H World Group (HTHT) AI Stock Analysis

• Market Cap: $10.76B
• Dividend Yield: 4.38%
• Average Volume (3M): 2.40M
• Price to Earnings (P/E): 27.6
• Beta (1Y): 0.44
• Revenue Growth: 7.68%
• EPS Growth: -25.12%
• Country: US
• Employees: 28,502
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Travel Lodging
• EPS (TTM): 1.30
• Shares Outstanding: 321,039,250
• 10 Day Avg. Volume: 1,595,564
• 30 Day Avg. Volume: 2,397,905
• PEG Ratio: 1.53
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $47.33
• Price Target Upside: 32.76% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

H World Group's stock score reflects strong financial performance with significant revenue and profit growth, supported by efficient cash flow management. Technical indicators show mixed signals with some weakness in medium-term trends. The valuation is moderate, with a reasonably attractive dividend yield. The recent earnings call provided positive insights into expansion and revenue growth, despite some operational challenges. Overall, the stock is positioned well for potential growth, albeit with some risks.

Positive Factors

EBITDA Margin Improvement

The company converted 11 hotels from an asset-heavy model to an asset-light model, which improves EBITDA margin from 7% to 10%.

Expansion and Growth

HTHT achieved a net opening of 1,762 hotels and plans to maintain a similar pace in FY25, with 2,300 new openings, indicating strong expansion efforts.

Financial Performance

HTHT declared a total dividend of US$1.6 per ADR in FY24, indicating strong financial performance.

Negative Factors

Revenue Growth Challenges

The slower overall revenue growth than China is due to the exit of 11 DH's leased contracts.

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.

Stock Price Decline

H World’s (HTHT) stock price is down by 6% after 3Q results due to slightly disappointing 4Q revenue growth guidance.

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 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 exhibits strong financial performance with robust revenue and profit growth, improving margins, and efficient cash flow management. Despite a high leverage ratio, the company is leveraging its equity efficiently to generate returns. The overall financial health is positive, with a solid trajectory toward further improvement.

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.

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.

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.

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
	EBIT
5.20B	4.71B	-197.00M	410.00M	-1.22B
	EBITDA
6.54B	7.15B	549.00M	1.67B	-384.00M
	Net Income Common Stockholders
3.05B	4.08B	-1.81B	-420.00M	-2.06B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
11.08B	9.13B	5.37B	7.71B	10.93B
	Total Assets
62.55B	63.53B	61.51B	63.27B	65.80B
	Total Debt
35.45B	35.88B	43.89B	44.16B	44.98B
	Net Debt
27.97B	28.93B	40.30B	39.05B	37.95B
	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

• Technical Analysis Sentiment: Positive
• Last Price: 35.65
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 35.65 is above the 20-day moving average (MA) of 33.71, above the 50-day MA of 35.02, and above the 200-day MA of 32.84, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 57.01 is Neutral, neither overbought nor oversold. The STOCH value of 55.23 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
H	72 Outperform	$10.41B	8.62	22.31%	0.49%	-6.41%	511.40%
HTHT	70 Outperform	$10.76B	27.60	25.06%	4.38%	7.68%	-25.12%
IHG	66 Neutral	$15.72B	26.69	-27.16%	1.45%	6.34%	-11.99%
HLT	66 Neutral	$57.26B	38.00	-41.19%	0.25%	7.43%	38.52%
MAR	63 Neutral	$62.02B	27.05	-144.82%	1.01%	5.85%	-18.43%
WH	62 Neutral	$6.70B	24.13	53.31%	1.78%	1.57%	48.48%
Sector *	61 Neutral	$6.65B	11.71	3.09%	3.98%	2.65%	-20.82%