H World (1179.HK)_ Expiring Upside 30-Day Catalyst Watch

Summary of H World (1179.HK) Research Call Company Overview - Company: H World (1179.HK) - Market Capitalization: HK$96,494 million (US$12,418 million) [2] Investment Rating and Target Price - Rating: Buy [4] - Current Price: HK$29.55 [2] - Target Price: HK$42.00 [2] - Expected Share Price Return: 42.1% [2] - Expected Total Return: 44.8% [2] - Expected Dividend Yield: 2.7% [2] Earnings Summary - 2022 Net Profit: -RMB 735 million (Loss) [3] - 2023 Net Profit: RMB 4,029 million [3] - 2024 Estimated Net Profit: RMB 4,241 million [3] - 2023 EPS: RMB 1.202 (608.9% growth from 2022) [3] - 2024 Estimated EPS: RMB 1.284 (6.8% growth) [3] - 2025 Estimated EPS: RMB 1.407 (9.6% growth) [3] - 2026 Estimated EPS: RMB 1.533 (9.0% growth) [3] Strategic Positioning - Market Position: H World is positioned to capture structural growth in the mid-to-upscale segment of the hotel industry [4] - Competitive Advantages: First-mover advantages in the economy upgrade trend, proven cost management, and advanced technology infrastructure [4] - Industry Outlook: Expected to lead the industry rebound and accelerated consolidation [4] Valuation Methodology - Valuation Basis: Target price derived from a 2024 EV/EBITDA of 18x for hotel operations, which is 0.5 standard deviations above historical average due to industry-leading RevPAR recovery [5] Risks - Key Risks: 1. Pandemic-related fluctuations and travel impacts from natural disasters or epidemics [6] 2. Prolonged economic downturn in China affecting discretionary spending [6] 3. Intense competition among Chinese operators [6] 4. Oversupply of lodging accommodations [6] Analyst Insights - Analyst: Lydia Ling [2] - Analyst Contact: +852-2501-2475, lydia.w.ling@citi.com [2] Additional Information - Citi Research Ratings Distribution: 58% Buy, 33% Hold, 9% Sell [10] - Citi's Position: Citigroup Global Markets Inc. holds a significant position in H World's debt securities [9] This summary encapsulates the key points from the research call regarding H World, highlighting its financial performance, strategic positioning, risks, and investment outlook.