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H World Group (HTHT)
NASDAQ:HTHT
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H World Group
(NASDAQ:HTHT)
Rating:68Neutral
Price Target:
$38.00
â–²(11.60%Upside)
Positive Factors
Operating Model
HTHT’s asset-light model offers strong operating leverage and downside protection in a softer macro environment.
Strategic Focus
The company reaffirmed its FY25 guidance, underscoring confidence in its fundamentals and strategic focus on developing emerging leisure segments and B2B corporate demand.
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 Uncertainty
Management highlighted increased uncertainties in achieving flat RevPAR for FY25.
H World Group (HTHT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.42B
Dividend Yield4.52%
Average Volume (3M)1.64M
Price to Earnings (P/E)24.8
Beta (1Y)0.39
Revenue Growth5.20%
EPS Growth-11.08%
CountryUS
Employees28,502
SectorConsumer Cyclical
Sector Strength56
IndustryTravel Lodging
Share Statistics
EPS (TTM)0.35
Shares Outstanding310,509,460
10 Day Avg. Volume1,335,376
30 Day Avg. Volume1,643,771
Financial Highlights & Ratios
PEG Ratio-0.42
Price to Book (P/B)0.61
Price to Sales (P/S)0.00
P/FCF Ratio1.12
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$45.75Price Target Upside34.36% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
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 Earnings Call Summary
Earnings Call Date:May 20, 2025
(Q1-2025)
| % Change Since: -8.25%|
Next Earnings Date:Aug 26, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with strong growth in specific segments like upper midscale and asset-light models, alongside challenges such as RevPAR decline and uncertainties from tariff issues.Q1-2025 Updates
Positive Updates
Expansion in Upper Midscale Segment
The number of upper midscale hotels in operation increased by 36% year-over-year to 933, and the pipeline grew by 22% year-over-year to 523.
Robust Membership Growth
The member base increased to nearly 280 million, with room nights generated through the central reservation system accounting for 65.1%, up 5.4 percentage points year-over-year.
Improvement in Asset-Light Model
Manachised and Franchised hotel percentage increased to 46% from 38% in the previous year. Asset-light hotels in the pipeline increased to 57%.
Strong Growth in Manachised and Franchised Revenue
Manachised and Franchised business achieved a robust growth of 21.1% year-over-year, driven by strong network expansion.
Legacy-DH RevPAR Improvement
RevPAR of Legacy-DH improved 12.7% with ADR up 2.8% and occupancy increased by 5.3 percentage points, with strong performance in North Africa and Middle East.
Negative Updates
RevPAR Decline for Legacy-Huazhu
RevPAR declined by 3.9% year-over-year with ADR decreased by 2.6% and occupancy rate declined slightly by one percentage point.
Challenges from Tariff Issues
Tariff issues starting from April brought uncertainties to the market outlook, affecting business travel and creating volatility.
Decrease in DH Revenue
DH revenue decreased by 11.3% year-over-year mainly due to the transformation of 10 leased hotels to franchised hotels.
Like-for-Like RevPAR Decline
Like-for-like RevPAR declined 8.3% year-over-year due to pressure from new supply and regional occupancy challenges.
