digits [3] Market Data - Closing price: HKD 22.55 [5] - 52-week low/high: HKD 20.80/HKD 36.30 [5] - P/B ratio: 5.75x [5] - Market cap: HKD 72.394 billion [5] Financial Ratios - ROIC: 16.32% in 2023A, projected to be 16.87% in 2024E [8] - ROE: 33.66% in 2023A, expected to decline to 18.38% by 2026E [8] - Gross margin: 34.46% in 2023A, projected to remain stable around 35.57-35.77% from 2024E to 2026E [8]