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H World Group (HTHT)
NASDAQ:HTHT
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H World Group
(NASDAQ:HTHT)
74Outperform
Positive Factors
Earnings
HTHT reported stronger-than-expected 4Q results, driven by reduced RevPAR pressure supported by robust leisure travel demand.
Expansion
The company is focused on expanding its presence in the upper-midscale segment and increasing its penetration in lower-tier cities through its asset-light model, which enables rapid network expansion with minimal capital investment.
Financial Performance
HTHT declared a total dividend of US$1.6 per ADR in FY24, indicating strong financial performance.
Negative Factors
Revenue Pressure
HTHT's revenue guidance may seem on the softer side, primarily driven by DH's accelerated transition to an asset-light model, resulting in 15% of its O/L hotel portfolio coming offline, putting pressure on revenue.
RevPAR
4Q RevPAR is expected to be down mainly on ADR weakness.
Stock Price
H World’s (HTHT) stock price is down by 6% after 3Q results due to slightly disappointing 4Q revenue growth guidance.
H World Group (HTHT) vs. S&P 500 (SPY)
Market Cap
$11.84B
Dividend Yield3.29%
Average Volume (3M)2.15M
Price to Earnings (P/E)27.6
Beta (1Y)0.46
Revenue Growth7.68%
EPS Growth-25.12%
CountryUS
Employees26,985
SectorConsumer Cyclical
Sector Strength50
IndustryTravel Lodging
Share Statistics
EPS (TTM)1.30
Shares Outstanding321,039,250
10 Day Avg. Volume2,342,529
30 Day Avg. Volume2,146,857
Financial Highlights & Ratios
PEG Ratio1.53
Price to Book (P/B)N/A
Price to Sales (P/S)3.94
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$42.47Price Target Upside15.50% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
H World Group Business Overview & Revenue Model
Company DescriptionH World Group Limited, together with its subsidiaries, develops leased and owned, manachised, and franchised hotels primarily in the People's Republic of China. The company operates hotels under its own brands, such as HanTing Hotel, Ni Hao Hotel, Hi Inn, Elan Hotel, Zleep Hotels, Ibis Hotel, JI Hotel, Orange Hotel, Starway Hotel, Ibis Styles Hotel, CitiGO Hotel, Crystal Orange Hotel, IntercityHotel, Manxin Hotel, Mercure Hotel, Madison Hotel, Novotel Hotel, Joya Hotel, Blossom House, Steigenberger Hotels & Resorts, MAXX by Steigenberger, Jaz in the City, Grand Mercure, Steigenberger Icon, and Song Hotels. As of June 30, 2022, it operated 8,176 hotels with 773,898 rooms. The company was formerly known as Huazhu Group Limited and changed its name to H World Group Limited in June 2022. H World Group Limited was founded in 2005 and is headquartered in Shanghai, the People's Republic of China.
How the Company Makes MoneyH World Group generates revenue primarily through its hotel operations, which include room rentals, food and beverage sales, and other guest services. The company operates under a franchise and management contract model, where it derives income from franchise fees, management fees, and room rentals. Franchise fees are collected from hotel owners who wish to operate under H World Group's brand names, while management fees are earned for managing hotels on behalf of property owners. Additionally, the company benefits from its loyalty program, which encourages repeat business and enhances customer retention. Strategic partnerships and expansion of its brand portfolio also contribute to the company's revenue growth.
H World Group Financial Statement Overview
Summary
H World Group demonstrates strong financial performance with solid profitability and efficient cash management. The income statement shows robust growth with improved EBIT and EBITDA margins. However, the balance sheet reveals high leverage, posing a potential risk, though offset by a strong ROE. Cash flow is healthy, indicating good cash generation relative to profits.Income Statement
The income statement for H World Group shows a solid recovery and growth trajectory, with TTM revenue up by approximately 7.2% from the previous year. Gross profit margin is robust at 35.66%, and the net profit margin is strong at 15.96%. There's a noticeable improvement in profitability metrics, with positive EBIT and EBITDA margins at 21.55% and 27.65%, respectively, indicating operational efficiency and profitability.78
Positive
Balance Sheet
The balance sheet reflects a high debt-to-equity ratio of 2.97, suggesting heavy leverage, which could pose financial risks. However, the return on equity is impressive at 30.85%, showing effective use of shareholder capital. The equity ratio stands at 19.55%, indicating moderate financial stability.65
Positive
Cash Flow
Cash flow analysis indicates a strong operating cash flow to net income ratio of 1.93, demonstrating good cash generation relative to profits. The free cash flow growth rate is slightly negative at -8.16%, reflecting a decrease from the previous year, but the free cash flow to net income ratio is a healthy 1.66, suggesting efficient cash management.72
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 23.45B | 21.88B | 13.86B | 12.79B | 10.20B | 11.21B | Gross Profit |
| 8.36B | 7.54B | 1.60B | 1.50B | 467.00M | 4.02B | EBIT |
| 5.05B | 4.71B | -197.00M | 410.00M | -1.22B | 2.11B | EBITDA |
| 6.49B | 7.15B | 549.00M | 1.67B | -384.00M | 3.10B | Net Income Common Stockholders |
| 3.74B | 4.08B | -1.81B | -420.00M | -2.06B | 1.77B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 9.13B | 9.13B | 5.37B | 7.71B | 10.93B | 6.14B | Total Assets |
| 63.53B | 63.53B | 61.51B | 63.27B | 65.80B | 52.98B | Total Debt |
| 35.88B | 35.88B | 43.89B | 44.16B | 44.98B | 38.16B | Net Debt |
| 28.93B | 28.93B | 40.30B | 39.05B | 37.95B | 34.93B | Total Liabilities |
| 51.28B | 51.28B | 52.70B | 52.23B | 54.37B | 45.48B | Stockholders Equity |
| 12.13B | 12.13B | 8.73B | 10.94B | 11.33B | 7.38B |
| Cash Flow | Free Cash Flow | ||||
| 6.22B | 6.77B | 511.00M | -333.00M | -1.17B | 1.76B | Operating Cash Flow |
| 7.22B | 7.67B | 1.56B | 1.34B | 609.00M | 3.29B | Investing Cash Flow |
| 583.00M | -1.48B | -522.00M | -1.40B | -8.10B | -285.00M | Financing Cash Flow |
| -6.21B | -3.72B | -1.39B | -1.80B | 883.00M | 6.04B |
H World Group Technical Analysis
Neutral
36.77
Price Trends
35.15
Positive
34.59
Positive
33.56
Positive
Market Momentum
0.62
Positive
49.93
Neutral
53.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTHT, the sentiment is Neutral. The current price of 36.77 is below the 20-day moving average (MA) of 37.31, above the 50-day MA of 35.15, and above the 200-day MA of 33.56, indicating a neutral trend. The MACD of 0.62 indicates Positive momentum. The RSI at 49.93 is Neutral, neither overbought nor oversold. The STOCH value of 53.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HTHT.
