H World Group (HTHT) AI Stock Analysis

• Market Cap: $11.25B
• Dividend Yield: 6.78%
• Average Volume (3M): 2.28M
• Price to Earnings (P/E): 22.9
• Beta (1Y): 0.27
• Revenue Growth: 4.43%
• EPS Growth: 1.61%
• Country: US
• Employees: 28,502
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Travel Lodging
• EPS (TTM): 0.60
• Shares Outstanding: 306,939,100
• 10 Day Avg. Volume: 1,737,031
• 30 Day Avg. Volume: 2,277,898
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.29
• Enterprise Value/Revenue: 0.60
• Enterprise Value/Gross Profit: 1.57
• Enterprise Value/Ebitda: 1.97
• 1Y Price Target: $45.33
• Price Target Upside: 18.60% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 77 Outperform
• Price Target: $40.00 ▲(4.66% Upside)

H World Group's strong financial performance and effective cash generation are key strengths, contributing significantly to the overall score. The bullish technical indicators support a positive outlook, although caution is advised due to potential overbought conditions. The company's valuation is reasonable, with an attractive dividend yield. The earnings call provided positive insights into growth areas, despite some challenges in the leased and owned segments.

Positive Factors

Asset-Light Business Growth

The robust growth in the asset-light segment enhances profitability and reduces capital expenditure, supporting sustainable long-term expansion.

Network Expansion

Expanding the hotel network increases market presence and revenue potential, especially in untapped regions, driving future growth.

Membership Growth

Growing membership enhances customer loyalty and repeat business, providing a stable revenue base and competitive advantage.

Negative Factors

High Debt Levels

Significant leverage can increase financial risk and limit strategic flexibility, necessitating careful debt management for stability.

Challenges in Leased and Owned Segment

Declining performance in leased and owned segments may impact overall profitability and necessitate strategic adjustments.

RevPAR Decline

A decline in RevPAR indicates potential challenges in pricing power and occupancy rates, affecting revenue and profitability.

H World Group Business Overview & Revenue Model

Company Description

H 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 Money

H World Group generates revenue primarily through its hotel operations, which include room bookings, food and beverage sales, and other ancillary services offered to guests. The company earns income from both directly managed hotels and franchised properties, where it collects franchise fees and royalties based on hotel performance. Additionally, H World Group benefits from its loyalty programs, which drive repeat business and customer retention. Strategic partnerships with travel agencies and online travel platforms further enhance its revenue streams by increasing visibility and customer access. The company's focus on expanding its hotel portfolio, including through acquisitions and new developments, also contributes to its long-term revenue growth.

H World Group Financial Statement Overview

Summary

H World Group shows strong financial performance with impressive revenue growth and profitability. The company effectively generates cash and delivers high returns on equity. However, high debt levels pose a potential risk, necessitating a focus on debt management for long-term stability.

Income Statement

H World Group has demonstrated strong revenue growth, particularly in the TTM period with a 15.8% increase. The company maintains healthy profitability with a gross profit margin of 37.4% and a net profit margin of 13.7% in the TTM. EBIT and EBITDA margins are also robust at 23.2% and 28.6%, respectively, indicating efficient operations. However, the gross profit margin has slightly decreased from the previous year, suggesting potential cost pressures.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 3.35 in the TTM, which indicates significant leverage and potential financial risk. However, the return on equity is strong at 27.7%, reflecting effective use of equity to generate profits. The equity ratio is moderate, suggesting a balanced asset structure. The company should focus on managing its debt levels to mitigate financial risk.

Cash Flow

Cash flow analysis reveals a positive trend with a 6.9% growth in free cash flow in the TTM. The operating cash flow to net income ratio is 0.49, indicating solid cash generation relative to net income. The free cash flow to net income ratio is high at 0.88, showing effective conversion of profits into cash. Continued focus on cash flow management will be crucial for sustaining growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	24.29B	23.89B	21.88B	13.86B	12.79B	10.20B
Gross Profit	9.25B	9.86B	7.54B	1.60B	1.50B	467.00M
EBITDA	7.36B	6.46B	7.15B	259.00M	1.50B	-384.00M
Net Income	3.76B	3.05B	4.08B	-1.81B	-465.00M	-2.19B
Balance Sheet
Total Assets	64.78B	62.55B	63.53B	61.51B	63.27B	65.80B
Cash, Cash Equivalents and Short-Term Investments	12.45B	11.08B	9.13B	5.37B	7.71B	10.93B
Total Debt	37.77B	35.45B	35.88B	43.89B	44.16B	44.98B
Total Liabilities	52.49B	50.28B	51.28B	52.70B	52.23B	54.37B
Stockholders Equity	12.15B	12.18B	12.13B	8.73B	10.94B	11.33B
Cash Flow
Free Cash Flow	6.79B	6.62B	6.77B	511.00M	-333.00M	-1.17B
Operating Cash Flow	7.64B	7.52B	7.67B	1.56B	1.34B	609.00M
Investing Cash Flow	-1.94B	-2.24B	-1.48B	-522.00M	-1.40B	-8.10B
Financing Cash Flow	-3.48B	-5.50B	-3.72B	-1.39B	-1.80B	883.00M

H World Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.22
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTHT, the sentiment is Positive. The current price of 38.22 is above the 20-day moving average (MA) of 36.27, above the 50-day MA of 33.71, and above the 200-day MA of 33.35, indicating a bullish trend. The MACD of 1.14 indicates Negative momentum. The RSI at 70.94 is Negative, neither overbought nor oversold. The STOCH value of 50.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HTHT.

H World Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HTHT	77 Outperform	$11.25B	22.94	30.38%	6.78%	4.43%	1.61%
WH	72 Outperform	6.38B	19.87	58.77%	1.93%	3.65%	38.50%
HLT	70 Outperform	62.66B	42.07	-34.62%	0.23%	6.26%	38.11%
H	65 Neutral	13.52B	33.95	12.13%	0.43%	0.74%	-54.42%
IHG	63 Neutral	18.10B	25.14	-27.16%	1.46%	8.89%	23.20%
MAR	59 Neutral	71.14B	30.22	-83.23%	0.99%	5.12%	-11.48%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%