Company Guidance
In the first quarter of 2025, H World Group reported a challenging environment for RevPAR, which declined by 3.9% year-over-year, with ADR decreasing by 2.6% and occupancy rates dropping slightly by one percentage point. Despite these pressures, primarily due to an oversupply in the market, the group saw promising growth in leisure travel demand, evidenced by mid-to-high single-digit increases in the number of travelers and total spending during key holidays. H World opened 695 hotels and closed 155, with a pipeline of 2,865 hotels by the quarter's end, focusing on quality improvement. The upper midscale segment saw significant growth, with the number of hotels in operation increasing by 36% year-over-year. The company’s asset-light strategy has been progressing well, with 46% of its hotels now franchised or manachised. Financially, H World Group's revenue grew by 2.2% year-over-year to RMB5.4 billion, aligning with guidance, and adjusted EBITDA rose by 5.3% to RMB1.5 billion. The company maintained a strong cash position of RMB11.8 billion. Looking ahead, H World expects group revenue to grow 1% to 5% in Q2 2025, driven by an 18% to 22% growth in manachised and franchised revenue.H World Group Financial Statement Overview
Summary
H World Group exhibits strong financial performance with robust revenue and profit growth, improving margins, and efficient cash flow management. The company's effective use of leverage to generate returns and stable equity position contribute positively to its financial health.Income Statement
H World Group's income statement shows strong revenue growth, with a significant increase from 2022 to 2024. The gross profit margin improved notably as gross profit grew faster than revenue, indicating improved cost management. The net profit margin has recovered from negative in 2022 to solid positive figures in 2023 and 2024, reflecting profitability restoration. EBIT and EBITDA margins have also improved significantly, showing operational efficiency gains.82
Very Positive
Balance Sheet
The balance sheet reveals a stable equity position with gradual improvements. The debt-to-equity ratio remains high, indicating leveraged operations, but the company has managed to stabilize its stockholders' equity. The equity ratio has shown slight improvement, suggesting a better asset-to-equity balance. Return on equity improved significantly in 2024, showcasing effective utilization of shareholder funds.75
Positive
Cash Flow
Cash flow analysis indicates strong operational cash flow generation, outpacing net income, which suggests quality earnings. Free cash flow has also grown, supporting future investments or debt reduction. The free cash flow to net income and operating cash flow to net income ratios indicate efficient cash generation relative to reported profits.78
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 23.89B | 21.88B | 13.86B | 12.79B | 10.20B |
| Gross Profit | 9.86B | 7.54B | 1.60B | 1.50B | 467.00M |
| EBITDA | 6.54B | 7.15B | 549.00M | 1.67B | -384.00M |
| Net Income | 3.05B | 4.08B | -1.81B | -420.00M | -2.06B |
Balance Sheet | |||||
| Total Assets | 62.55B | 63.53B | 61.51B | 63.27B | 65.80B |
| Cash, Cash Equivalents and Short-Term Investments | 11.08B | 9.13B | 5.37B | 7.71B | 10.93B |
| Total Debt | 35.45B | 35.88B | 43.89B | 44.16B | 44.98B |
| Total Liabilities | 50.28B | 51.28B | 52.70B | 52.23B | 54.37B |
| Stockholders Equity | 12.18B | 12.13B | 8.73B | 10.94B | 11.33B |
Cash Flow | |||||
| Free Cash Flow | 6.62B | 6.77B | 511.00M | -333.00M | -1.17B |
| Operating Cash Flow | 7.52B | 7.67B | 1.56B | 1.34B | 609.00M |
| Investing Cash Flow | -2.24B | -1.48B | -522.00M | -1.40B | -8.10B |
| Financing Cash Flow | -5.50B | -3.72B | -1.39B | -1.80B | 883.00M |
H World Group Technical Analysis
Negative
34.05
Price Trends
35.31
Negative
34.91
Negative
34.17
Negative
Market Momentum
-0.48
Positive
44.10
Neutral
46.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTHT, the sentiment is Negative. The current price of 34.05 is below the 20-day moving average (MA) of 34.70, below the 50-day MA of 35.31, and below the 200-day MA of 34.17, indicating a bearish trend. The MACD of -0.48 indicates Positive momentum. The RSI at 44.10 is Neutral, neither overbought nor oversold. The STOCH value of 46.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $60.31B | 40.37 | -41.19% | 0.23% | 7.43% | 38.52% | |
72 Outperform | $72.85B | 30.61 | -144.82% | 1.00% | 5.45% | -9.50% | |
70 Outperform | $13.09B | 17.63 | 22.31% | 0.44% | -7.38% | 19.62% | |
68 Neutral | $10.42B | 24.80 | 28.90% | 4.52% | 5.20% | -11.08% | |
67 Neutral | $6.10B | 18.82 | 53.31% | 2.06% | 4.79% | 48.48% | |
66 Neutral | $17.47B | 29.53 | -27.16% | 3.98% | 6.34% | -11.99% | |
66 Neutral | S$875.87M | 33.08 | 6.05% | 4.27% | 6.06% | -31.90% |
* Consumer Cyclical Sector Average
Performance Comparison
HTHT
H World Group
34.05
2.18
6.84%
H
Hyatt Hotels
137.10
-11.26
-7.59%
IHG
Intercontinental Hotels Group
113.73
9.73
9.36%
MAR
Marriott International
265.99
26.13
10.89%
HLT
Hilton Worldwide Holdings
253.72
39.18
18.26%
WH
Wyndham Hotels & Resorts
79.50
6.72
9.23%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.