H World Group Risk Analysis
H World Group disclosed 55 risk factors in its most recent earnings report. H World Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
H World Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $11.84B | 27.57 | 25.06% | 3.29% | 7.68% | -25.12% | |
72 Outperform | $54.08B | 36.76 | -41.19% | 0.27% | 9.17% | 42.78% | |
64 Neutral | $11.69B | 9.61 | 36.45% | 0.49% | -6.41% | 511.40% | |
62 Neutral | $16.90B | 28.10 | -27.16% | 1.41% | 6.34% | -11.99% | |
60 Neutral | $6.15B | 21.22 | -661.94% | 0.87% | 2.63% | 23.39% | |
59 Neutral | $12.26B | 11.12 | -0.55% | 3.78% | 1.42% | -20.63% | |
55 Neutral | $65.27B | 28.46 | -144.82% | 1.06% | 5.85% | -18.43% |
* Consumer Cyclical Sector Average
Performance Comparison
HTHT
H World Group
36.77
-1.51
-3.94%
CHH
Choice Hotels
131.59
8.70
7.08%
H
Hyatt Hotels
121.59
-35.88
-22.79%
IHG
Intercontinental Hotels Group
109.48
6.11
5.91%
MAR
Marriott International
237.01
-11.82
-4.75%
HLT
Hilton Worldwide Holdings
225.71
13.56
6.39%
H World Group Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: -3.36% | Next Earnings Date: Jun 2, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong focus on expansion and asset-light strategy leading to revenue and EBITDA growth. However, there were challenges like RevPAR and ADR declines, and increased SG&A expenses. Despite some operational headwinds, the overall performance was positive with significant shareholder returns and a strong cash position.Highlights
Record Hotel Expansion
Opened a record high of 2,442 new hotels during 2024, with 2,430 from Legacy-Huazhu, supported by penetration into lower-tier cities.
Upper-Mid Segment Growth
The upper-mid segment hotel network grew by 35% year-over-year in 2024, driven by the development of Intercity and Crystal Orange brands.
Asset-Light Strategy Success
In 2024, the asset-light revenue contribution exceeded 50% for the business, aiding in achieving more stable and sustainable development.
Revenue Growth
Total revenue for the group increased 9.2% year-over-year to RMB23.9 billion in 2024.
Core Adjusted EBITDA Increase
Core adjusted EBITDA increased 15.5% year-over-year to RMB1.7 billion in Q4 and grew 13.9% year-over-year to RMB7.5 billion for the full-year.
Strong Cash Position
The group had RMB11.9 billion in cash and equivalents at the end of 2024, with a solid net cash position of RMB6.5 billion.
Shareholder Returns
In 2024, the total shareholder return was US$770 million, accounting for more than 1/3 of the three-year plan.
Lowlights
RevPAR Decline
Legacy-Huazhu's blended RevPAR decreased slightly by 3% to RMB235 in 2024.
ADR Decline
ADR was down 3.2% to RMB289, primarily due to a high base last year and supply increase.
Legacy-DH Operating Loss
Legacy-DH's operating loss widened due to impairment loss and around RMB100 million one-off restructuring costs.
SG&A Increase
SG&A expenses for Legacy-Huazhu increased 19.7% year-over-year in 2024, mainly due to higher share-based compensation.
Company Guidance
During the H World Group's Q4 and full-year 2024 earnings call, several key metrics and guidance were provided. The group achieved a record hotel expansion with 2,442 new hotel openings and a milestone of 10,000 hotels in operation across 1,000 cities. Despite a 3% decline in RevPAR to RMB235, the occupancy rate improved by 0.2 percentage points to 81.2%. The group's asset-light strategy led to a 40% revenue contribution from manachised and franchised hotels, with a total revenue increase of 9.2% year-over-year to RMB23.9 billion. The company also announced a US$300 million final cash dividend, culminating in a total shareholder return of US$770 million for 2024. Looking ahead, the group projects a 2% to 6% revenue growth for 2025 and plans to open around 2,300 new hotels, aiming for a 15% increase in their hotel network.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.