Core Viewpoint - H World Group Limited reported strong financial results for the second quarter and first half of 2025, driven by network expansion and an asset-light strategy, despite a modest decline in revenue per available room (RevPAR) [5][22]. Financial Performance - Total revenue for the second quarter of 2025 was RMB6.4 billion (US$897 million), a 4.5% year-over-year increase, with revenue from the Legacy-Huazhu segment increasing by 5.7% to RMB5.1 billion [5][8]. - Net income attributable to H World Group Limited was RMB1.5 billion (US$215 million) in Q2 2025, reflecting a 44.7% year-over-year increase [22]. - EBITDA (non-GAAP) for Q2 2025 was RMB2.5 billion (US$344 million), compared to RMB1.9 billion in Q2 2024 [23][24]. Operational Highlights - As of June 30, 2025, H World operated 12,137 hotels with 1,184,915 rooms, including 12,016 hotels from Legacy-Huazhu and 121 from Legacy-DH [2][41]. - The company opened 595 hotels in Q2 2025, contributing to a total of 2,947 hotels in the pipeline [2][5]. - The average daily room rate (ADR) for Legacy-Huazhu was RMB290, down from RMB296 in Q2 2024, while the occupancy rate was 81.0% [6]. Segment Performance - Revenue from manachised and franchised hotels in Q2 2025 was RMB2.8 billion (US$400 million), representing a 22.8% year-over-year increase [12][13]. - Revenue from the Legacy-DH segment was RMB1.3 billion, showing a slight increase of 0.1% year-over-year [5][9]. - Adjusted EBITDA from the Legacy-Huazhu segment was RMB2.1 billion in Q2 2025, compared to RMB1.9 billion in Q2 2024 [24][25]. Cash Flow and Dividend - Operating cash inflow for Q2 2025 was RMB2.7 billion (US$371 million) [26]. - The board declared a cash dividend of approximately US$250 million, equating to US$0.081 per ordinary share [29]. Guidance - For Q3 2025, H World expects revenue growth in the range of 2%-6%, or 4%-8% excluding Legacy-DH, with manachised and franchised revenue growth projected at 20%-24% [30].

Core Insights - The Coca-Cola Company is implementing a long-term refranchising strategy to shift bottling operations to local partners, allowing for a focus on brand building, marketing, and innovation while reducing capital-intensive production and distribution responsibilities [1][4] Financial Performance - In Q1 2025, Coca-Cola reported a 130-basis-point increase in comparable operating margin, indicating the effectiveness of its refranchising strategy [2][9] - The exit from the Philippines bottling operations and a local focus contributed to enhanced profitability, despite slight dilution in top-line metrics [2][9] - The Zacks Consensus Estimate for Coca-Cola's earnings implies year-over-year growth of 3.1% for 2025 and 8.3% for 2026, with earnings estimates remaining unchanged over the past 30 days [12] Operational Strategy - Coca-Cola's refranchising strategy not only improves capital efficiency but also maintains close alignment with bottling partners through joint planning and execution [4][9] - The company's local bottling system helps mitigate risks associated with trade disruptions and shifts in consumer sentiment, while also supporting local economies by creating jobs [3] Competitive Landscape - Coca-Cola's asset-light bottling model has been adopted in various forms by competitors like PepsiCo and Keurig Dr Pepper, although Coca-Cola remains more focused on local partnerships [5][6][7] - PepsiCo employs a hybrid bottling strategy that retains more control over key operations, which may limit margin expansion compared to Coca-Cola's model [6] - Keurig Dr Pepper utilizes a mix of owned operations and third-party bottlers, allowing for efficient scaling but potentially limiting direct control [7] Market Performance - Coca-Cola's shares have increased by 11.6% year-to-date, outperforming the industry growth of 5.3% [8] - The company trades at a forward price-to-earnings ratio of 22.43X, which is significantly higher than the industry's 17.98X [10]

Core Viewpoint - H World Group Limited reported its unaudited financial results for Q1 2025, showing a year-over-year revenue increase of 2.2% to RMB5.4 billion (US$744 million) and a significant net income growth of 35.7% to RMB894 million (US$123 million) [4][21][22]. Financial Performance - Total hotel turnover increased by 14.3% year-over-year to RMB22.5 billion in Q1 2025, with a 15.3% increase excluding Legacy-DH [4]. - Revenue from manachised and franchised hotels rose by 21.1% year-over-year to RMB2.5 billion (US$344 million) [12]. - Revenue from the Legacy-Huazhu segment was RMB4.5 billion, a 5.5% year-over-year increase, while the Legacy-DH segment saw a decline of 11.3% to RMB918 million [4][9]. Operational Highlights - As of March 31, 2025, H World operated 11,685 hotels with 1,142,158 rooms, including 11,564 hotels from Legacy-Huazhu and 121 from Legacy-DH [2][37]. - The company opened 694 hotels in Q1 2025, contributing to a total of 2,888 hotels in the pipeline [2][8]. - The average daily room rate (ADR) for Legacy-Huazhu hotels was RMB272, with an occupancy rate of 76.2% [5][6]. Cost and Expenses - Total operating costs and expenses in Q1 2025 were RMB4.4 billion, reflecting a slight increase of 0.5% year-over-year [14]. - Hotel operating costs were RMB3.6 billion, a 1.1% year-over-year increase, primarily due to a 4.2% increase in Legacy-Huazhu costs [14]. Cash Flow and Debt - Operating cash inflow for Q1 2025 was RMB580 million (US$80 million), while investing cash inflow was RMB757 million (US$103 million) [24]. - As of March 31, 2025, the company had total cash and cash equivalents of RMB8.2 billion (US$1.1 billion) and total debt of RMB5.3 billion (US$726 million) [25][24]. Future Guidance - For Q2 2025, H World expects revenue growth in the range of 1%-5%, or 3%-7% excluding Legacy-DH, with manachised and franchised revenue growth anticipated at 18%-22% [26].