Company Overview - H World Group Limited is a significant player in the global hotel industry, operating 9,817 hotels with 955,657 rooms across 18 countries as of March 31, 2024 [2] - The company's 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 [2] - 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 [2] Business Model - H World's business encompasses leased and owned, manachised, and franchised models [3] - As of March 31, 2024, 11% of hotel rooms are operated under the lease and ownership model, while 89% are under the manachise and franchise model [3] - The company maintains a consistent standard and platform across all its hotels [3] Recent Developments - The 2024 annual general meeting was held on June 27, 2024, where several resolutions were passed, including the appointment of Deloitte Touche Tohmatsu as auditor for 2024 and amendments to the 2023 share incentive plan [1] - The AGM authorized directors and officers to take necessary actions to implement the resolutions [1]

Core Viewpoint - H World Group Limited (NASDAQ:HTHT) maintains a Hold rating due to a lackluster short-term outlook for Q2 2024, while still having favorable long-term growth potential driven by expansion into new Chinese cities and a shift to a capital-light model for overseas operations [2][7] Short-Term Outlook - H World has guided for Q2 2024 top line growth of +7% to +11% YoY in RMB terms, a decline from +18% YoY growth in Q1 2024 [3] - The company expects "flattish to slightly negative" RevPAR growth for its Mainland Chinese hotel operations in Q2 2024, contrasting with a +3% YoY RevPAR increase in Q1 2024 [3] - The overall performance of the Mainland Chinese hotel industry was weak during the Labor Day holiday, with RevPAR and occupancy rates decreasing by -5% and -430 basis points, respectively [3] - The Chinese hotel sector's Labor Day holiday ADR was -12% lower compared to the previous year, attributed to increased market supply and outbound travel diversion [4] - Selling and marketing expenses rose by +33% YoY to RMB260 million, increasing the S&M costs-to-revenue ratio from 4.4% in Q1 2023 to 4.9% in Q1 2024 [4] Long-Term Growth Potential - Analysts forecast H World's revenue and normalized operating profit to grow at CAGRs of +10% and +18% from FY 2023 to FY 2027, with normalized operating margin projected to improve from 21.5% in FY 2023 to 28.3% in FY 2027 [6] - The company is expanding into lower-tier Chinese cities, with the proportion of hotels in these cities increasing from 39% in Q1 2023 to 40% in Q1 2024, and 54% of hotels in the pipeline located in lower-tier cities [6] - H World aims to have hotels in 2,000 Chinese cities in the long run, having already established a presence in 1,290 cities as of March 31, 2024, up +14% from the previous year [6] - The overseas business is transitioning to a capital-light model, moving from leased and owned hotels to franchised hotels, which is expected to enhance overall operating profitability [6] Valuation Comparison - H World currently trades at 14.4 times consensus next twelve months' EV/EBITDA, comparable to peers such as Hyatt Hotels at 14.3 times and Marriott International at 15.4 times [7]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company has shown stable growth in operational metrics for Q1 2024, with net store openings exceeding expectations. The recovery in leisure travel demand has positively impacted the company's RevPAR, and its proactive focus on B2B business has positioned its corporate travel capabilities above industry standards. The revenue forecasts for 2024E/2025E/2026E are projected at 241/259/279 billion RMB, representing year-on-year growth of 10.0%/7.8%/7.6%. The net profit attributable to shareholders is expected to be 43/50/56 billion RMB, with growth rates of 5.6%/15.5%/12.6% [7][8]. Summary by Sections Market Data - As of May 22, 2024, the closing price is HKD 29.05, with a total market capitalization of HKD 932.62 billion and total shares outstanding of 3.21 billion [5]. Financial Performance - For Q1 2024, the company achieved revenue of 5.28 billion RMB, a year-on-year increase of 17.8%. The revenue breakdown includes domestic self-operated, domestic franchised, overseas self-operated, and overseas franchised revenues of 2.11, 2.04, 0.99, and 0.0021 billion RMB, respectively, with growth rates of 4.6%, 32.9%, 15.6%, and 16.7% [7]. - Adjusted EBITDA for Q1 2024 was 1.42 billion RMB, up 37.8%, with an adjusted EBITDA margin of 26.9%, an increase of 3.9 percentage points year-on-year [7]. RevPAR and Operational Metrics - The company's domestic RevPAR, ADR, and OCC for Q1 2024 were 216 RMB, 280 RMB, and 77.2%, reflecting year-on-year growth of 3.1%, 1.0%, and 1.6 percentage points, respectively. The overseas metrics were 58 EUR, 104 EUR, and 55.8%, with year-on-year growth of 4.5%, 0.2%, and 2.3 percentage points [7]. Store Expansion - In Q1 2024, the company opened 569 new stores domestically, a significant increase from 262 in the same period last year. The total number of stores reached 9,817, with plans to open 1,800 new stores in 2024 [7]. B2B Business Development - The company has actively expanded its corporate travel business, with a 34% year-on-year increase in contracted room nights and a 57% growth in active corporate users, reaching 2,700 [7].

