H World Group (HTHT) AI Stock Analysis

• Market Cap: $10.82B
• Dividend Yield: 4.28%
• Average Volume (3M): 2.23M
• Price to Earnings (P/E): 22.2
• Beta (1Y): 0.31
• Revenue Growth: 4.43%
• EPS Growth: 1.61%
• Country: US
• Employees: 28,502
• Sector: Consumer Cyclical
• Sector Strength: 80
• Industry: Travel Lodging
• EPS (TTM): 0.59
• Shares Outstanding: 306,939,100
• 10 Day Avg. Volume: 2,930,523
• 30 Day Avg. Volume: 2,226,897
• 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: 1.34
• Enterprise Value/Revenue: 0.60
• Enterprise Value/Gross Profit: 1.57
• Enterprise Value/Ebitda: 1.94
• 1Y Price Target: $45.33
• Price Target Upside: 27.19% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 77 Outperform
• Price Target: $40.00 ▲(12.23% 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

Cost Optimization

Ongoing supply chain optimization is expected to further reduce operating costs, enhancing operating leverage.

Guidance and Model Strength

Management’s reaffirmation of FY25 guidance highlights the underlying strength of its asset-light managed and franchised model, even with lowered RevPAR expectations.

Network Expansion

The company is focused on expanding its upper-midscale presence and increasing penetration in lower-tier cities, supporting faster growth with minimal capital outlay.

Negative Factors

Business Travel Weakness

The weakness in business travel is attributed more to a supply issue, adding uncertainties to the market outlook.

Industry Challenges

The continued challenging industry landscape marked by increased hotel supply, which has pressured overall hotel profitability, while macroeconomic uncertainties have dampened high-end consumer spending.

RevPAR Guidance

RevPAR guidance for FY25 has been cut to a low single-digit percentage decline, highlighting challenges in maintaining previous growth expectations.

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 revenue and profit growth with solid profitability margins. However, high leverage and recent declines in free cash flow are concerns that need monitoring.

Income Statement

H World Group has demonstrated solid revenue growth with a 9.69% increase from 2023 to TTM (Trailing-Twelve-Months), indicating strong market demand. The net profit margin improved significantly to 13.67% in TTM, suggesting enhanced operational efficiency. Gross profit margin stood at 37.44% in TTM, reflecting healthy profitability. However, the EBIT margin of 21.98% and EBITDA margin of 28.65% show room for improvement in managing operating costs.

Balance Sheet

The debt-to-equity ratio of 3.35 in TTM indicates substantial leverage, which poses a risk if revenue growth slows. The equity ratio of 17.05% highlights a moderate reliance on equity financing, and the return on equity (ROE) at 31.28% in TTM suggests efficient use of shareholder funds. Despite strong ROE, high leverage remains a concern for financial stability.

Cash Flow

Operating cash flow to net income ratio of 2.20 in TTM reflects robust cash generation relative to earnings. The free cash flow to net income ratio of 1.94 indicates strong free cash flow generation, supporting potential reinvestments and debt servicing. However, the free cash flow growth rate of -3.99% from 2023 to TTM suggests a need for improved cash flow management.

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	7.48B	6.54B	7.15B	549.00M	1.67B	-384.00M
Net Income	3.76B	3.05B	4.08B	-1.81B	-420.00M	-2.06B
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: 35.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 35.64 is above the 20-day moving average (MA) of 33.28, above the 50-day MA of 33.38, and above the 200-day MA of 33.87, indicating a bullish trend. The MACD of 0.81 indicates Negative momentum. The RSI at 62.26 is Neutral, neither overbought nor oversold. The STOCH value of 85.14 is Negative, 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	$10.82B	22.20	30.38%	4.28%	4.43%	1.61%
WH	74 Outperform	$6.69B	20.51	56.16%	1.78%	3.65%	38.50%
HLT	70 Outperform	$64.76B	42.29	-41.19%	0.22%	6.26%	38.11%
H	69 Neutral	$13.65B	33.72	11.66%	0.41%	0.74%	-54.42%
MAR	65 Neutral	$72.71B	30.30	-144.82%	0.96%	5.12%	-11.48%
IHG	63 Neutral	$18.30B	25.18	-27.16%	1.41%	8.89%	23.20%
Sector *	61 Neutral	$17.75B	12.56	-5.49%	3.02%	1.43%	-14.12%