Investment Rating - The report maintains an "Accumulate" rating for Huazhu Group-S (1179.HK) with a market price of HKD 30.7 [1]. Core Views - Huazhu's Q1 performance slightly exceeded expectations, benefiting from improvements in product strength due to direct store renovations and enhanced revenue management capabilities. The company continues to lead its competitors in management and product selection, resulting in a sustained increase in market share. The current valuation does not fully reflect the company's intrinsic value [5]. - The profit forecast for Huazhu has been raised, maintaining the "Accumulate" rating. In Q1 2024, despite the industry facing growth pressures from high base effects, Huazhu's core operating metrics showed steady growth. The company is expected to achieve or exceed its performance targets, leading to an upward revision of net profit forecasts for 2024-2025 [5]. Financial Performance Summary - For Q1 2024, Huazhu reported revenue of CNY 5.28 billion, a year-on-year increase of 17.8%. The net profit attributable to shareholders was CNY 660 million, a decrease of 33.4% compared to Q1 2023 [5]. - The domestic hotel segment (Legacy-Huazhu) generated revenue of CNY 4.23 billion, up 17.6% year-on-year, with a net profit of approximately CNY 830 million, down 30.6% [5]. - The overseas hotel segment (Legacy-DH) reported revenue of CNY 1.03 billion, a year-on-year increase of 16.6%, with a net loss of CNY 170 million [5]. Growth and Expansion - The company opened 569 new stores and closed 148 in Q1 2024, resulting in a net increase of 421 stores. The number of signed contracts reached 647, with a pipeline of 3,138 hotels awaiting opening [6]. - Huazhu's RevPAR (Revenue per Available Room) increased by 3.1% year-on-year in Q1 2024, with direct stores showing an 8.8% increase [5][6].

Investment Rating - The investment rating for the company is "Buy" [2][10] - The current market price is 30.7 HKD [2] Core Views - The company benefits from the enhancement of product capabilities due to the renovation of direct-operated stores and improved revenue management capabilities, leading to slightly better-than-expected performance in Q1 [6] - The company is expected to maintain a leading position in management and product iteration, which will continue to enhance its market share [6] - The profit forecast for 2024-2025 has been raised, with expected net profits of 42.3 billion and 50.5 billion respectively [6] Financial Performance Summary - Revenue for 2022 was 13,862 million, with a projected increase to 21,882 million in 2023, and further growth to 24,282 million in 2024 [3] - The net profit for 2022 was -1,821 million, expected to turn positive with 4,085 million in 2023 and 4,234 million in 2024 [3] - The company’s earnings per share (EPS) is projected to improve from -0.58 in 2023 to 1.31 in 2024 [3] - The return on equity (ROE) is expected to rise from -18.5% in 2022 to 39.2% in 2023 [3] Operational Highlights - In Q1 2024, the company opened 569 new stores and closed 148, resulting in a net increase of 421 stores [7] - The domestic hotel segment reported revenue of 42.3 billion, a year-on-year increase of 17.6% [6] - The overall RevPAR (Revenue per Available Room) increased by 3.1% in Q1 2024, with direct-operated stores showing an 8.8% increase [6]

Investment Rating - Buy (Maintained) [1] Core Views - Q1 revenue exceeded guidance: Revenue for Q1 2024 reached 5.3 billion yuan, up 18% YoY, surpassing the guidance of 12-16% growth [3] - Net store openings accelerated: In Q1, the company opened 569 new stores, with a net increase of 421 stores, exceeding expectations [3] - RevPAR under pressure due to high base: Q1 RevPAR was 216 yuan, up 3% YoY, with a room rate of 280 yuan and an occupancy rate of 77.2% [3] - Q2 revenue growth guidance: The company expects Q2 revenue growth to be between 7-11% [3] Financial Performance - Revenue: 2024E revenue is projected at 23.97 billion yuan, with a YoY growth of 9.54% [2] - Net profit: 2024E net profit is forecasted at 3.79 billion yuan, a decrease of 7.28% YoY [2] - EPS: 2024E EPS is expected to be 1.18 yuan per share [2] - P/E ratio: The current P/E ratio is 23.68x for 2024E [2] Store and Room Metrics - Total stores: As of Q1 2024, the company had 9,684 stores, with 47% being mid-to-high-end brands and 94% being franchised [3] - Room count: The total room count reached 929,000, with franchised rooms accounting for 843,000, up 19.5% YoY [3] - Store pipeline: The company has a pipeline of 3,138 stores, with plans to open 1,800 stores and achieve a net increase of 1,150 stores in 2024 [3] Market Data - Closing price: The stock closed at HKD 30.65 [5] - Market cap: The company's market cap is HKD 98.4 billion [5] - P/B ratio: The P/B ratio is 8.02x [5] Financial Ratios - ROE: 2024E ROE is projected at 23.79% [8] - Gross margin: 2024E gross margin is expected to be 35.44% [8] - Net profit margin: 2024E net profit margin is forecasted at 15.80% [8] Historical Performance - 2023 revenue: 21.88 billion yuan, up 57.86% YoY [2] - 2023 net profit: 4.09 billion yuan, up 324.33% YoY [2] - 2023 EPS: 1.27 yuan per share [2]

Investment Rating - The report maintains a "Buy" rating for the company [6][3][24] Core Insights - The company's revenue growth exceeded previous guidance, with Q1 2024 revenue reaching 5.278 billion yuan, a year-on-year increase of 17.8%, surpassing the prior guidance of 12-16% [2][6] - The domestic hotel RevPAR for Q1 2024 was 216 yuan, showing a year-on-year increase of 2.9% and a 21.3% increase compared to Q1 2019 [1][6] - The company continues to expand its hotel network, with 569 new openings and 148 closures in Q1 2024, resulting in a net increase of 421 hotels [2][6] Financial Performance - Q1 2024 operating income was 5.278 billion yuan, with domestic revenue at 4.245 billion yuan and international revenue at 1.033 billion yuan [2][6] - The operating profit for domestic hotels was 1.131 billion yuan, while international operations reported a loss of 128 million yuan [2][6] - The company expects Q2 2024 revenue growth guidance of 7% to 11% [2][6] Operational Metrics - The occupancy rate (OCC) for domestic hotels was 77.2%, with an average daily rate (ADR) of 280 yuan [1][6] - The company has a pipeline of 3,138 hotels in China, indicating continued expansion [2][6] - The report highlights the company's strategy of upgrading its product offerings and optimizing its brand portfolio, focusing on eliminating underperforming economy hotels [6][2] Future Projections - The projected net profit for the company for 2024, 2025, and 2026 is 4.32 billion yuan, 5.013 billion yuan, and 5.9 billion yuan, respectively, with corresponding P/E ratios of 22, 19, and 16 [6][10][18]

事件 5月 17 日公司公告1Q24 业绩，收入 52.8 亿元/+17.8%，归母净利 6.6 亿元/-33.4%，经调整净利7.7 亿元/+100.8%，经调整EBITDA 14.2 亿元/+37.8%。 点评 经营数据：Q1境内行业压力加大情况下表现较好，境外量价同比 均有提升。LH 1Q24 RevPAR 216 元/+3.1%、为 19 年同期121.3%， 恢复度环比Q4+1.5pct，行业淡季压力较大情况下表现持续领先； 拆分量价，OCC 77.2%/+1.6pct、ADR216 元/+3.1%，分别为19 年 同期 95.8%、126.7%；拆分结构，Q1 成熟店整体/经济型/中高端 RevPAR 为19年的123.9%/109.9%/111.4%。DH 1Q24 RevPAR 58 欧 元/+4.5%、恢复至19年同期98.3%；拆分看 OCC 55.8%/+2.3pct， ADR 104 欧元/+0.2%。 美元(元) 成交金额(百万元) Q1 收入增速好于指引，Q2预期增长7~11%。1Q24收入增速较4Q23 50.00 400 业绩公告指引上限16%高1.8pct，其中LH收入42. ...

Investment Rating - The report assigns a "Buy" rating for both US and Hong Kong stocks of the company [3]. Core Views - The company reported Q1 2024 revenue of 5.3 billion RMB, an 18% year-over-year increase, exceeding previous guidance of 12%-16% [5]. - The growth in revenue is primarily driven by new store openings, with franchise revenue increasing by 33% to 2.1 billion RMB and direct hotel revenue increasing by 8% to 3.1 billion RMB [5]. - The adjusted EBITDA for Q1 2024 rose by 38% to 1.4 billion RMB, reflecting a 169% increase compared to Q1 2019 [5]. - The company opened 569 new hotels in China during Q1 2024, significantly surpassing the previous year's total of 264 openings [5]. - The company expects Q2 2024 revenue to grow by 7%-11% [5]. Summary by Sections Financial Performance - Q1 2024 revenue reached 5.3 billion RMB, up 18% year-over-year and 162% compared to Q1 2019 [5]. - Q1 2024 net profit attributable to shareholders decreased by 33% to 660 million RMB, primarily due to the sale of assets in Q1 2023 [5]. - The company forecasts net profits of 4.2 billion RMB, 4.8 billion RMB, and 5.4 billion RMB for 2024, 2025, and 2026 respectively [5]. Operational Metrics - In Q1 2024, RevPAR in China increased by 3% to 216 RMB, while ADR rose by 1% to 280 RMB [5]. - The occupancy rate in China increased by 1.6 percentage points to 77.2% [5]. - The company has a total of 9,684 hotels in operation, with 3,138 hotels in the pipeline [5]. Market Outlook - The report maintains a reasonable value estimate of 35.06 HKD per share and 44.77 USD per ADS, supporting the "Buy" rating [5].

H World Group Limited (HTHT) delivered mixed first-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same.  The top line grew year over year while the bottom line dwindled.The company’s results reflect solid contributions from its Legacy-Huazhu and Legacy-DH segments, primarily driven by the growth in hotel openings and increased revenue per available room (RevPAR). Furthermore, the effective execution of its Service Excellence-Centric Sustainable Quality Grow ...